Further simplification needed if new entrants to the industry are to be encouraged

Chris Tinker

After nine months of serious deliberation, the Lyons Housing review, published on the 16 October, sets out a framework of measures designed to stimulate the delivery of over 200,000 homes per annum by the end of the next parliament.

This remains an extremely ambitious target requiring a step change of approach by planners and communities alike in the allocation of housing land, the quicker delivery of permissioned land, and changes to the capacity and structure of the house building industry itself.

Additionally, the review proposes the establishment of new mechanisms under which the homes would be made available for sale to first time buyers from the local communities ahead of purchasers from further afield. Indeed, several recommendations of the review seek to create clearer and more understandable links between the benefits which a community would derive from development and the responsibilities which the community then has to allocate sufficient land to meet housing need in its area.

The review was launched by Ed Miliband and Sir Michael Lyons at Crest Nicholson’s Oakgrove village development in Milton Keynes. This is a partnership development between the HCA and Crest Nicholson which comprises circa 1,000 high quality houses and apartments clustered around a new district centre, anchored by Waitrose. It is a development which exemplifies many of the recommendations embedded in the report. Conversely, it also illustrates many of the challenges which are inherent in turning recommendations of this nature into reality.

For people on the front ranks of planning it is frequently not the quality of the scheme which undermines prompt consent, but the desire of the system to extract too much planning gain

The development is delivering 150 homes a year, nearly three times the rate of the average suburban site. With a diverse mix of product and price range it is capable of meeting the housing need of a broad cross section of the community resulting in an average sales rate well over two per week. Of the 162 sales in the last 18 months, 81% have been to people with a Milton Keynes postcode and 51% to first time buyers. So, as with many developments outside of London (and perhaps Cornwall!), the homes are already being purchased by local people, including a high proportion of first time buyers.

So does the fact that many suburban sales are to local purchasers create the conditions for an effective planning experience? Unfortunately this does not seem to be the case. To give an example, at Oakgrove the scheme design included retail and community facilities, access to schools and great landscape setting, and is now universally popular to politicians of all hues. Yet it took over seven years and nearly £4m promotion cost to secure outline planning, despite the site being allocated and set within a growth area.

For people on the front ranks of planning it is frequently not the quality of the scheme which undermines prompt consent, but the desire of the system to extract too much planning gain. Also to blame are the whims of local politicians who, against a backdrop of an outspoken house-owning minority seeking to preserve the status quo irrespective of their children’s housing plight, fail to take leadership in meeting housing need.

Such uncertainty and cost in the planning system has over time led to considerable consolidation in the industry. As identified within the report, it has also led to the decimation of the number of SME housebuilders from 12,000 to 2,800 over the last 25 years.

It is difficult to see how SMEs will ever be encouraged back into the industry without a major simplification in the system. Yet in the absence of significant change to the scope and effect of the European Habitat Directives, this simplification cannot readily be delivered. On this latter point the report is strangely silent, as the resulting need for extensive environmental assessments is the root cause of much of the system’s complexity and cost.

The report seeks to incentivise the rapid development of housing land through penalising “land bankers” – those who seek to earn a living through land speculation and not development. Given the example above and the fact that it is frequently public sector land which has failed to come forward for development in a timely fashion, several of the related recommendations could be very problematic in practice. An example would be the recommended payment of council tax on homes not delivered on land identified for development but which, despite such identification, haven’t started delivering after five years. This would suggest that many councils and public agencies themselves could be paying council tax on their land holdings.

Overall the review makes many sensible and far-ranging recommendations across a whole raft of policy and industry structure areas. Yet it remains the case that without strong national, regional and local political leadership, planning will fail to deliver sufficient permissioned land, new entrants will be excluded from the market and the housebuilding industry will continue to be dominated by a smaller number of larger developers. These developers alone will be incapable of delivering the rate of new housing required.

Chris Tinker is executive board director and regeneration chairman at Crest Nicholson