The Government has revealed plans to intervene directly to get more sites into residential development, just as a report from the Local Government Association says there are 475,000 homes with planning permission, that are yet to be built.
The new, “ground-breaking” policy aims to build 30,000 new affordable starter homes, backed by a £1.2bn fund, on underused brownfield sites. Five pilot sites have been selected, in Dover Cambridgeshire, Chichester, Gosport and at Old Oak Common in west London.
“Today’s package signals a huge shift in government policy,” said prime minister David Cameron. “Nothing like this has been done on this scale in 3 decades – government rolling its sleeves up and directly getting homes built.”
The launch statement notes that eight large housebuilders currently deliver half of all new homes, and it is intended that the direct commissioning approach will let small builders back into the housebuilding sector in greater numbers.
At Old Oak Common, land around the new transport superhub will be made available for directly commissioned homes, as part of a total 24,000 new homes promised across the whole development corporation area.
The government initiative comes as the LGA release a study undertaken for them by Glenigan which reveals what the association calls a “bumper backlog” of permissions that has grown substantially in recent years. In 2012//13, there were 381,390 unimplemented permissions which had increased to 443,265 the following year.
The LGA says the figures underline its desire for councils to be able to invest in building more homes, and also suggests more investment is needed in construction skills. The report also found evidence that developers are taking longer to build out sites, now averaging 32 months from permission being granted, a timeline that is up from an average 12 months in 2007/08. It also notes that the number of planning applications granted permission last year was 212,468 – up from 187,605 in 2007/08.
“These figures conclusively prove that the planning system is not a barrier to house building,” said LGA housing spokesman Peter Box. leader of Wakefield council. “In fact the opposite is true, councils are approving almost half a million more houses than are being built, and this gap is increasing.”
“While private developers have a key role in solving our chronic housing shortage, they cannot build the 230,000 needed each year on their own. To tackle the new homes backlog and to get Britain building again, councils must have the power to invest in building new homes and to force developers to build homes more quickly.”
“New homes are badly-needed and councils want to get on with the job of building them. If we are to see a genuine end to our housing crisis we have to be given the powers to get on with it.”
The LGA’s headline figure has been questioned by several, including Duncan Stott, director of affordable homes campaign Priced Out, who argues the number includes homes on part-finished sites, including the completed apartment he has lived in for the last 18 months. “According to these figures, I live in an unbuilt home.
“Surely the key point isn’t how long the development pipeline is, but how much is going through the pipe to begin with,” said Stott in an opinion piece published by City Metric. “To get more houses completed, we need our councils to be granting enough planning permission to begin with, especially in the areas where housing costs are the most unaffordable. That means setting ambitious housing targets in their local plans so that more land is opened up for homes and can have planning permission granted.”
He also queries the LGA’s headline permissions figure of 212,468, saying that once expiries and re-applications are deducted, the true figure is “169,000 new permissions genuinely entering the pipeline.”
There are those in the housebuilding sector, too, who appear to believe that housebuilders alone cannot solve the problem. In a blog entry, Philip Barnes, group land and planning director at Barratt Developments, says the reason for the delivery gap is down to the fact that scheme sizes have been getting larger – and housebuilders still deliver at the same rate: “the reality is that a site with a consent for 1000 units is not going to yield much more units per year than a site for 100 units.” He says the solutions include permissions on more, smaller sites, and subdividing large schemes to increase competition: “This means more smaller and custom builders building alongside the volume builders.” He also suggests government should support smaller housebuilders in some way via a subsidy that enables them to buy into sites they are otherwise priced out of.
Barnes also puts forward the concept of local authorities specifying build out rates for sites, though he suggests that an aggressive requirement will then reduce the site value. And he says the concept of housebuilders swapping parts of large sites among each other, common prior to the financial crisis, should be encouraged once more. Barnes is in positive mood: “There does appear to be opportunities for the additional housing funding released in the Autumn Statement to be used to encourage greater and faster levels of delivery.
LPA Perspective: Let’s not get into an argument about the numbers. The LPA appears to have used a count that favours their case, while plenty of others have pointed to reasons why the absolute figures are not so high. But the fundamental point, that a housing shortfall is not the fault of the planners, is well made.
The flip side is the lack of delivery agencies. As Philip Barnes so honestly calls it, housebuilders will only build on any site at a rate they think their sales and marketing machine can comfortably sell. They are in business to make money, and that means not building loads of inventory that costs them borrowed funds, that they then have to secure against squatters.
It appears Barnes and the government are on the same page, in encouraging smaller housebuilders into the market. That’s a laudable aim, as is Barnes’s idea of encouraging custom and self builders, but in these cases it could well be development lenders and mortgage providers – ie the banks – that will be holding such initiatives back. Development finance continues to be hard to find, without substantial equity, while mortgages are a tough call even for those buying regular, standing property.
Councils continue to claim that they cannot build, but some are: notably Birmingham, which is building homes for private rent as well as for low rent. Nearer to home, Sutton set up a development company in 2014.