Smaller builders at heart of new planning plans to build more new UK homes

The poor quality of local authority planning for new home building in the UK has been highlighted in a policy paper published by the Government which reveals that 40% of councils do not have a housing demand plan.

The Housing White Paper also revealed that more than a third of new homes that were granted planning permission between 2010/2011 and 2015/2016 have yet to be built and sets out ways to increase building, including make it easier for smaller builders and clamping down on developers that delay construction once planning permissions has been granted.

A consultation has been launched on new standard of methodology for councils calculating housing need. They could be allowed to increase planning fees if the funds raised are invested back into planning alone.

All local authorities will be required to produce an up to date plan with their communities that meets their housing requirement, be asked to decide applications for development promptly and ensure the homes they have planned for are built on time.

‘It is crucial that local authorities hold up their end of the bargain. Where they are not making sufficient progress on producing or reviewing their plans, the Government will intervene. And where the number of homes being built is below expectations, the new housing delivery test will ensure that action is,’ the White Paper says.

The paper has been welcomed by the Federation of Master Builders (FMB) which said that the ability for councils to increase planning fees by 20% should increase house building by SMEs.

‘Both house builders and local authorities agree that the Government will not be able to build one million homes by 2020 unless council planning departments are properly funded. That’s why SME house builders will give a cautious welcome to the announcement in today’s Housing White Paper that central Government will allow councils to increase planning fees by 20% if they commit to investing the extra funds in planning alone and not in other areas,’ said Brian Berry, FMB chief executive.

‘This is something that the FMB has been calling for and in our view, is one of the biggest game changers to come from today’s White Paper. If this can be shown to deliver real improvements in planning, then it would make a good case for further increases along the lines the White Paper. Stimulating greater output among smaller scale house builders will not only help us build thousands of additional homes, it will also help us deliver those homes more quickly,’ he pointed out.

He explained that the business model of an SME developer relies upon building out sites and then selling the properties as quickly as possible. ‘The Government clearly recognises the importance of this model in meeting its housing target and is right to identify the decline of the SME house builder as a key factor behind the continued shortfall of new homes. The reforms to the country’s planning system, outlined in the White Paper, are important to this end as they place greater emphasis on using small undeveloped sites and further support one-off windfall sites,’ Berry added.

He also pointed out that building more homes on small sites doesn’t just provide opportunities for SME builders but on average delivers homes more quickly than on large sites. ‘This White Paper will result in ambitious new housing targets for councils which they will have to deliver against, these targets will not be met through an over-reliance on large developers and large sites,’ said Berry.

‘If local authorities fail to meet their targets they could lose control over their own planning policy and the threat of this should provide the impetus for councils to push more small sites through the system. It is in everyone’s interest to see SMEs play a far greater role in house building and small sites are key to this,’ he concluded.

The White Paper also says that the Government wants to give councils and developers the tools they need to build more swiftly. ‘Local authorities should not put up with applicants who secure planning permission but don’t use it. And they will have nowhere to hide from this Government if they fail to plan and deliver the homes this country needs,’ it adds.

Future building policy is also about providing a wider range of homes, the White Paper says. Housing Associations will be encouraged to build more and the Government was more institutional investment in the private rented sector.

It gives backing to more Build to Rent developments and says it will promote more modular and factory built homes as well as making it easier for people who want to build their own homes.

David Cox, Managing Director of the Association of Residential Letting Agents (ARLA) welcomed the plans to encourage more institutional investment to boost the number of properties available for rent.

‘Any proposals that increase supply should be applauded. However, this approach should not be at the expense of small landlords who make up the bulk of the private rented sector. Experience has shown that, even in countries where institutional investment in the PRS has been encouraged, it still only makes up a small part of the sector. Small landlords are vital to the health of our rental sector,’ he added.

The changes will help smaller builders, according to David Giovanni, managing director of the Whitecroft Group. ‘We welcome the announcement of relaxed planning and increased funding to help small to medium developers enter the market,’ he said.

‘The current planning system is arduous and geared towards large scale operations that have both the time and funds to successfully navigate it, when the reality is that it is small to medium sized developers that can bring to fruition the innovative solutions needed to help build more homes. Currently just 10 companies build around 60% of new homes and that has to change,’ he added.

Ready made or modular homes will make a difference for the construction industry, according to Phil Wade, operations director of First Base. ‘If you look at how car manufacturing has advanced since the 1950s, it is startling how little innovation we have seen in construction. There is a lingering misperception that modular equates to makeshift. The challenge is to find new efficient ways to build, without compromising on quality?,’ he explained.

The emphasis on more homes to rent will be welcomed by builders, according to Stephen Webb, planning partner at Clyde & Co. ‘The White Paper demonstrates a shift in the previous Government’s policy by putting greater emphasis on increasing the availability of quality rented accommodation, as well as creating affordable housing for home ownership,’ he said.

‘This increased focus on building homes for the private rented sector will be very welcome by developers. By incentivising the development of private rentals, as well as affordable housing, it gives developers more flexibility, which should in turn lead to an uptick in the number of homes built,’ he added.