Game of two halves

Whether it’s the extension of social housing grant to developers or the watering down of section 106 agreements, the public and private sectors have gone head to head in some key matches of late. As the results roll in (see box below), a clear winner seems to have emerged and it is not councils or housing associations. So have developers finally won and if so what were their tactics?

The latest example of the supremacy of developers over their public sector rivals came in the revision of Planning Policy Guidance Note 3 in January – the government’s housing planning policy.

A draft of proposed changes to the document was leaked late last year and showed that lobbying by local authorities had paid off:

the ODPM was considering allowing councils greater control over the mix of housing built in their localities. For Terry Fuller, chair of the affordable housing committee at the House Builders Federation, this was “when the gloves really came off”.

“The country’s major housebuilders wrote to John Prescott and Gordon Brown,” he says. “We lobbied hard at a senior level and said

‘if you put these proposed constraints on developers, then quite simply you will not get the homes you want built.’… You can talk all you like to the National Housing Federation, the Chartered Institute of Housing and Shelter but none of them lay a brick.

The homes the you want built can only be delivered by us.”

Government officials found it hard to resist their arguments and the changes that emerged in January, in the official consultation document of the five year plan, gave developers much more say in the mix of housing in new developments.

A key past victory for councils and RSLs was the provision of social and affordable housing by developers in exchange for planning permission as part of the planning gain – or section 106 – process. The government seems to support this. Indeed, through the Housing Corporation it has been clamping down on the use of social housing grant by developers to build section 106 housing.

Yet even here the ODPM has been swayed by the arguments of developers fed up with what they consider to be unrealistic demands from local authorities. In advance of the introduction of a planning gain supplement – a tax on increased land values proposed by economist Kate Barker – the government is intending to “slim down” the burden of section 106 (HT 18 February, page 7).

Extra housing would not be affected, but it is likely to apply to things such as major road junctions or educational facilities.

Feelings on the public sector side understandably run high. One housing association chief executive who wished to remain anonymous, says: “Developers have the upper hand with government. They have two things on their side: land banks and public prejudice against social housing.

The government runs scared of the argument made strongly by developers in private that schemes with large amounts of social housing on them are much harder to sell.”

Housebuilders play down such talk but it will be interesting to note the outcome of the on-going grudge match that is the payment of social housing grant to non-RSLs.

This week the corporation was due to publish its prospectus for the £200m pilot scheme to extend the pot to developers.

But RSLs have already cried foul because housebuilders will face a different regulatory regime. “Grant to developers raises massive questions about the [regulatory] regime that associations are carrying on their shoulders,” says Charlie Hughes, chief executive of Endeavour Housing Association.

Although those concerns are being echoed throughout the sector, many associations deny they are in competition with developers and are in fact looking to partner them in bids. Bill Payne, chief executive of Yorkshire Housing Trust, says: “The big issue is not to get excited about grant going to developers. The question is, how good will the outcome be for people living in the houses?”

Michael Hill, director of Countryside Properties’ In Partnership division agrees, saying: “We believe we can achieve far more by working in partnership with RSLs, jointly bidding for grant, than we could on our own.”

It seems that – for the time being – housing associations and councils have been out-played by their wily developer opponents.

But for housing associations at least, the game is far from over. Corporation officials have said in private that “if housing association bids [for the £200m pot] are the best, then we will happily give the funds to them”. Ironically, it is the HBF’s Terry Fuller who can envisage a future where fewer, larger RSLs have the same clout as their developer rivals in a partnership Premier League. “The economy has changed so that big is best and now housing associations are going to have to follow suit.” 

Key matches – the results so far

Planning and Compulsory Purchase Act

(Late result)

The government faces a contentious decision about whether or not to play planning tariffs. A win for local authorities as developers will no longer be able to twin-track by submitting identical applications.

Housebuilders lobbied hard at a senior level. We said, if you put these constraints on developers, then quite simply you will not get the homes you want built

Terry Fuller, HBF

Local authorities 1 developers 2

July 2003 – January 2005

PPG3: Planning for mixed communities

(Out for consultation, after extra time)

A leaked draft of the update to PPG3 last year had developers on the back foot after it seemed to give local authorities the main say in the mix of housing in new developments. But housebuilders saw off the proposals.

Developers 1 RSLs 0

2004 to present

Social Housing Grant

(Injury time still being played)

The sector was up in arms after Housing Corporation referee Neil Hadden pointed to the spot and the resulting goal looks set to give the developers access to new funds.

Developers 2 RSLs 1

March 2004

The Barker Report

(League campaign under way)

Initially seen as a famous victory for social housing as economist Kate Barker called for an additional 23,000 units to be built each year. Strong developer fightback as they made their superior land possession tell.

RSLs & local authorities 1 developers 1

March 2004 to present

Section 106

(Still room for a late shock)

Big-name developers could place less importance on 106 as it is “slimmed down” but introduction of planning gain supplement or planning tariffs has led to concerns.

Local authorities 1 developers 0

February 2005

Planning fees

(Authorities win but want to score more)

Increase in fees for major developments from £11,000 to £50,000 – expect the industry to fast-track new planning applications before the changes come into effect in April.