2015 saw house prices rise by 9.5 per cent, with an average home now costing £208,000. Of course, there are regional variations, and £200,000 wouldn’t even buy a shoebox in London and other prime locations. The problem will be exacerbated when interest rates start to rise, as the Chancellor recently hinted is becoming more likely.
The shortage of housing is a contributory factor in price escalation, but penalising developers for ‘land banking’ isn’t the answer; the Local Government Association propose charging full council tax on sites with planning consent. So, who would pay? Inevitably, the cost would be added to the sale price, making a new home even more unaffordable for struggling young buyers already paying a premium. The Chancellor recognised this in his Autumn Statement, when he set out plans for 200,000 new starter homes by 2020, for sale at 80 per cent of market value, a 20 per cent saving made by removing developers’ Section 106/Community Infrastructure Levy contributions.
But, another contributory factor to the shortage is the behaviour of some local authorities. Planning is the biggest obstruction to delivering new homes.
It takes years for schemes, large or small, to get planning consent, despite months of detailed consultation with planners prior to submitting an application. Section 106/CIL demands are often impractical, unnecessary and too expensive, given the likely return from the eventual sale prices, which are driven by local market conditions. Detailed design approval and building regulations can then take a further year or more to be agreed before anyone can start on site.
Even if a developer can get past the first stage to gain officer support, I’ve seen many a planning committee document subsequently using spurious arguments which prevent a scheme coming to fruition. Committee members don’t always do their homework to challenge recommendations so they consequently refuse consent; at this stage, some developers will either decide to prioritise other sites or go to appeal – usually winning. All this costs a great deal of money and time – which will be reflected in future sale prices.
I can already hear readers furiously disagreeing with my assertions, but any developer will agree with me.
Just recently, it took a company acquiring a site out of receivership, which included a partially built multi-storey structure, a year to get planning consent to continue the approved scheme because the previous developer had added a couple of floors to the structure without consent. Yet to remove them would destabilise the whole building, requiring it to be demolished, making the project unviable.
It then took a further year to agree building regulations (why? when these were part of the original approvals. As a matter of interest, where were the planners/building control when those floors were added, unnoticed?) So, completion of 180 new homes has not only been delayed by a couple of years, tender prices have risen in the same period, significantly adding to all the costs, which will have to be passed on to future purchasers. Thank goodness, the Section 106 requirements were eventually renegotiated or the site would have continued to be left barren in a prominent location in dire need of investment.
Another site took seven years to get consent and, two years on, work still hasn’t started. Consequently, the whole system needs streamlining. Something which the Government has also recognised, with its new Local Plan Expert Group, designed to ‘streamline the process’.
An injection of common sense and flexibility would also help.
Committee reports are now required to outline the financial benefits to authorities arising from new developments, including New Homes Bonus and the Community Infrastructure Levy, but planners and councillors need to understand the information put to them, instead of, for example, trying to manipulate figures in their own favour following political interference.
Again, I’ve seen reports questioning independent expert analysis of construction and other costs on specific sites, when officers, who are not quantity surveyors and have never worked on a building site, came up with their own figures in order to demand additional financial commitments, despite their own consultants verifying the developer’s viability submission. Needless to say, once specialist barristers were involved, this wheeze failed – but it was costly for all sides, and caused unnecessary further delays. The Autumn Statement called for a more standardised approach to viability assessments, extending the ability to appeal.
Developers need to make money so they can buy sites and materials, and pay their staff; since the recession, smaller firms without the Big Boys’ financial resources have virtually disappeared from the market – so the Government should be praised for trying to bring them back to life with opportunities to redevelop public land. It would be good if Community Land Trusts could also flourish in the wake of this new initiative.
Authorities which legitimately refuse new schemes because of poor design should also be praised, but such schemes should never get as far as committee; developers should be made aware that only the very best will suffice as soon as they start pre-application discussions. Equally, planners and councillors should be prepared to accept adventurous modern architecture provided it ticks the quality standard box.
As has been said before, the big developers tend to inflict their standard designs on communities across the country, yet they have the resources to effectively tailor their product when forced to do so. Reducing the scale and using different materials can make a huge difference, at marginal additional cost – to the benefit of all parties – especially if they can be encouraged to create some lifetime homes within a complex.
Councils (including the LGA) also need to understand that there remains a serious skills shortage across the industry, which is another reason why sites are not being developed as quickly as all parties may wish. They could be working more closely with their LEPs and developers to identify what skills are needed (engineering, bricklaying, plumbing, electricians, landscaping) to ensure that local colleges provide the training, raise the profile of the various trades as valuable professions, and support building companies with apprenticeship programmes.
But, please make Section 106 demands more focused and value for money for all parties, and forget any proposals to start charging council tax on unbuilt properties. If we want more affordable housing (both to buy and to rent), there has to be give and take on all sides. If not, the Government could introduce an Ofsted-style system whereby failing planning authorities are taken over by high performing councils. Now there’s a thought!