Supply-side measures will help keep the development market moving
Government support could be key to driving the residential development market forward.
3 minutes to read
Almost a month ago housing secretary Robert Jenrick set out proposals to bring Britain’s planning system into the 21st century as part of plans to “get the country building”.
It followed a package of measures announced in the Budget designed to help more people onto the housing ladder by building more affordable homes and speeding up the planning process to deliver 300,000 homes a year, up from 240,000 currently.
Fast-forward to today and, as a response to the COVID-19 outbreak, many of the UK’s major home builders have halted construction on sites in order to safeguard staff and prevent the spread of the virus. A survey of architects and surveyors conducted by RIBA found that 80% of its members are reporting project delays and over 33% have had schemes cancelled.
A drop in transactions is in line with our view for the wider housing market, with sales across the UK expected to total around 734,000 in 2020, a 38% decline from the level seen in 2019. Activity is expected to pick-up in 2021. However, for the government to see a full recovery of the market, with all of the “lost” sales carried forward, there will be a need for substantial incentives to ease market liquidity - including a reform to stamp duty, a stance echoed by the Royal Institute of Chartered Surveyors which has called for a stamp duty holiday.
"Measures to help stimulate demand may well fall flat without supply-side support as well."
Already moves designed to keep the planning system moving have been made, with the Coronavirus Bill (which received Royal Assent on 25th March) effectively allowing councils to hold virtual planning meetings, but more can be done.
An extension of time to implement existing and pending planning permissions, given current barriers to developers starting on sites, would be a start, and one that has the backing of the HBF, the trade body for the home building industry. There is also a precedent with the government having granted similar temporary powers between 2009 and 2012 following the financial crisis.
"It is a sentiment shared by Stuart Baillie, Head of Planning at Knight Frank, who notes that it is just one of a multitude of challenges which need to be overcome."
Greater flexibility should also be encouraged with regards to the payment of planning obligations, he says, such as section 106 and Community Infrastructure Levy (CIL) payments. Such outlays are generally paid up-front and – given expected limited cash-flow over the coming months - a move to allow practical staggering or staged payments would be welcome.
“Public sector planning authorities have a clear role to play here in creating a flexible framework that will allow stalled schemes to remain deliverable,” Stuart adds. “This might include extensions of time on permissions, flexibility around planning obligations and reconsidering the timing of pre-commencement planning conditions that would otherwise restrict start on site. Collaboration between parties is going to be key.
“The move to virtual planning committees is positive but there are other procedural matters such as posting site notices and neighbour notifications that need a work around solution that will not invalidate planning authorities’ decision making. We must also not ignore the plan making process and every effort must be made by the authorities and other stakeholders to keep plan preparation on track. Otherwise pipeline developments and necessary new infrastructure will be further delayed.
“The government should think about a phased implementation of measures in the imminent Planning White Paper. Otherwise there is a risk that planning authorities will be overloaded with fresh policy and procedural burdens amidst significantly stretched resourcing.”