Given the slow progress of economic recovery and the continued depression in the construction industry and house-building in particular, You may think I am offering a solution to a problem we don't have, but a major reason for the slowdown in new residential construction is the fact that developers are sitting on sites for which they paid far too much.
We have for more than three decades operated on the basis of developers land-banking, ie buying up sites without planning consent at inflated values and fighting extended planning battles whilst betting on ever-rising prices bailing them out. They usually get away with it. Sadly, as the latest decade of unsustainable increases in house prices from 1997 to 2007 saw a bigger boom than ever before, with prices and rents trebling on average and soaring even more than that in hot-spots, the bust, when it inevitably came, was even bigger.
It is estimated that planning consent exists for 400,000 new homes. The reason many of these developments sit un-started on developers' Books, is that they paid far too much for the sites and cannot economically develop them. This holds up not just the development of market homes, but also of the affordable homes which rely on cross subsidy from the market elements of schemes to make the whole thing viable. Without change, we are destined to repeat this mistake.
In the new National Planning Policy Framework, the Government requires local authorities to identify a five year supply of sites for new homes. It has, however, left in place the previous labyrinthine system of Local Development Frameworks, Area Action Plans and Special Planning Guidance which failed to deliver new homes even in the good years. But there is a sliver of an opportunity here.
Councils regularly issue a "call for sites", basically an opportunity for landowners and developers to promote their sites to be included in the five year supply. Yet the process is not one which is open to public scrutiny.
The reason for this is that landowners and developers will promote their sites and discuss the potential only with the planning officers. Should their land be included, it will be included in a Local Plan, but when they are published, they usually are too detailed and technical for most people to engage with. It is only when specific proposals come forward for development that local people realise what is about to be done to them. By which time, of course, it is usually too late.
Instead, why not ask those landowners who promote their land for inclusion in the five year supply – or who are lucky enough to have it identified for them – to pay for the preparation of binding planning guidance? This will require site-specific advertising and local public consultation. In areas where there are numerous sites, a Neighbourhood Plan might even be required. The resulting planning guidance or Neighbourhood Plan would have far greater weight as policy against which developers can draw up their proposals.
This would achieve two things. Firstly, local consultation would happen and communities would be engaged in a way they never have been with the vastly too complicated and specialised LDF process. Local views on type and tenure, size and style would be heard and accommodated in the guidance and developers would then have a much easier and shorter route through the planning system.
Secondly, developers will know what they can and cannot build. They will know what the affordable housing requirement is and any capital contribution that has to be paid. There will still be flexibility, architects and developers will still try to innovate and offer alternatives, but the costs and risks will be clear up front and land will be much more likely to be bought at prices which support the viability of development.
Doing this will not stop speculative buying, but it could reduce it so that it does not do quite so much harm to the economy when the wheels fall off.
We may even prevent the wheels from falling off at all!