Autumn Budget 2017: Planning Implications

At the end of last year, the Chancellor of the Exchequer, Phillip Hammond announced the 2017 Autumn Budget and the Government also published its Industrial Strategy.

Following on from the Government's Housing White Paper (March 2017), that was discussed in our March 2017 briefing, the Chancellor's Budget commits heavily to housing in a bid to fix "our broken housing market".

This briefing highlights the main measures that are of relevance to land owners, developers, local authorities and others.

Planning For More Homes

• £44 billion for the housing market over five years, to aid an average of 300,000 homes per year until the mid-2020s.
• Creation of 5 new 'garden' towns in areas of high demand through development corporations.
• Consultation on strengthening policy to enable deallocation of land if there is no prospect of a planning application.
• Intervention in local plans may be possible where local authorities fail to put an up to date plan in place.
• Consultation on a new 'exceptions site' policy in favour of local planning authorities (LPAs) granting planning permission outside their development plans, if a "high proportion" of the houses are for first-time buyers or at affordable rent.
• Proposals to consult on increasing housing density in urban areas through:
• policy change for converting empty spaces above high street shops and retail/employment land into housing;
• minimum densities for housing developments in city centres and around transport hubs; and
• permitted development rights for the demolition of commercial buildings in favour of residential dwellings.

Ensuring That Planning Permissions Are Built Out Faster

• Strengthening the Housing Delivery Test (HDT) by changing the presumption in favour of sustainable development threshold where housing delivery drops below 75%.
• Expectation that LPAs will bring forward 20% of their housing supply as small sites.
• Removing exemptions from the deemed discharge rules to speed up the development process.
• Review of build out rates by a panel to assess the gap between housing completions and the amount of land allocated/consented with recommendations expected during 2018.
• Developing a central residential permission register to enable a review of hold ups and encouraging build out.

Developer Contributions

The budget addresses the consultation promised in the Housing White Paper on the Community Infrastructure Levy (CIL):

• Removing restrictions on Section 106 pooling (in certain circumstances for example low viability areas) towards a single piece of infrastructure to avoid complexity.
• Speeding up the process of setting and revising CIL, making it easier to respond to changes in the market.
• Allowing LPAs to set rates for different changes in use of land rather than a flat rate.
• Changing indexation of CIL rates to house price inflation, rather than build costs to avoid viability issues.
• Giving Combined Authorities and planning joint committees with statutory plan-making functions the option to levy a Strategic Infrastructure Tariff (SIT), which would be additional to CIL and similar to London Mayoral CIL.

Housing Investment

The Government has outlined several keys areas in which they propose to make major investments, which aim to improve the support to the private sector and LPA, to ensure homes are built out on available land:

• Land Assembly Fund of £1.1 billion, to allow Homes England with private developers to develop strategic sites.
• The Housing Infrastructure Fund is to receive a further £2.7 billion to support new housing in high-demand areas.
• More strategic and zonal planning for housing in the South East. Oxfordshire has committed to a target of 100,000 homes by 2031, in return for £30 million a year for five years for infrastructure and affordable housing.
• Further £2 billion of funding for affordable housing and £630 million to accelerate house building on small, stalled sites, through funding on-site infrastructure and land remediation.

Industrial Strategy - Building A Britain Fit For The Future

In late November 2017, the Government also published its Industrial Strategy, promising greater collaboration between Councils and a more strategic approach to planning housing and infrastructure:

• Greater support to areas with ambitious and innovative plans for housing.
• Greater funding and a review of local enterprise partnerships (LEPs). These were established to drive economic growth, however greater accountability, along with more clearly defined activities and objectives is required. New local industrial strategies (LISs) are to be established by March 2019, prioritising areas with the potential to drive regional growth. LISs will identify actions needed to boost productivity, earning power and competitiveness.

Our view

There are measures and changes within the Budget and Industrial Strategy, which like the Housing White Paper, show the Government's eagerness to tackle the UK's "broken housing market", along with addressing infrastructure provision which may make a difference. The proposals also follow on from the Government's controversial consultation in September 2017, 'Planning for the right homes in the right places. Consultation proposals' implementing the Housing White Paper promise to reform policies on the way housing need is calculated and standardise viability assessments, the former attracting much criticism for undermining housing provision in the north and overburdening London and the South East. It appears unlikely that the present changes or any of the others changes currently contemplated will solve the housing crisis. There is no doubt that it will continue to be a real problem for those struggling to get on to the housing ladder for years to come. Time will tell whether announcements of grand reform in areas such as planning will be implemented any time soon, with Brexit remaining the Government's priority and focus of attention. The proposals are also likely to increase the workload on the already stretched LPAs and are, therefore, reliant on LPAs having the necessary resources available, a point in real doubt in the continuing austerity.

The CIL reforms are of interest for many reasons, including confirmation that the Government has rejected its CIL Review Panel's recommendation in February 2017, to replace CIL with a lower standard charge. Whether the changes will simplify or further complicate a very difficult charging regime will be unclear until the detail is available. What is clear is that, as with most things to do with CIL, it appears the changes are likely to lead to greater costs to developers with the introduction of an additional Strategic Infrastructure Tariff (SIT) on top of existing liabilities. The net effect of this may be a further reduction in the supply of affordable housing as viability is further challenged, suggesting some conflict with the policy of 'fixing the broken housing market'.

There is also a discreet reference to 'land value uplift' in the Budget, the reference being discreet because it is understood that there is no agreement in Government on how to take it forward. However, 'land value uplift' would be a significant paradigm shift in thinking on how to fund major infrastructure, with a significant financial burden, not only for developers, but also existing land and building owners in the vicinity of large infrastructure projects by seeking to capture payment from them for the infrastructure, perhaps through higher Council rates and taxes.