Philip Barnes – Blog


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DO WE HOUSEBUILDERS MOAN TOO MUCH?

I sense a mismatch between us housebuilders and many others in the housing and policy sphere. It seems that we builders are too often moaning about how the public policy treats us whilst others argue that we have been supported by Government too much, especially as the market and our profitability strengthens.

So where does the truth lie? Clearly that depends on your standpoint and political priorities. Let’s explore.

There is no doubt that with housing output collapsing to less than 30% of need the Government needed to kick start private sector housebuilding activity. The credit crunch and subsequent price falls meant it was almost impossible, in many parts of the country to build and sell a house profitably. Costs were static but there were virtually no purchasers able to secure a mortgage. Firstbuy and Kickstart blew air on the embers and arguably prevented a wholesale collapse of the housebuilding sector north of Watford. From there Help to Buy came and stimulated both demand and supply of new homes. Its continuation until 2020 provides confidence to continue investment in the process of land purchase, planning promotion, construction and sales. Starts are up and planning consents are their highest since 2007.

Alongside the financial assistance a wide range of other policy levers have been pulled relating to inter alia, planning, public sector land and small builders.

So no housebuilder could reasonably claim that we haven’t been targeted for help or that this hasn’t positively affected our balance sheets. Why? – because we provide a public good for which there is a calculated and recognised need related to household growth.

And it is this “calculation” or regulation of need which is usually the cause of housebuilder concerns.
Our product is considered by many to cause harm. Especially by those who do not wish the area of the UK covered by homes to rise above the current 2-3% of our land mass. The state (nationally) created the planning system to provide nationalised state control of our output – operated both locally and nationally. The problem is that the calculated needs are rarely met as the state (locally) focusses on the overriding electoral pressure to prevent the perceived local harm rather than meeting the wider need.

There is no sanction for not having a plan let alone failing to meet need. Many applications are a battle – for Barratt it takes an average of 70 weeks from the first pre application meeting to being able to start construction. Longer than the whole construction and sales process for our smaller sites. The crux of the housebuilders constant lament is not the existence of the planning system but the need to turn the dial slightly more towards meeting the housing need rather than simply avoiding the perceived harm. NPPF has helped enormously but the uniquely English obsession with the urban containment (aka stranglehold) around most of our key cities is simply not a sustainable approach to assist future generations.

Time and time again I hear people who don’t actually build houses say the planning system is not the key issue. They are wrong. In a recovering market we can and will build more houses if we have confidence that land will be released where it will meet need and address demand. At present the planning approach to the edges of our major cities of London, Manchester, Birmingham, Oxford, Bristol and others gives no confidence in this regard. I would urge those cities to look at the examples provided by York and Newcastle recently.

So back to the question – do we housebuilders moan too much? Unquestionably yes but perhaps slightly understandable as we get lambasted for not building enough, for making too much profit, for not providing enough affordable units and receiving too much Government support. Yet the way we see it is that we could and would build more if, as Cameron Robb of Shelter said recently, the system could provide more land more quickly and more cheaply into the hands of those who actually build houses.


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THE PLAN LED SYSTEM

The plan led system has long been a source of intrigue. Along with Green Belt it is one of those immoveable aspects of British planning that seems beyond criticism.

First source of intrigue is because it must be the biggest misnomer in British social policy. 24 years after the plan led system came in we still don’t have many plans. Only 57% of local authorities have an adopted local plan and only 15% have a post – NPPF plan, namely one that can be described as up to date. I recently heard someone from York City Council confirming that within two years they should be able to adopt the first plan for the City since 1956. Newcastle, as a major regional capital currently has the 1998 UDP as its adopted policy document.

Planning must be the only area of policymaking where national policy is more fleet footed than local policy. As a housing specialist we seem to get brand new national policy every few years. Since 1992 we have had 3 versions of PPG3, plus PPS3 and now NPPF. In contrast the pace of local plan production seems to sit somewhere between glacial and snail.

The second thing which causes intrigue is its purpose. It’s clearly not to speed up housing delivery as average annual output in the last 25 years has been roughly half the level of the preceding 25 years.

I guess its attractiveness lies in the innate desire of us planners and policymakers to prepare plans. Perhaps giving us an attractive sense of control over the rapacious developers. It also seems so similar to our North European cousins with their high quality urban extensions and so divorced from the sprawl and unplanned development in the Southern Europe, Ireland or the US.

A comprehensive district-wide local plan offers us the chance to control the future of a whole district or town or even City. It allows us to draw a map where some areas are shaded brown for housing and other areas are shaded green for countryside or purple for employment etc. Then, once the plan is finished you simply say yes to a housing application if it is shaded brown. The brown areas are carefully sized to accommodate all the homes we need for the next 15 years. Not too small and not too big.

Job done. Housing applications on brown = Yes. Housing applications on another colour = No.

But it hasn’t quite worked out as planned – pardon the pun. Firstly, unlike our North European cousins sometimes we see the preparation of the plan as the end of the job – other than to sit back and monitor what others to to make it happen. Completely different in Holland or Germany where the plan is simply the catalyst for local and central government to roll up their sleeves to work with the private sector to make the plan happen. The 1991 VINEX programme in Holland planned 455,000 new homes in new suburbs. By 2008 they were built.

Secondly, the plans, when written, simply didn’t get implemented. In response the Government then asked LAs to prepare strange “plans lite” documents like urban capacity studies or SHLAAs. These were aimed at defining the off-plan sites which could nevertheless be deemed suitable for housing in order to drive up housing output – in particular on brownfield sites.

Unfortunately, over ambitious Employment Land Reviews, the recession and the abolition of “garden grabbing” largely put an end to these “plan-lite” “windfalls” as a significant source of supply.

Now the “in my day” bit.

I can remember, just, what it was like to work in a local authority before the plan-led system. The local plan team prepared local plans for areas of major change or areas where particular control was needed. In my authority about 5 local plans covered about 20% of the area. The development control team was then trusted to say “yes” or “no” to housing applications based on whether the site and design complied with general national and local policy objectives or criteria-based policies. Namely whether or not it was a good development. It all seemed to work quite well. Certainly I found development control was an exciting place to work constantly making tough judgement calls on interesting applications. There were no housing caps – simply a loose application of the 5 year supply based on supply estimates compared to past build rates.

So what happens now? Nothing – as the plan led system appears sacrosanct and we all need to work within it. But that doesn’t stop old timers like me hankering for a planning system which either:

a. enables local government to quickly prepare district wide plans and then get involved in making delivery with pace happen, or,
b. focuses local planning effort on areas of change and then considers other applications on their sustainable development merits rather than the colour it is shaded on a big map.