• Issue

  • Sep 2015

The Source

Check out our September Issue of The Source.

The Source

Welcome to the fourth edition of ‘The Source’ – prepared by the Strategic Land Team at Gladman with the specific aim of better informing you with regard to current news and views in land & planning.

This Editions News...
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Editorial

England is suffering from a chronic housing shortage, with assessments placing the shortage at over two million homes. Nobody can deny the harm being done, socially and economically, to millions of young people and families by being priced out of the market by the lack of affordable homes.

One of the main purposes of the NPPF was to deliver a sufficient amount of new homes, to not only meet the country’s need, but to also deliver more housing so that over time the real cost of homes would reduce. This is something that will only begin to happen once we start building over 250,000 homes each year, and as of today we are not even close!

The topic of delivering more homes in areas with “market signal” problems in order to address high house prices is a topic that we will no doubt address again in further issues of The Source – Also see issue 2.

The notion that the house building industry should provide the vast bulk of Affordable Housing in the form of rented homes, rather than shared ownership or low cost open market, seems to be illogical:-

Councillor Michael Jones, Leader of Cheshire East Council, and a man whom I often have opposing views to, explained a different take on this subject in a meeting I had with him recently. His view was that rarely do his voters say to their intended life partner “Where shall we rent a home to create a life together or start a family”. The vast majority of people in Cheshire, and likely across the UK, still want to buy their own home. The problem is however that there just aren’t any at a price they can afford!

In Cllr Jones’s opinion, he thought that his voters would be far better served by house builders delivering a significant proportion of their affordable requirement as discount Starter Homes, whereby there is a discount from open market value that is held in perpetuity. By way of an example, if the discount applied was 20% to 22.5 %, then it would make a home more affordable to buy for people who otherwise cannot.

This is exactly the same logic as the Government’s Starter Home initiative seeks to achieve, however this is restricted to sites where the current or most recent use was commercial or industrial i.e. brownfield land. It seems likely that because of the distribution of suitable brownfield sites any impact from this initiative will likely be greatest in the bigger cities, rather than in the more rural areas where affordability is more acute.

In many places across the country, Registered Providers (RP’s or Housing Associations as they used to be referred to) do not have sufficient funds to keep pace with buying the affordable homes that house builders must deliver alongside their open market housing. This funding shortage has been made markedly worse by the most recent Budget. RP’s are now required to reduce the rents they charge tenants by 1% each year, whereas they had previously been able to increase them. This small change will have vast unintended consequence for the whole housing sector with RP’s reneging on agreed deals, as the prices they can afford to purchase has reduced.

At this present time, there are numerous sites where the house builder is finding it difficult to attract an RP to deliver the rented affordable homes. In each case by not being able to find an RP to deliver the homes, the house builder will be in breach of the Section 106 legal agreement they have entered into with the local council and may well have to stop construction. Furthermore, houses will be built that won’t be occupied because there is no RP to manage them. When everyone wants more housing to be built, my prediction is that this change will cause a major blip in the delivery of affordable housing until it is resolved.

The most obvious answer to this issue may well be the most logical – change how affordable housing is delivered for a generation! Let house builders provide the required percentage of affordable homes in the form of true starter homes that are discounted from the identical open market houses by at least 20% on the same development. This has numerous benefits:-

  • RP’s are not required or play more of a facilitating role, so their funding problems become irrelevant and the development can commence without any delay. In fact RP’s could use their financial resources to actually build more homes themselves, rather than “buying them in” from house builders, further increasing housing production!
  • People are able to buy a home they can afford in an area they would like to live and not be forced to rent
  • It enables people to more easily move nearer to where their job is
  • It provides a more stable cohesive community on new developments as residents who are renting are more transient

Views expressed from our numerous purchasers, suggest that the House building industry would in general be delighted to be able to construct and sell starter homes direct to purchasers.

So just where is the catch? More homes that the Government are desperate for, affordable starter homes that the current million plus “hidden homeless” are desperate for, and an industry keen to deliver them. The sooner councils start to adopt a more flexible and market led approach to the delivery of affordable housing, and in particular allowing the provision of discount to market homes, the sooner more people will be able to own their own homes.

David Gladman

rural-productivity

Rural Productivity Plan

The Source ran an article in Edition 1 on “Unlocking the Potential of Rural Areas”a study Gladman commissioned from Rural Solutions. Four weeks later, Chancellor George Osborne and Environment Secretary Elizabeth Truss published their 10-point plan for boosting productivity in rural areasincluding simplification of planning laws for rural businesses and communities.

The report promotes increased housing to allow rural towns and villages to thrive, whilst at the same time “protecting the Green Belt and countryside.” The boost to rural housing will “include a significant contribution” to 200,000 discounted ‘Starter Homes’ for first time buyers under 40. As a measure to improve rural vitality and affordability for younger people with local family or employment connections, this may only represent the thin end of the wedge.

The Government is also reinforcing its commitment to the localism agenda by ensuring any village in England can agree its own incremental expansion through an easier Neighbourhood Plan allocation process to deliver its Starter Homes scheme. Likewise, local authorities will be induced to expedite local plans again, “to plan proactively for the delivery of Starter Homes.” The Government will also assist with housing delivery by introducing a dispute resolution mechanism for s106 agreements.

Is Drainage Betterment Necessary?

In a recent judicial review case, the Menston Action Group claimed that Bradford Metropolitan District Council had misdirected itself when discharging details in respect of a drainage scheme required by a condition imposed by a Planning Inspector on a proposal for housing development.

The case is interesting as the Honourable Mrs Justice Patterson DBE concluded that neither the NPPF nor PPG require development proposals to remedy pre-existing issues. In our experience both the Environment Agency and now Lead Local Flood Authorities seek betterment from proposals where pre-existing flooding issues occur. This case would suggest that such requirements are not necessary to make a proposal acceptable in land use planning terms. However, where betterment can be provided by a developer to address pre-existing flooding issues, it would suggest that such proposals then become positives in the planning balance and the weight to be attached to such benefits is a matter for the decision maker.

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land supply

Shortfall in 5 year land supply

Since the publication of the NPPF, there has been debate as to whether the degree of shortfall in 5 year land supply is a material factor in determining decisions.
However, the judgments in Crane and Phides Estates make clear the degree of shortfall is material, both when determining the degree of weight to be given to both the out of date development plan policies and the benefit of providing homes to help remedy this shortfall.

Most importantly, in Phides Estates Mr Justice Lindblom made clear “the decision-maker must establish not only whether there is a shortfall but also how big it is, and how significant.”

Read more here

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Is Frontloading the Appeal System Working?

It is now almost 2 years since the Planning Inspectorate amended its appeal procedures to ‘front load’ the appeal system. The aim was to provide the principal parties and the general public with much greater clarity and understanding of respective cases as early as possible to help prevent ‘rabbits being pulled from hats’ at the last minute. For the most part these changes were welcomed.

However, the volume of the workload now facing the Planning Inspectorate means that the front loading is not working as intended. On average it is taking 6 weeks to validate an appeal, but it has not been uncommon for the validation to have taken 10-12 weeks. This means that the process required of agreeing dates for an inquiry, between parties in advance of lodging the appeal within a window of 10-17 weeks, becomes problematic. In some cases inquiry dates are being arranged 8 months after validation of the appeal.

Aside from such procedural issues, the reality is that the benefits of parties providing their full Statement of Case are being undermined by the fact inquiries are now often heard almost a year after the appeal was lodged and the decision issued. This passage of time is leading parties to amend their case, often radically, to respond to changes in development plan status or housing land supply.

In the light of the Wainhomes judgment, it is also not uncommon for post-inquiry/hearing correspondence to extend the determination period.

Front loading works in judicial proceedings because Court judgments are made on the facts at the time of the decision and therefore any changes in circumstances which occur between lodging claims and the hearing are largely not material. However, the fact that change of circumstances since the decision can be taken into account in planning appeals, means the benefits of front loading can be lost where hearing or inquiries are not scheduled expediently.

We would like to hear from others experiences of the appeal system and suggestions of how things could be improved which could possibly be discussed with the Inspectorate.

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House Builder News

Persimmon Half Year Results

Persimmon

Persimmon’s half year results mirror other positive reports from rival house builders with key highlights being:

  • Profit before tax increased 31% to £272.8m (2014: £208.9m)
  • Revenue up 11% to £1.33bn (2014: £1.20bn)
  • Legal completions increased 7% to 6,855 new homes sold (2014: 6,408)
  • Average selling price increased 4% to £194,378 (2014: £186,970)
  • Strong land investment with 11,539 plots of land secured in the period bringing consented land bank to 92,404 plots

Jeff Fairburn, Group Chief Executive, said: “Persimmon has traded well in the first half of 2015. The Group continues to take advantage of the current market opportunities to deliver sustainable growth whilst also utilising its excellent cash generation to build a strong asset platform for the future. We have now entered the traditionally slower summer weeks for the market. Our private sale reservation rate since 1 July is currently 5% ahead of the same period last year which is a reflection of the continuation of healthy customer demand.”

The half year results also showed that customer activity remained high in the six months to June 2015, with a strengthening apparent after May’s general election.

 

DCLG figures indicate housing starts slow but completions increase

housing

Recently released figures from the Department for Communities and Local Government (DCLG) indicate that housing starts in the second quarter of the year were down 14% on the period from January to March. The 33,280 housing construction starts in England between April and June 2015 also represent a 6% reduction on those seen in the same quarter in 2014. The overall reduction comprises a 12% reduction in private construction starts and 23% from housing associations.

Over the same period however there has been an increase in housing completions with 35,640 between April and June 2015, an increase of 4% on January to March 2015 and a 22% increase over the same quarter in 2014.

In the year to the end of June 2015, England saw 136,320 housing starts with 131,060 completions over the same period representing a decrease of 1% and an increase of 15% respectively.

DCLG also points out that notwithstanding the slight reduction, construction starts stand at around 94% higher than the low point of the recession, although they are still 32% below the high point seen in the first quarter of 2007.

Housing and Planning Minister Brandon Lewis welcomed the rise in completions, saying it “has provided a real boost to the UK’s construction industry and is delivering the homes that hard-working people rightly deserve”.

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Interesting Appeal Decisions

At Gladman, we monitor all residential appeal decisions issued by the Planning Inspectorate, to better understand current interpretations of government planning policy.

 

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Green Gap in Cheshire East outweighs benefits

The inspector dismissed an appeal for 30 dwellings in the village of Shavington due to conflict with several policies of the Local Plan, in particular the Green Gap separating the settlement with Crewe, the erosion of which was a reason for refusal. The potential harm to biodiversity (including uncertainty over harm to Great Crested Newts) and harm caused to the character and appearance of the area significantly and demonstrably outweighed the benefits of the scheme, namely the contribution to housing supply and the short / long term economic gains leading to dismissal of the appeal.

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Benefits outweigh Green Gap in Cheshire East

In this appeal for 53 dwellings also in Shavington, Cheshire East Council chose not to defend any reasons for refusal affected by a lack of 5 year housing land supply. The council relied on two policies (NE.2 and RES.5) deemed by the inspector to be time expired and out of date. However, the inspector believes these policies have a dual purpose, not just containing built development, but also in protecting the open countryside in order to safeguard its character and amenity. Some weight was therefore afforded to these policies, as well as the breach of Policy NE.4 (Green Gap) to which the inspector concluded there would be little harm to the purposes of the Green Gap in this location. The above matters and potential harm were insufficient to outweigh the benefits of the development, specifically the provision of much needed housing in the district. The appeal was therefore allowed.

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Remote Shropshire village deemed sustainable

Despite substantial conflicting evidence from both sides on land supply, the matter was not a decisive factor on a development of 17 dwellings in the small village of Norton in Hales, Shropshire. The inspector was mindful that even if Shropshire Council’s claim of a demonstrable five year supply were true, it does not rule out sustainable residential development. The proposed site was agreed to be in a sustainable location, despite the lack of bus service, with the inspector stating that the village is within a reasonable driving distance (2.4 miles) from the town of Market Drayton. Having discounted the council’s original concerns on highway safety and establishing that the development is sustainable, the appeal was allowed.

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Provision of Suitable Alternative Natural Greenspace resolves harm to Special Protection Area and Special Area of Conservation

An appeal for 65 dwellings on a site allocated in the Adopted Teignbridge Local Plan and Exminster Neighbourhood plan, was allowed following non-determination due in part to a previous appeal decision on the site being subject to a legal challenge. In the previous appeal, the housing land supply position was found to be lower than five years, although the main issue was impact on the Exe Estuary SPA and Dawlish Warren SAC. However the creation of an adjoining SANG mitigated the harm and the location of the site within the settlement boundary meant the inspector concluded that the site was sustainable.

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Suitable site downed by Traffic Severity Test

An appeal for 490 dwellings, a shop, 2 accesses and open space has been dismissed in Bromsgrove as the proposal would conflict with the adopted development plan and the severity test at NPPF para 32. The inspector reached the decision once it became clear that the appellants’ mitigation strategies would not adequately resolve concerns over highway safety, congestion and ease of movement.

The inspector recognised that the appeal site would make an important contribution to the housing land supply and the council were clearly not against the site in principle as it is a proposed housing allocation (BDP5A.7) in the emerging District Plan.

The council and inspector were positively in agreement that the appeal site is suitable for future development. Great weight was applied to the provision of 196 affordable units in an area of pressing need and weight was given to social and economic benefits, such as improved bus services and employment opportunities. However, the inspector did not consider the proposals were sustainable due to issues surrounding traffic and highways and he deemed the harm caused by the scheme would outweigh the benefits, leaving no option but to dismiss the appeal.

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