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Tory leadership candidates: The housing crisis is not a game!

Rico Wojtulewicz, Head of housing and planning policy National Federation of Builders, comments

The Conservative leadership election has brought out the worst in planning reform debate, with both candidates seemingly deciding vote attracting ideas on the back of a fag packet before presenting them publicly. 

From brownfield first which makes protecting greenbelt pledges almost impossible, to tackling the landbanking in a system where Local Planning Authorities (councils) allocate land, neither candidate is engaging with policy in practice. 

On 5 August 2022, the latest set of proposals came forward, where Rishi Sunak MP announced three ideas: 

  1. Developers must build on land with planning before granted permissions in the same area.
  2. Compulsory Purchase Orders (CPO) - councils buy land back discounted if not built on in agreed time frame.
  3. Build out levy on unbuilt planning after a set period of time.

Unfortunately for an industry which finally got the Government’s attention and had them analysing the reality of policy in practice and not media opinion, these proposals take us ten steps back. 

No new permissions until granted permissions are built out
We do not know whether this proposal refers to outline of full permissions, or whether it targets one developer or the regions permission strategy. However, outline permissions have a host of requirements to still settle but are the usual way that land comes forward. These conditions are set by councils. 

Landowners and land promoters also typically achieve these permissions; therefore, it is not clear if the policy targets them, or the builder who buys or options the site. 

Separately, councils allocate land for housing through their local plans and they permission it too. They are in control of the process and previous efforts, such as the Housing Delivery Test (HDT) or national targets have tried to ensure they allocate and permission deliverable sites, rather than ones they hope can be delivered. ‘No new permissions’ simply shrinks the pool of land which will and can come forward and therefore encourages large, slow to deliver sites to be allocated to meet demand need. 

No new permissions will end up harming small builders (SMEs) the most as their sites don’t typically get allocated, meaning their sites targeting local people are deemed ‘speculative’. Plus, due to the complexity of getting planning over the line - such as signing off planning conditions either via statutory bodies or planning departments, or getting services connected – opportunity to deliver will be hindered and pipelines will dry up immediately. 

As an example, an NFB member bought a site with outline planning in 2018 which achieved permission in 2013 but required an electricity company to connect the site. The previous landowner bought up surrounding land to accommodate a twice changed connection strategy but the council permitted building on one section, which meant another cable rerouting. In 2018, the strategy was settled and the budget for works set. With a timeline established, the developer bought the site but sudden changes in budget and now policy has meant the timeframe for connection is now 2023, at the earliest. 

Would this mean the developer, who is delivering another site nearby would not be able to apply for another until this site was delivered? Or, that no new sites could come forward until this one was delivered? Mr Sunak’s proposal closes permission pipelines, meaning developers of all sizes will be forced to operate hand to mouth (SMEs already are) and in a spiralling land price war. This will also reduce the number of new learners in the industry and directly employed labour as businesses without work pipelines will not be able to take the financial risks to take on new staff. 

Discounted land via CPO for unbuilt permissions
CPO powers must be strengthened to permit more homes to come forward, but councils control the timeframes for delivery, as they permission and allocate sites for their local plans. There is therefore nothing stopping them from changing the delivery rules, particularly on phased developments and hindering delivery within any ‘agreed period’. 

The Government and councils are also not in control of outside factors, such as service connections or material supply. Therefore, if a caveat was put in place to ensure these factors did not trigger CPO powers, we effectively have the same system we already have where development must begin within three years. The better solution is to increase and simplify CPO powers from the outset and have policies to ensure councils use it and built homes. 

The myth that builders do not build out developments is fantasy. Absorption, where you don’t have hundreds of homes left empty does occur on a minority of sites but using existing powers, such as ‘subdivision of large sites’ alongside improved CPO powers would deliver this proposal ambition under the current policies, without the potential for perverse outcomes. 

Build out levy on unbuilt planning after a set period of time. 

This ‘levy’, or stealth tax and additional cost already exists via a requirement to re-apply for a planning permission if work has not started within three years, or if the government changes Building Regulations mid project, as has happened with June 2022 reforms. It also exists through ‘Completion Notices’, which charges council tax on unfinished properties not delivered within a set period of time. 

The previous two sections also contain the reason why this policy is flawed, as they identify that builders are the final piece of the puzzle and landowners or promoters, alongside councils and service providers or statutory bodies are the long chain before them. The ex-chancellor is therefore seeking to take a bite out of the deliverer, not the profit making land owner or enabler. This is totally incoherent economics. 

There is much more which could be said about affordable housing, supply challenges or other but politicians appear to have stopped listening. The Government has increasingly drifted toward anti-small business, anti-housebuilder, pro-headline appeasement and pro-taxation and the Conservative leadership candidates appear no different. 

The country needs a leader which understands policy in practice and sadly, since reforms proposed by Robert Jenrick MP were watered down, all proposals to fix the housing and planning crisis continue to prove that the housing crisis is a game played to win votes, not solve the greatest challenge the nation has faced since the Second World War.

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