The Levelling Up and Regeneration Bill was introduced to Parliament on 11 May. Its aim is to improve productivity and deliver prosperity to all parts of the country. The Bill is currently at Committee stage.
HBF and its membership has had two roundtable events in June with DLUHC officials to discuss aspects of the Bill especially its planning reforms. One was held with major and mid-size housebuilders and one with SMEs. HBF will continue to consult with the membership while the Bill and associated papers progress through parliament.
The Government still refers to the figure of 300,000 net housing additions a year as an aspirational target, but the Secretary of State has stated to the House of Commons Housing Committee on 13 June that it is unlikely that the target will be achieved, especially as the Government seeks to rebalance housing supply towards the midlands and the north in order to ‘relieve pressure on the southeast’ as part of its levelling up programme. Gove also staged that he considered the housing targets for the Ox-Cam Growth Corridor to be inflated and unworkable.
Confirmation is awaited as to whether the Government will revise the Standard Method for assessing housing need, but Michael Gove has accused PINS of imposing the existing Method on local planning authorities.
Many of the changes proposed will be introduced through revisions to the NPPF. The revised NPPF is expected within the next few months.
The following is a summary of some of the key elements of the Bill with HBF commentary.
Key areas:
Local Plans
It is proposed to amend Section 19 of the Planning and Compulsory Purchase Act 2004 to require local planning authorities (LPA) to produce a single Local Plan that sets out the amount, type, location and timetable for development in the area. These plans would need to be produced within 30 months with the aim of achieving full coverage in England (currently only 39% of local authorities have an up-to-date local plan, i.e., one adopted in the last five years). Local Plan Commissioners may be deployed to support or take over plan preparation. Gateway checks are proposed to identify and correct problems with the local plan at an early stage.
Local Plans, including Supplementary Local Plans, Spatial Development Strategies and Neighbourhood Plans will be accorded much greater weight by Clause 83.
Clause 83: Greater weight to local plans
Clause 83 will amend section 38 of the Planning and Compulsory Purchase Act 2004 so that determination of a planning matter must be made in accordance with the development plan (consisting of potentially Spatial Development Strategies, Local Plans, Supplementary Local Plans, and Neighbourhood Plans) and any national development management polices ‘unless material considerations strongly indicate otherwise’. This will reduce the scope for decisions to depart from the local plan.
Tensions between national and local policy ‘must be resolved in favour of the national development management policy’.
Loss of five-year land supply requirement
To incentivise the production of Local Plans and to keep them updated, and to reduce ‘speculative development’ the Government proposes revising the NPPF and deleting the five-year housing land supply test. Local planning authorities (LPA) with plans adopted within the last five years will not be required to demonstrate a five-year supply. HBF will be consulting with members to gauge views. We suspect that major housebuilders might be less concerned so long as there is full plan cover and these are kept up-to-date. SME members are more alarmed by this proposal given the weakness of para. 69 of the NPPF and the reluctance of LPA to allocate small sites.
Design codes
Alongside reform of local plans, the Bill will require all LPAs to produce a design code for its area. This will become part of the development plan. The Government hopes that the simplification of local plan making, with fewer locally specific policies, will enable local authorities to shift resources towards preparing these codes. The industry is concerned about the time delays associated with the production of these.
The requirement for a design code for each LPA will also enable the faster implementation of Street Votes.
Section 15HB will create a power for the Secretary of State to intervene where an LPA fails to prepare a design code.
National Development Management Policies
Clause 84 will introduce ‘national development management policies’ to enable faster local plan making and avoiding the duplication and endless deviations in detail that plagues the current planning system. The duplication and variation in policy by local authorities limits the ability of the industry to develop effective solutions at scale to a wide array of government policy initiatives, not least the zero-carbon agenda, because each local authority feels the need to do things differently. This is likely to be welcomed by the membership.
This change should also be understood in the context of the Government’s wish to implement Street Votes.
Some commentators have observed that this is a landmark reform since it will place Government - for the first-time since the inception of the planning system in 1947 – as a maker of policy that applies at the local authority level, centralising power to a degree not seen hitherto. Government will now be responsible for policies that will have a direct bearing on planning outcomes.
Duty to Cooperate / joint spatial strategies
Clause 87 introduces Schedule 7 which would replace Part 2 of the Planning and Compulsory Purchase Act 2004. Among other things this schedule would repeal section 33A of the PCPA 2004 and the statutory Duty to Cooperate and replace it with a non-statutory requirement for LPAs to ensure that local plans are ‘aligned’. Clause 90 would require LPAs to assist in plan-making with an option for two or more LPAs to produce voluntarily a spatial development strategy. Schedule 7 would allow also for the preparation of voluntary joint spatial strategies.
This set of proposals is unlikely to be any more effective than the duty to cooperate and potentially even less so.
Commencement notices etc
The Government says it wishes to increase the transparency of contractual and other arrangements on the control of land to expose anti-competitive practices. As part of this, it will introduce a new commencement notice applied when a scheme is granted planning permission, to address perceptions about ‘land-banking’. LPAs will also have enhanced powers to impose completion notices.
If this proposal is to become effective, Government will need to address the poor development management performance of LPAs and statutory consultees. It now often takes years from planning permission to confirmation of reserved matters and/or discharge of conditions, before developments may lawfully commence.
Planning fees to increase
It is proposed that planning application fees will increase by 35% for major applications (10 or more homes) and 25% for minor applications (9 or fewer). The proposed increase will be subject to consultation before approved.
It is uncertain if the increase in fees will be ringfenced to support development management or other planning services.
Few developers think this will herald a material improvement in the performance of local authority development management services.
Infrastructure Levy
The Government will reform planning gain to capture more value. It will do so by repealing thew Community Infrastructure Levy (except in London and Wales) replacing this with an Infrastructure Levy for all developments, as opposed to being optional, like the CIL). Section 106 payments, including contributions towards affordable housing, would be retained for major development.
The IL would be charged on the value of property when it is sold and applied above a minimum threshold – set as a percentage of gross development value rather than on floorspace. Rates would be set and collected locally. LPAs can set different rates within their areas.
LPAs would be required to prepare Infrastructure Delivery Strategies. These would assess requirements and how the Levy would be spent. The Bill will require the cooperation of infrastructure providers.
N.b. the Levy would be necessary to implement Street Votes.
Street Votes
Despite its inaccurate portrayal in the press (possibly a deliberate feint by DLUHC), this is not about ceding power to local people to vote against development but allowing residents of streets to vote in favour of densification. If a supra-majority of freeholders (60% plus) vote in favour of developing their street to accommodate more homes, then the LPA must allow them to do so. They will then have the permitted development right to do so, subject to following a design-code for the street. The needs of any leaseholders and renters will need to be taken into consideration, and rehoused, preferably in the redeveloped street.
The incentive is that any freeholders would keep any gain in development value. A paper by Policy Exchange estimated that the initiative might generate 110,000 additional homes a year and that each freeholder would benefit by up to £900,000 in planning gain.
Streets within conservation areas, AONB etc would be excluded. So would streets of pre-1919 homes.
The reform of the Infrastructure Levy and the proposal to make national development management policies should be understood in the context of Street Votes: participants would be required to comply with Building Regulations and pay the Infrastructure Levy.
The fact that the Government is considering exempting some parts of the built environment from planning control is an admission that the 1947 planning system is failing.
Community Land Auctions
An idea originally associated with the Cameron government, Tim Luenig’s proposal for the auction of land has a new lease of life. The idea is that landowners will be able to submit their land for allocation, offering the LPA an option on the land at a price set by the landowner. The DLUHC explanatory notes to the Bill say that the LPA can then allocate the land based on both ‘planning considerations and the option price. It can then auction the development rights once allocated I the adopted plan. The LPA will retain the difference in value between the landowner’s option price and the price offered by the developer.
In some ways, the antithesis of plan-making if land is allocated based on its potential development value for the local authority, it also has the potential to increase the amount of developable land. Difficult, nevertheless, to see how this would work in tightly constrained areas, where the only suitable land is that which will need to be allocated in any case to meet development requirements (e.g., York or St Albans).
The Government has said it will pilot the idea in local authorities.
The formulation of national development management policies and the Infrastructure Levy will assist with the pricing of land.
Compulsory Purchase reform
Government is currently consulting on its proposal to reform Compulsory Purchase code to assist regeneration. It will do so by limiting the amount of ‘hope value’ a landowner may expect to receive by way of compensation. This would represent a move away from the Land Compensation Act 1961 Act that had allowed landowners to benefit from more of the value of the proposed redevelopment of the land (aka ‘scheme value’).
There are pros and cons associated with the Government’s reform. While reducing the hope value that a landowner might receive could assist with urban regeneration, it would also alleviate pressure on the Government to implement more wider-ranging reforms of the planning system that would ensure an adequate supply of developable land in the first place. Moreover, landowners and developers should view warily any move by government that increases its ability to seize assets at existing use value. There is the possibility that government could continue to tighten further the supply of land, thereby boosting the potential development value of a limited number of allocated sites, but then seize these assets at existing value and profit from the increase in value deriving from the restrictions it has created.
The consultation can be read here.
Environmental outcomes
The Government proposes to replace processes derived from the now repealed Habitats Directive – Sustainability Appraisal, Environmental Assessment and Strategic Environmental Assessment - with Environmental Outcome Reports to ensure ‘tangible environmental outcomes’ that will be set by the UK government. This would include policy measures like biodiversity net gain. While we await the details this could be a welcome development for the industry, if the route to planning permission is linked to the achievement of measurable and defined outcomes, rather than the identification of a series of risks where the precautionary principle might come into play.
Development Corporations
Clauses 131 and 132 would insert provisions into the Local Government, Planning and Land Act 1980 and the New Towns Act 1981, allowing one or more local authorities to propose the making of a development corporation to the Secretary of State. The LPA or local authorities would act as an ‘oversight authority’ for the development corporation.
In addition, clause 134 would amend the Local Government, Planning and Land Act 1980 to allow Urban Development Corporations (distinct from development corporations) to access planning powers equivalent to those available to Mayoral Development Corporations (like Stockport and South Tees). Clause 135 would amend the New Towns Act 1981 to allow New Town Development Corporations to access planning powers equivalent to those exercised by Mayoral Development Corporations.
It is possible that these reforms have been designed to assist with the Government’s renewed focus on urban regeneration. It might also become the vehicle to deliver change in the Ox-Cam corridor.
HBF will endeavour to engage with members on the planning reform proposals over the next few weeks and months. Meanwhile, if people have any observations on the Bill and its associated reforms that they wish to share or discuss, please get in contact with James Stevens at james.stevens@hbf.co.uk.