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Welcome to the ninth edition of ‘The Source’ – prepared by the Strategic Land Team at Gladman with the specific aim to inform you of current news and views in land & planning.
We’re pleased to extend this welcome to our many new readers who have recently joined our continually expanding list of subscribers. Please use the links below to view all the back issues of ‘The Source’ from the experts in the strategic residential development industry.
Edition One | Edition Two | Edition Three | Edition Four | Edition Five | Edition Six | Edition Seven | Edition Eight
Why only 5 years supply?
It’s 1972 and the UK is suffering a severe housing shortage in many urban areas. On top of the high level of council house construction, the Secretary of State for the Environment wants to increase the rate of private house building. The Government had already set in motion several programmes to boost housebuilding; Local Authorities had responded to government requests to release more public land for housing, whilst meetings with landowners and builders had sought to resolve local problems. However, availability of housing land was still in short supply, particularly in the South East and West Midlands.
The Government at the time fully understood that not all land with planning permission would in fact be developed for housing and, in this vein, the Secretary of State issued Circular 102/72 to ensure Councils start building up a continual supply of deliverable housing for at least the following five years. The circular stated:
“Except in areas which are already largely built up or where there are special constraints such as green belt, local planning authorities should ensure that they have at least 5 years’* supply of land allocated or informally earmarked for housing, that is to say land which enjoys planning permission already or for which permission would at once be likely to be granted, if application were now made or for which permission would be likely to be forthcoming in not more than 2 years’ time following provision of services. Within areas approved in principle for growth, either in strategic plans or otherwise, the number of years’ supply of land provided for should be very much greater than this”
“*By 5 years’ supply is meant enough land to sustain for 5 years an annual housebuilding programme (public sector plus private sector) equivalent to the total housebuilding in the area over the last year or the average for the last 5 years if that is greater.”
Fast forward 44 years and the present Government is again seemingly doing everything in its power to boost housing land supply, more through carrot-based incentives than stick-based inducement. Meanwhile, the 5 year supply has survived many governments but still remains in much its original form, despite the housing requirement and associated undersupply being much greater in 2016 than in the early 70s, due partly to higher population levels.
Against this backdrop, the Local Government Association announced on 8th January 2015 that 475,647 homes in England have planning permission that are still waiting to be built. However, as understood by the Ted Heath Tory government of 1972, there will always be a degree of natural wastage in housing which remains undelivered. Should a policy requiring a 6-year housing supply become the norm across the board to take account of the UK’s present day realities?
Deemed Discharge of Conditions
As part of efforts to expedite delivery of housing, since April 2015 the DCLG has allowed applications for discharge of conditions to be automatically approved if the Local Planning Authority has failed to issue a decision within 6 weeks of the applicant providing the relevant supporting information.
This relies upon the applicant issuing the authority with a ‘deemed discharge notice’ at the 6-week stage whereupon, if the condition is still not decided within 14 days, it is deemed to be discharged.
However, exceptions exist, such as applications subject to EIA, SSSI, Habitat Regs, Development Orders, Simplified Planning Zones or Enterprise Zones and conditions relating to approval of details, remediation, archaeology, flood risk, highway safety or requiring a s106 to be entered into.
Nine months in, can the procedure be said to have sped up housing delivery? Probably not, since the final list of conditions which have managed to slip through the net is pretty small. Furthermore, the definition of conditions relating to flood management could be stretched to include matters such as drainage. We would be interested to hear from housebuilders who have benefitted from the deemed discharge scheme. Email Us.
Inspector allows Market Signals uplift to Objectively Assessed Housing Need
A recent appeal decision (7 January 2016) on a site in Farnsfield, Nottinghamshire (App/B3030/W/15/3006252) has set the tone for the acceptance of a Market Signals uplift to Objectively Assessed Housing Needs (OAN) through a S78 appeal.
Inspector Anne Napier stated, within paragraphs 25-29 of her Decision Letter, that the basis for an adjustment for Market Signals is to address issues of housing affordability, improve house prices and increase home ownership. The Council had incorporated a Market Signals uplift of 8 dwellings per annum within their OAN but they accepted that this uplift would not have any material effect on the relationship of the demand for housing and the supply.
Inspector Napier went on to consider that although house prices are affected by macro-economic issues and the housing market in Newark and Sherwood did not operate in isolation, this did not justify only making a small adjustment to the OAN for Market Signals. She stated that if this approach was followed more widely, the broader issue regarding affordability would remain unresolved.
Whilst not setting out the precise level of uplift that would be required to address Market Signals within Newark and Sherwood, Inspector Napier considered that overall there was evidence of a need for a greater uplift to the OAN than 8 dwellings per annum.
This is one of the first times that the need for a Market Signals uplift to address housing affordability has been accepted by an Inspector as part of a S78 appeal. It is expected that this decision will encourage other Inspectors to follow suit and apply the procedure set out in the Planning Practice Guidance in subsequent appeal decisions.
Government to privatise planning applications
In early January the Planning Minister, Brandon Lewis introduced an amendment to the Government’s Housing and Planning Bill which would allow ministers to bring in competing bodies to process planning applications, for a limited period only.
The proposal will test whether planning applications could be accelerated if “alternative providers” handled planning applications.
The pilot differs from the scope of the ‘Special Measures’ introduced with the Growth and Infrastructure Act 2013, which gave developers the option to submit planning applications directly to the Planning Inspectorate for determination, if a local authority had failed to determine at least 30 per cent of major applications within 13 weeks.
The pilot, as proposed would solely entail the processing of the planning application, rather than the democratic or delegated duty of actual decision-making. However, some members of the Commons debate questioned the process for formulating an accurate case, the liability for cost claims and with whom responsibility would rest for making a recommendation to committee.
Mr Lewis, in introducing the measures explained that clauses in the bill would allow for, “setting, publishing and charging of fees by designated persons and planning authorities in the pilot areas, and for the refunding of fees in specific circumstances. It would also provide for the Secretary of State to intervene when he considers that excessive fees are being charged.”
The process of outsourcing planning administration already takes place within various Local Planning Authorities such as at Salford’s Urban Vision Partnership, although this is by agreement with the Council, rather than in direct competition with it.
Housing and Planning Bill – S106 negotiations sped up
Following the third reading of the Housing and Planning Bill, the House of Commons has passed additional Clause 30, intended to speed up s106 negotiations where disputes have arisen between the applicant and the authority, in order to help housing starts to proceed more quickly. Under such circumstances, either party would request the Secretary of State to appoint an independent third party to recommend suitable 2016 terms. However, the SoS would only proceed with this mechanism if he or she believes that a satisfactory s106 will lead to a planning permission.
There is no recourse for the applicant to appeal, nor for the authority to refuse permissions until this process is complete. So long as the s106 is agreed according to the terms of the independent appointee, the authority cannot refuse permission within a prescribed period however, the authority must refuse permission if the agreed s106 is not entered into within that same prescribed period. Furthermore, authorities and applicants may go away and agree different terms, but only within the limited timeframe.
Fortunately, during the reporting period, if the applicant and authority agree their own s106 terms, the parties may proceed independently to avoid becoming entrenched in an additional layer of bureaucracy.
Record year for UK Entrepreneurs
A record number of new UK businesses were registered in 2015. Data from Companies House, analysed by the Centre for Entrepreneurs confirms the number of start-ups has risen to 608,100 from 581,173 in 2014 which was also a record figure.
StartUp Britain has produced an interactive map, alongside a report showing the entrepreneurial hotspots around the UK. Outside London, hotspots include Birmingham, Manchester, Leeds, Edinburgh and Glasgow. Areas, such as Warrington, Watford and Cheshire East, on the outskirts of major cities, are also performing well suggesting they are effectively utilising the resources of nearby cities.
The increase is assumed to be due to funding and support from universities, banks and large companies becoming more easily and readily available. Entrepreneurship is also becoming a realistic career prospect for more university graduates.
House Builder News
Bovis Homes expects to announce a “significant” rise in its revenue and pre-tax profit for the year ending December 31 2015, it said today, (January 15) as it continues to deliver on its growth strategy.
The housebuilder said that its strong performance was driven by a “record” number of legal completions, rising more than 8% to 3,934 homes against 2014, and a 7% increase in its average sales price to £231,000. Bovis anticipates a lift in operating profit margin to more than 17%.
Throughout 2015, private reservations climbed 10% on 2014, with the group trading on an average of 102 sales outlets, a 6% improvement.
Bovis began 2016 with a “strong forward sales position” of 2,003 total reservations, up 14% on the previous year. Private forward reservations increased 11% to 841.
The housebuilder said that a stable housing market, coupled with Bovis’ strong forward sales position and expected rise in average sales outlets supported its expectation of further growth.
David Ritchie, Bovis’ CEO, commented: “We have delivered the group’s highest ever level of profit driven by another year of record volume in 2015. Our strategic plan is on track and we have enhanced our business structure for the start of this year to manage the planned further growth in volume.
“Assuming market conditions remain stable we are confident in our ability to improve return on capital employed further in 2016.”
Barratt Developments saw its completions rise 9.4% during the six months to December 31 2015 against 2014, with CEO David Thomas hailing “an excellent first half performance” for the volume housebuilder.
Giving an update ahead of its half year results to be announced on February 24, Barratt said that it had seen year-on-year improvements “across key financial metrics”, achieving completions on 7,626 units. It added that it expected to be “around” its target of 45% of full year completions, as it aims for 16,750 completions for the full year 2016.
During the half year, Barratt’s private average selling price on completions rose 11% to £281,000 against the six months ending December 31 2014, driven by mix and underlying selling price inflation.
Its average net private reservations per week lifted to 246 against 2014’s 218, with average net private reservations per active site per week reaching 0.66 (2014: 0.58). During the half year, the firm operated from an average of 386 active sites, compared to 384 in 2014.
Private forward sales as of December 31 2015 climbed 19.9% at a value of £1,081.2 million against £901.9 million the previous year.
David Thomas said: “We have seen an excellent first half performance, increasing our completions by 9% whilst maintaining our industry leading quality.
“Overall, market conditions are good and we remain confident in our outlook for the full year as we continue to execute our strategies: aimed at ensuring disciplined growth, improving key financial metrics through a focus on efficiency and the continued delivery of attractive cash returns.”
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.
An appeal for 13 dwellings on the edge of Welford on Avon, Stratford on Avon District, was allowed after the inspector deemed the appeal site to already display a generally domestic appearance and to be in a location encouraging sustainable travel routes. The inability of the council to demonstrate a 5 year supply of land meant that several local plan housing policies were out-of-date as well as some housing policies in the recently submitted Welford on Avon Neighbourhood Plan. The benefits to this scheme outweighed the limited harm caused by the loss of open space and the appeal was allowed.
An inspector has allowed an appeal for 122 dwellings in St. Ives, Huntingdonshire District despite concluding that the council can claim 5 years housing land supply. Prematurity, as a reason for refusal, was unfounded, given the existing general direction for growth established in the adopted core strategy, rather than being premature against the emerging plan. The inspector considered the imperative within the NPPF that dismissing the appeal would not be in line with dramatically increasing the supply of housing.
A scheme for 96 affordable and 51 low cost dwellings in Leamington Spa, Warwick District was allowed by the inspector after the council withdrew from defending its refusal of the application. The council had approved smaller schemes on the same site (and these were to act as fall back positions should the appeal have been dismissed) but consequently would not defend their reasons for refusal on the original application. Combined with the Rule 6 party (an adjacent business) deciding not to attend, the inspector heard a particularly one sided case. Having established an agreed lack of 5 year housing land supply, including an agreed 20% buffer, as well as finding the site sustainable, which weighed heavily in favour despite the loss of some employment land, the inspector allowed the appeal.
This appeal for 130 dwellings in Saltburn, Redcar and Cleveland Borough was allowed after the inspector found that the council did not demonstrate an understanding of its OAN. Firstly the inspector dealt with the development being within the Strategic Gap, which was deemed not to be an important open space and although it would lead to reduction of a gap between settlements, development would not lead to coalescence and the distinction of two different settlements would be maintained. The inspector went on to discuss housing land supply and concluded that the council had yet to establish the objectively assessed need. Consequently, it was not possible to determine whether a five-year supply of land was available and, therefore the relevant policies for the supply of land were out of date and the presumption in favour was engaged.
An appeal for 60 dwellings in Little Oakley, Tendring District has been dismissed despite a five-year supply figure of only 2.9 years. The significant social benefits of the scheme in the form of housing and affordable housing provision, and limited economic benefits, were not significant enough to outweigh the environmental harm that was presented. The erosion of a Local Green Gap by the development was given significant weight by the inspector, as it performed an important role in preventing coalescence. This proposal would therefore harm the character and appearance of the area and was contrary to adopted and national policy. The appeal was therefore dismissed.
An appeal in Riddings, Amber Valley Borough, has been dismissed due to the lack of a signed section 106 agreement, this being the only reason the appeal was not approved. Many positives suggest that the site would be an ideal location for the development of 53 dwellings, as the site is well related to the existing pattern of development, easily accessible by foot and close to local facilities. The inspector noted that the positive economic benefits of the site, with regards to jobs, would also be a major factor to support approval of the site as well as a contribution to a lacking 5 year housing land supply. The absence of the section 106 completely outweighs such positives, leading to the dismissal of the appeal.
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