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Planning changes and the problem of slow build-outs

Among the many changes proposed to the planning system are changes to the National Planning Policy Framework (the ‘NPPF’).  The changes will come in two tranches as the Levelling Up and Regeneration Bill (“LURB”) makes its way through Parliament.  Firstly, there will be intermediate amendments to the NPPF and then, if all goes to plan, the bill will become law in some shape or form towards the end of this year (2023).  After that, a further fuller review will be carried out of the NPPF.   

Consultation for the first set of changes to the NPPF opened in December 2022 and the deadline for responses of 2 March 2023 is fast approaching.

The changes are linked to a number of wider government objectives including increasing prosperity across the country (levelling-up), building more homes to increase home ownership and to deal with the housing crisis/deficit, and delivering for local communities along with other objectives to do with the environment, encouraging beautiful design and protecting our heritage assets.

This article will deal with the proposals in the NPPF and LURB to tackle the problems of slow build-out of development, a problem which has an impact on the provision of sufficient homes for the country’s needs and can affect Councils’ ability to plan for that housing or to demonstrate or effectively manage their five-year housing land supply (‘HLS’). 

The five-year HLS relates to the current obligation on Councils, set out in the NPPF, to demonstrate, during preparation of their local plan and on an annual basis, that they have identified sufficient land to meet the housing need in their area for five years. There are also current obligations to provide a buffer to that five-year HLS just in case not all of the land identified eventually becomes available for housing.  That buffer is a set amount which increases if Councils under-perform in respect of demonstrating their five-year HLS.

Failing to demonstrate a five-year HLS currently means that the determination of planning applications is tilted substantially in favour of granting, even on land which would be considered less than ideal or suitable.  The rule is that planning permission should be granted unless the negative effect of doing so would “significantly and demonstrably outweigh the benefits” (the ‘tilted balance’).  If planning permissions are granted for sites which make up the five-year HLS but are not built out, this can reduce the Council’s HLS and one common complaint is the perception that this gives developers, carte-blanche to apply for further housing on unsuitable sites.  On this topic the NPPF consultation document states:

“Some authorities are subject to consequences through the housing delivery test due to developer behaviour where they are granting more than enough permissions.  There are concerns about the pace of which some sites, which have been granted planning permission, move through to construction and completion of new homes.  The combined effect is to inhibit plan making, fuel opposition to development and ultimately hinder the supply of high-quality homes where they are needed.”

“Our proposed changes to the operation of the housing delivery test are similarly designed to support a plan led system, by preventing local authorities who are granting sufficient permissions from being exposed to speculative developments which can undermine communities trust in plan making”.

The above in essence is what the reforms, set out in this article, are all about and although not reflected in specific changes which are currently proposed  to the NPPF, one of the questions asked in the consultation document is whether past irresponsible developer behaviour should be a material consideration in determining planning applications.  I suspect that it will be difficult to define  what this irresponsible behaviour consists of.  Clearly, it relates to not building out development, for which planning permission has been granted, but to be reasonably considered as a material consideration, I believe it also must reflect the reasons for not building out development. 

The proposed amendments in the LURB and the NPPF try to address this issue by putting pressure on developers to build housing more quickly, which this article focuses on, and also amending the obligation to demonstrate a five-year HLS. 

Provisions already exist in current legislation to encourage developers to build out planning permissions in a timely manner, like the mandatory condition that development is started within a certain time period or the planning permission expires.  Councils can also issue completion notices which give the developer a set period of time, which cannot be shorter than 12 months, to complete the development or lose the benefit of the planning permission.  These are fairly rare and one reason given is that they do not necessarily accomplish what the Council wants, which is the build-out of the development.  The Council and the community can end up, instead, with a half-built development which cannot be enforced against.  Another reason is that completion notices require an individual treatment of each site which can be time consuming and onerous.

The LURB proposes the following:

  • Housebuilders will be required to formally notify Councils via a development commencement notice when they commence development. 
  • The bill also proposes to modernise and streamline existing powers for local authorities to serve a completion notice to make the process quicker and simpler.
  • Housing developers will be required to report annually to the Council on their actual delivery of housing against a proposed trajectory that they submit before commencing the scheme for which they have permission.  This means that they have to indicate to the Council how quickly they propose to deliver housing and report back on their performance.
  • Councils will have the discretion to decide whether to entertain future planning applications made by developers who fail to build out earlier permissions granted on the same land.  Councils already have powers to  ‘decline to determine’ applications for situations where applications for the same development on the same land are submitted repeatedly after refusals in an attempt to overcome, by wearing down, objections.  This may be another similar power.
  • Failure to build out an earlier planning permission could be treated as a material consideration. This will have an effect on the principle that consistency is a material planning consideration.  Therefore, if an authority grants planning permission for a development on land and a second application is made, as long as there are no changes to the local policy or material considerations, the principle of consistency means that that second planning permission ought to be granted.   

The draft NPPF supports these changes by making it possible for Councils to take into account previous planning permissions for housing when considering planning applications and calculating their HLS.  This includes changes to the tilted balance (see above) in that, even if a five-year HLS is not present, authorities can refuse permissions if there is evidence that  more than enough planning permissions for housing  (‘over-delivery’) has been granted by the Council in the past.

In my view there is not enough in the consultation document about the factors which, from the developers’ point of view, cause slow build-out of planning permissions.  This affects our understanding of if and how the proposed measures will work. In the absence of a wide-ranging scheme for housing to be delivered by public authorities, things like profits and risks are part of the reality of housing delivery by the private sector and I do not think, without more information, merits the level of suspicion that is often seen.  I wish the consultation document had addressed this point.  Finally, as stated above, more guidance is needed as to what behaviour by developers constitutes ‘irresponsible’ behaviour.

There is obviously an issue to be grappled with and the question in mind is whether the government is getting the balance right in recognising these realities but also acting as overseer of the system in order to ensure that housing is delivered and the system is not (avoidably) distorted by planning permissions which are not built out.

“Our proposed changes to the operation of the housing delivery test are similarly designed to support a plan led system, by preventing local authorities who are granting sufficient permissions from being exposed to speculative developments which can undermine communities trust in plan making”.”