As outlined in our response to the consultation on proposed changes to the National Planning Policy Framework, the proposals focus disproportionately on securing an increase in the number of consents for housing developments, despite the system’s failure to build out the consents that developers already have. This reflects a commonly (and mistakenly) held view that a lack of supply is blighting the housing market and that only through the freeing up of more land to ease demand will things improve.
Getting builders to build
This view was looked at particularly closely back in December in The Journal of the Town and Country Planning Association, by Mike Kelly and Andrew Gilg. Kelly and Gilg outline how this view assumes a rational supply and demand model view of the housing market - which understands constraints in the amount of land available as leading to inelastic supply in economic terms.
However, as the article illustrates, and as CPRE has consistently argued, there are already sufficient planning permissions granted for much of the new development required. Planning authorities should not be held responsible for a lack of build-out on land that has been allocated for development.
A major factor concerning why planning permissions aren’t built-out is that developers hold on to their land while waiting for house prices to increase, targets for house building are then missed and local authorities come under pressure to release yet more land - thus creating the impression of scarcity. This hoarding of land is a tactic that has been taken up most keenly by the volume house builders that have come to dominate the housing market.
What can be done?
Kelly and Gilg’s TCPA article refers to CPRE’s policy proposal, as set out in the Housing Foresight Paper Getting Houses Built, to provide local authorities with powers to take away planning permissions that remain unused - ‘use it or lose it’ powers.
Such a measure would, in effect, coerce developers to make use of land already with planning permission. While a three-year time limit is currently granted for permissions, the paper argues that if local planning authorities were provided with the option to shorten this allowance, it would provide them with greater powers to help tackle housing developers from sitting on their acquired land.
While supportive of this approach, Kelly and Gilg outline an alternative method to address under-development. They suggest the levy of a tax dedicated to community infrastructure and services for each day that development remained overdue, while also taking steps to ensure early build-out.
Different approaches but both attempt to address the inherent inertia besetting the housing market that leads to a housing shortage but not - crucially - a shortage of land for houses. Both approaches could be thought of as nudges to the housing market; a market which we and many others believe has become dysfunctional.
A further CPRE Housing Foresight Paper, Removing Obstacles to Brownfield Development, sets out the possibility of levying a tax on land where planning permissions have been agreed and it is clear that the developer is holding the land to increase value. The paper suggested that the levying of such a tax should be discretionary and take into account the viability of individual development schemes.
A recent CPRE blog on the NPPF Consultation proposal of a ‘housing delivery test’ – Stand and Deliver – also suggests other solutions, including tying the granting of planning permission to a contractually agreed rate of development at which homes will be built, as well as the application of financial penalties for slow build-out rates. The same blog quoted a recently published figure provided by consultants Glenigan - that there are planning permissions already granted for 658,000 homes that have not yet been built.
Clearly there are a number of ways through which developers can be ‘nudged’ to get on with building homes. The Government needs to let go of its mistaken belief that there is a shortage of land and start looking at how developers can be encouraged to get on with building.