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Confronting the challenge of our lifetime: the impact of the Chancellor's new housing regulations

BRISTOL, UNITED KINGDOM - MARCH 18:  Construction workers continue to build new houses on a housing development on March 18, 2014 in Bristol, England.  A number of housebuilders are now constructing more homes this year than they did during the 2007 market peak, thanks to overseas investment and the government's Help to Buy scheme, which has been extended until 2020, boosting the property market and speeding up the number of new homes being built.  (Photo by Matt Cardy/Getty Images) In its latest productivity plan, boldly titled ‘Fixing the foundations: Creating a more prosperous nation’, HM Treasury declares, “The UK has been incapable of building enough homes to keep up with growing demand”, laying responsibility for remedying the situation squarely at the doors of local authorities.

‘Frustrated ambitions’

According to the document, housing starts fell by almost two-thirds, and first-time buyers by over 50%, between 2006 and 2008. The inability to produce homes, it says, “frustrates the ambitions of thousands of people”.

Meanwhile, an “excessively strict planning system” forced up costs for major housing developments to £3bn a year, hindering competition and “constraining the agglomeration of firms and the mobility of labour”. If the report is correct, these issues must certainly be addressed.

Planning proposals

The core of Mr. Osborne’s plan to address these issues rests on a simplification of planning permissions, and a selection of targets and requirements to speed up their processing.

This will be achieved by creating a new zonal system that gives developers automatic approval to build on brownfield land. The proposals also say the government will look at implementing national policy to release more brownfield sites for housing development.

London developers will be allowed to build upwards extensions of two storeys without planning permission, with similar rules planned for Manchester under new devolution proposals. Legislation will also allow major infrastructure projects 'with an element of housing' to apply for fast-tracking through the Nationally Significant Infrastructure Regime (NSIP); and higher-density developments are promised for ‘key commuter hubs’.

Looking ahead, the report talks of devolving to Mayors of Greater Manchester, allowing them to produce Development Corporations and promote Compulsory Purchase Orders. Other local authorities, however, will be expected to produce plans to boost housing developments and meet timeline targets for approving planning permissions without additional powers.

The main tools given to councils to speed planning permission processing is a fast-track certificate process to establish the principle of development for minor development proposals and a resolution mechanism for section 106 agreements.

Burden or opportunity?

It’s clear from the document that local authorities are expected to take the lead in making this work. They set the framework for development, meeting a deadline enforced by central government, following which league tables, setting out local authorities’ progress will be published.

While a certain amount of oversight and accountability is to be expected, we’re concerned by the suggestion that councils could be penalised for failing to make at least 50% of planning decisions ‘on time’. This could become particularly problematic if, as commentators predict, the easing of planning restrictions puts councils on a collision course with environmental, residential and preservation groups.

Nonetheless, if local authorities can manage public opinion effectively and seize the initiative while regulations are relaxed, this may prove to be a valuable tool in revitalising local economies. What’s more, promises to “improve the operation of the duty [of local authorities] to cooperate on key housing and planning issues” could unlock the door to greater shared services and efficiency savings. If not, this will provide further fuel for the devolution debate.

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