Planning for the Future - what do the planning reform proposals mean for affordable housing provision and what are the implications for housing land supply?

Ivan Tennant, Associate Director in our Economic Planning team, takes a look at the Planning for the Future White Paper to understand what this might mean for affordable housing provision and implications for housing land supply.

In preparing our response to government’s planning reform White Paper, we have been collaborating across our Planning and Development teams at GL Hearn to explore the implications of the proposed reform in relation to affordable housing provision and the implications for housing land supply.

For me, the White Paper makes it clear how government define the housing crisis; it is, for them, a crisis of home ownership. This was reinforced this week by the Affordable Homes Programme 2021 to 2026 (AHP), which proposes to use a limited budget of £12 billion to deliver 180,000 homes, half of which will be for affordable home ownership. The proposed reforms outlined to address affordability should therefore be read in the context of the government’s flagship First Homes policy.

First Homes are similar to the earlier Starter Homes, seeking to bridge the affordability gap to home ownership for those households with the resources to access mortgage finance. The policy has attracted concern in the housing sector as it may marginalise affordable rent tenures by reserving a portion of the funds available for affordable housing for this tenure alone. Therefore, whilst the White Paper’s commitment to using the new flat rate infrastructure levy to increase the resources available to affordable housing is broadly welcome, in finessing the policy, our recommendation is that discretion should be granted to local authorities at the plan-making stage in order to determine a mix of affordable housing that best suits the needs of their area, with available grant funding apportioned accordingly.

It is worth noting the word rent only appears once in the White Paper, yet the private rented sector has grown greatly in the last ten years, and demand for affordable rented tenures of homes is insatiable. The 90,000 social homes for rent envisaged under the AHP, whilst welcome, will not go far in meeting need. Shelter and the National Housing Federation suggest between 145,000 and 155,000 social homes are required each year to make real inroads into housing deprivation. [1,2]

Also, while owner-occupation remains the dominant tenure in large parts of England, rented housing is popular among newly forming households. This is because wages and rents have risen at broadly the same rate in many parts of the country (in contrast to house prices), and therefore rented accommodation remains relatively affordable for households on average incomes. As a result, it plays an important role in allowing younger people to move out of their parent’s home and establish their independence.

Therefore, advancing a policy that places a disproportionate emphasis on delivering homes for sale and provide additional help for those relatively well-positioned to mount the first rung of housing ladder risks being myopic, failing to recognise the needs of the great majority of younger households for whom home ownership (despite government support) remains an unrealistic aspiration.  

It is also worth questioning whether the suite of policies designed to promote home ownership (chiefly deregulatory) is likely to be successful in its own terms. The reforms propose to strengthen the supply of housing land in areas of high demand. Basic economics tells us this should lead not only to falling prices but also less house price volatility. But house-prices in these areas have risen to such an extent that reducing them to the point where they are affordable to households on mean incomes can only be achieved through the delivery of very large numbers of new homes. This can only be realised, politically and practically, over the longer-term.

While the White Paper addresses some important causes of suppression of land supply, and reduced delivery of homes, such as speeding up the plan-making process, eliminating the scope for resisting development for political reasons and ensuring the rules that development needs to comply with are straight-forward and relevant, it reinforces the principal bar to increasing land supply around our towns and cities - Green Belts. These swathes of land surrounding many of England’s cities will continue to enjoy protection, both within national policy and through the reform’s proposed zoning system.

The White Paper puts forward three different types of zone that may be identified in Local Plans and subject to different policies: “growth”, where development will be granted outline planning consent on condition it complies with clearly defined rules; “renewal”, previously developed sites where re-development and densification will be permitted subject to policies set out, for example, in a Local Development Order; and “protected” where development will be restricted.

Decisions for Green Belt release will remain within the purview of local planning authorities when deciding in their Local Plans which areas are for “growth” and “protection”. And, once designated as “protected,” it seems likely that developers seeking to bring forward development in the Green Belt will face a sterner test than they do now, even where they are able to show very substantial benefits of such proposed development.

This is likely to undermine the main thrust of the White Paper to accelerate the delivery of housing where it is most needed unless fresh guidance is provided as to the circumstances in which inclusion of Green Belt sites in the “growth” zone may take place.

One of the anomalies of the current system is that the “exceptional circumstances” test for Green Belt release during plan-making set out in paragraph 135 of the NPPF is a less stringent that the “very special circumstances” test that developers have to meet to secure approval at the decision-making stage. Given the proposed abolition of council discretion on applications for planning consent, it would make sense when assessing whether to include Green Belt sites in “growth” zones to take into account where developers are willing to commit to substantial benefits over and above the delivery of housing. Also, the same test should be used to justify release of Green Belt during plan making and promoted sites. Having a different test is capricious and unjustified. . This will help ensure the opportunities for high quality development, sustainable development is not lost, and local authorities are more likely to meet demand for housing and need for affordable and specialist dwelling types.

With this in mind, GL Hearn will be contributing to the consultation by recommending fresh guidance on Green Belt release as part of Local Plan making. Assuming the proposed reforms in the White Paper make their way into a revised NPPF and planning practice guidance more or less in their current form, we will work with Local Authorities to achieve an appropriate balance between different zones to ensure enough land of is available for meet demand for housing and employment floorspace. For our private sector clients, we will support them to feed constructively into the Local Plan process to give them the best chance of seeing their site included in non-restricted zones.

[1] Shelter, Building for our future: a vision for social housing, page 17
[2] National Housing Federation, Let’s end the housing crisis, page 1

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