Increasing the number of homes in the next quarter century is critical and a focus of the NPPF. But many local authorities have no plan as of yet.
Almost three years into the National Planning Policy Framework regime, there are mixed reviews of how well the programme is working. It was intended to stimulate home building by ceding greater authority to local councils. This is a critical consideration to those who actively invest in development, including homebuilders, as getting approvals for building amounts to a go/no-go equation.
Notably, many of those councils that have no approved plan are building at a faster rate than those with an adopted plan, say researchers with Inside Housing, which reports on social housing and related real estate and land development issues.
The intention of the NPPF was to simplify and expedite the homebuilding process. It dissolved regional planning in favour of local planning authorities (LPAs), who in theory could better plan where new homes and commercial structures should be built. A key requirement was that all local councils establish a five-year plan.
But fewer than one in five councils had adopted plans as of October 2014, according to Planning Inspectorate data. The problem, says Planning Officers Society president David Evans, is that writing up a five-year plan often doesn’t work where a more evolutionary process might. Investors who strategically form partnerships to purchase land are often the impetus to these evolutions.
Add to that, staffing cuts in some planning policy teams means this work is unfolding more slowly than the Government would like. “My view is that local authorities aren’t dragging their feet,” says Alison Tero, director of planning for the real estate firm CBRE. “They’re caught out by the changing system and it’s a huge resource issue.”
According to Inside Housing’s assessment 167 local councils have a plan that is approved or in process, while 127 councils simply have no local plan at all. Yet in comparing the numbers of homes added in two recent years (2012-2013 vs. 2013-2014), the latter group with no plans increased building by 35.9 per cent while those with plans/plans-in-development by 29.2 per cent.
A review of the Inside Housing list suggests that the councils without a plan tend to be from smaller districts. One standout was Bradford (population 293,000), where without a local plan the increase in building from 2013 to 2014 was a tripling, from 400 to 1,210 homes built. Boroughs with approved plans such as Allerdale (population 93,500) increased their new-build homes slightly (from 270 to 280), and North Lincolnshire (population 167,500) increased by almost 50 per cent (from 190 to 280). The city of Southampton (population 253,600) actually slowed in its growth (from 1,140 to 570), although it should be noted that this council had an adopted development plan as early as 2010, which changes the equation a bit.
LPAs that lack a plan can still permit use changes, and in fact often do in reaction to proposals submitted by private developers (perhaps largely due to the staffing considerations mentioned above). build the required infrastructure as needed if the local authorities permit them to do so. But before that permission is granted, public reviews of plans are required. The process may be reactive, but it is transparent and allows for dissent.
Investors in property are answering to a strong demand-driven market, given the serious shortage of housing in the UK. But development is largely stimulating to local economies, enabling employers to base operations where employees might be able to live. This is particularly useful for cities outside the congested South East and London, as growth firms are finding new opportunities in the North, Midlands and West.
Beyond where planning approvals might be achieved, investors in property funds also need to consider their personal asset-building strategies relative to the risks of real estate. A personal financial advisor is highly recommended for that discussion.