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The long read: reflections on the white paper

17 February 2017 • Jo Savage

The housing white paper is intended to address the challenges that we face in terms of housing supply and affordability. The first observations are that plans in local areas do not meet the projected growth and that the pace of development is too slow. It also recognises that the structure of the housing market makes it hard to increase supply.

The answers? Plan for the ‘right homes in the right places’, build homes faster and diversify the housing market. But how? Below is a summary of some of the white paper proposals.

Right homes, right places

To build the right homes in the right places the government plans to consult on a new standard methodology for calculating ‘objectively assessed need’ and ensuring that each local authority has an up to date plan. Any methodology is also expected to include policies for addressing housing requirements of groups with particular needs, such as older and disabled people.

Alongside this it intends to make land ownership more transparent to better identify land available for housing. Not only this, it is expected that there will be greater availability and transparency regarding other land interests, such as covenants, overage, options and other contractual arrangements which control land. There is to be a further consultation on this, after which any necessary legislation will be changed accordingly. Additionally, a draft bill is to be published to implement the Law Commission’s proposals for the reform of restrictive covenants and other interests.

It is intended that more land is to be made available for development and that better use of land should be made by encouraging higher density housing. The white paper states clearly that if developable land is identified then housing needs should be accommodated unless there are NPPF policies which restrict development or adverse impacts that significantly outweigh its benefits.

The government intends to set out regulations which will ensure that local plans will be reviewed every five years. If a local authority cannot meet the housing needs in its areas it will need to work with neighbouring authorities to address any remainder. Whilst there is already an obligation for cooperation there will be a consultation on changes to the National Planning Policy Framework (NPPF) to ensure that local authorities prepare a statement of common ground on working together across boundaries to meet housing need. Question 6 of the consultation asks whether land pooling could also be effective in land assembly.

A new £45m Land Release Fund is to be provided to support local authorities that will participate in the Accelerated Construction programme, this is with the aim of meeting the government’s target of releasing surplus public land with a capacity of 160,000 homes during this parliament. It is also proposed that there will be a consultation on extending the flexibility of local authorities to dispose of land at less than best consideration.

It is also proposed that at least 10% of sites allocated for residential development should be sites of half a hectare or less and local authorities will be encouraged to work with developers to encourage large site sub-division.

The government will legislate to allow locally accountable new Town Development Corporations to be set up for local areas to use as delivery vehicles.

Community involvement features highly, with funding to be made available from 2018-2020 to neighbourhood planning groups. This accords with the consultation question as to amending policy to encourage planning authorities to consider socio-economic benefits in estate regeneration, The NPPF is potentially going to change to allow more early discussions but also make clear that design cannot be a sole justification for objections.

It is difficult to see how a standard methodology can be implemented to assess housing needs that will be able to be used across the county, given that housing varies greatly in different geographical locations. If local communities are to be involved in the decisions to make the best use of all available land, local authorities will have to ensure close liaison with the local community to address any concerns up front and have a streamlined approach to dealing with objections, which the changes to the NPPF will hopefully assist with, as well as the proposed changes to decision making processes speeding up to quicken he implementation of development.

Faster build times

To build homes faster, the government will invest in making the planning system more accessible and open, it will aim to avoid unnecessary delays and introduce sanctions for applicants securing planning permission but not using it. It intends to introduce amendments to the national planning application form to request an estimated start date and build out rate, as well as progress reports from developers.

This would seem sensible to avoid land banking, however the question must be whether this additional obligation will deter developers.

Local authority capacity will be boosted and will be held to account through a new housing delivery test. New approaches will be explored as to how developers contribute to infrastructure.

The white paper sets out that the government will take steps to ensure the financial sustainability of planning departments, as such it will increase planning fees by 20% from July 2017, if the local authorities commit to investing the additional income in their planning department. The government is also minded to increase those fees by a further 20% for authorities which are delivering the homes required in their communities.

The £2.3bn Housing Infrastructure Fund will be open for bids this year, however the white paper confirms that it will be targeted at those areas with the greatest housing need.

CIL has been reviewed and it was found that it was not working as anticipated, therefore the government intends to examine options to reform the system of developer contributions, ensuring direct benefit for communities. An announcement will be made in the Autumn Budget.

Faster build times will assist with the supply of housing but it is imperative that they are the right types of housing. The last thing that the government would presumably intend is a large number of void properties as a result of faster planning but which is not in line with demand.

Diversification

To diversify the market, it intends to open it up to small builders, support housing associations to build more and encourage building by local authorities and institutional investment. In its executive summary it reminds us that it has already announced the £7.1bn funding for housing associations and confirms that it will clarify its plans over future rent levels. In return it expects housing associations to build significantly more affordable homes over the current parliament. If institutional investment is to be encouraged then it would perhaps be prudent to develop an investment framework.

Small and medium size builders will be backed to enable their growth and custom build homes are to be supported. New contractors are anticipated through the Accelerated Construction Programme, more homes for private rent are encouraged, alongside family friendly tenancies.

The Help to Buy equity loan scheme will be publicised to small and medium sized builders, who will also support the diversification of the market through the Accelerated Construction programme. The programme is expected to see up to 15,000 housing starts over the parliament, be a catalyst for changes in the wider housing market through supporting offsite manufacturing techniques and generate high receipts for taxpayers by sharing risk and reward in development, as the government partners directly with ‘innovative private sector partners’ – it is expected that this will lower risk for developers and help overcome issues with access to finance.

The government wants to see more institutional investors in housing, including shared ownership.

Alongside affordable homes, the government recognises a need for more good quality private rented homes and wants to remove the barriers that may exist for institutional investors. It has supported this via Build to Rent and the £3.5bn private Rented Sector Housing Guarantee Scheme but wants to build on this an attract greater investment to scale up market rent properties being development. In order to address tenure issues, it also plans to introduce ‘family friendly’ tenancies of three or more years.

A better private rented sector should be encouraged, however, the question is how this will be policed. Whilst measures are in place for HMOs, and the government is working with organisations like the National Housing Federation, this does not address how such tenancies will be enforced and also whether it is likely to deter developers from building private rent properties if they are contracted in for three year tenancies.

Housing associations and affordable homes

It is expected that a rent policy for social housing landlords will be set out in due course, for the period beyond 2020 to help RPs borrow against future income. It is confirmed that the 1% rent reduction will remain in place in the period up to 2020.

Social housing is to be put on a more independent footing and the regulator will be a standalone body; the white paper reiterates the government’s position that HAs belong in the private sector and are committed to the implementation of the deregulatory measures.

Housing associations are urged to build and expected to make the best use of whatever development ready capacity they have. They are also expected to make every effort to increase efficiency in order to release resources for development; it is suggested that this could be through mergers or partnerships.

Local authorities are also encouraged to build, including by making use of joint ventures and local housing companies, however the government wants to see tenants of local authorities offered equivalent terms to those in council housing, including the right to buy. Tailored support packages are being offered to councils who want to build on their own land at pace.

The government will work with local authorities to ‘understand all the options for increasing the supply of affordable housing’ and is interested in the scope for bespoke housing deals with authorities in high demand areas.

It is also proposed that the definition of affordable housing is amended to cover a variety of housing tenures and eligibility criteria. Whilst this is a welcomed proposal, to draw clear lines as to the affordable housing options that are available, it does not necessarily address the availability of affordable housing. It is intended that the NPPF will require local authorities to proactively plan to meet housing need, which will therefore include market and affordable housing.

A separate consultation is taking place in relation to the promotion of Build to Rent developments, for which the definition of affordable private rented housing is introduced.

A household income eligibility cap of £80,000 (£90,000 in London) is also to be introduced on starter homes, in line with shared ownership caps, and aimed at ensuring that starter homes are allocated to those who need them. The planned statutory requirement for starter homes is no longer going to be introduced, instead they will be delivered as part of a mixed package of affordable homes of all tenures that will respond to local needs and local markets.

The HCA

The HCA will be re-launched in the summer as Homes England. Its purpose shall be ‘to make a home within reach for everyone’ which includes an ambition for more homes across all tenures. The white paper also notes that the HCA needs to do more to increase the scale and pace of building and should do things differently by getting homes built directly on public sector land, encourage competition and embrace partnerships.

Conclusion

The white paper does attempt to address the issue of supply by simplifying and speeding up the planning process and attempting to ensure that land is developed and not just left undeveloped. It aims to increase supply in a number of ways, however, it may be that the proposals do not adequately address the need for more affordable housing.

 

Whilst supply is indeed an issue, small developers are unlikely to want to be restricted to building affordable housing, as one of the reasons they do not currently build is profitability. Therefore who will build the affordable units? If it is to be left to housing associations, which are clearly best placed to do so, they require surpluses, which are increasingly hard to come by, given rent cuts and striving for efficiency.

 

It must be welcomed then that the government supports the principle that they are private organisations, enabling housing associations to manage their assets more effectively and enter into projects which will enable them to build. However, housing associations that are charitable must remember that they can only act in accordance their objects, therefore are not free to build for profit without a vehicle or partner which may enable them to do so.


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