Firms struggle to find sites for large private developments as government prioritises housing renewal areas

Fears are growing among planning experts and housebuilders in the North-west that a freeze on the construction of large private homes will be extended by local authorities as they attempt to meet restrictive targets set by the regional assembly.

This time last year 12 out of 46 councils in the region had introduced partial or full moratoriums on all housebuilding by suspending new planning applications. That figure has now risen to at least 36 authorities. The freeze also appears to be spreading to authorities bordering the region.

The assembly imposed the target on councils to encourage growth in declining “market renewal areas”, where the government wants to boost growth. The 10 councils that have not imposed moratoriums are primarily market renewal zones.

The policy has led to an increase in the construction of homes, with the emphasis on flats rather than large private houses, in the market renewal pathfinder areas of Merseyside, east Lancashire, Manchester–Salford and Oldham–Rochdale. But one of its consequences has been that housebuilders that want to build low-density family homes are taking a closer interest in local authorities in Wales, Shropshire and West Yorkshire that are adjacent to those with moratoriums.

Sam Ryan, director of planning at consultant Turley Associates, said housebuilders were looking further afield because of the moratorium policy. She said: “This is a direct result of the policy of restraint that has been adopted by the North-West Regional Assembly. The fear is that this will have a knock-on effect as neighbouring local authorities also introduce a moratorium.”

Flintshire council in Wales is a prime example of an authority where a freeze might be introduced, as it is in an area next to an authority that has introduced a moratorium. It borders Chester, one of the most desirable local authorities in Cheshire for housebuilders, which introduced a moratorium last year. Andy Roberts, principal planner in Flintshire, said the local authority was likely to bring in restrictions if there was a sharp rise in planning applications from housebuilders. He said: “In the past three months we have certainly had interest from housebuilders in the North-west looking to build here for the first time.”

He said many planners believed that the assembly’s restrictive policy was having a detrimental knock-on effect. He said that the council would not want to find itself granting planning permissions for homes simply to cater for the overspill of demand caused by the moratorium.

Wrexham council in Wales also acknowledged growing interest from housebuilders. Malcolm Phillips, the planning policy manager, said that he was monitoring the situation. Monitoring will determine whether too many planning permissions are being granted for sites with small numbers of large private family homes. These housing schemes would not generate section 106 funding for low cost housing as this is only triggered when there is a sufficient number of homes.

Inevitably though, local authorities that introduce a moratorium risk frightening off housebuilders altogether, with section 106 funding drying up as a consequence. This has already started to occur in some areas, making it difficult for these authorities to build affordable homes.

Charlie Seward, regeneration manager at Chester council, said many councils in the North-west were struggling to meet demand for affordable housing. He said: “The regional assembly believes that constraint in housebuilding across the region will lead to interest in market renewal areas. This is a crude policy. People don’t want to be forced out of their communities into market renewal areas. But our hands are tied and we now have massive affordability issues.”

The assembly believes that constraints will lead to interest in market renewal areas

Charlie Seward, Chester council

Housebuilders in the area also argue that the moratorium is having a detrimental effect. While several small housebuilders have reportedly gone out of business, others are struggling.

Housebuilder Russell Armer, which operates solely in Lancashire and Cumbria, has slimmed down the firm by 30% in the past two years to survive. It is building homes in parts of Cumbria but the county council is considering the introduction of a “selling to locals only” policy for all new homes in Eden and South Lake, two district authorities that have no moratoriums. This would have a severe impact on Russell Armer if it become county council policy.

Antler Homes operates across the North-west and has had to employ two land directors to find enough land to keep business ticking over.

Most homes now being built in the region received planning permission before the freeze came into effect. But even building these homes is proving difficult as development is being held back by sustainability issues. The company is now looking at the Wrexham area for future developments.

But there could be a light at the end of the tunnel: the House Builders Federation, which is on the steering group panel for the review of the regional spatial strategy, believes that the moratorium policy will be lifted.

Mark Johnson, the federation’s regional policy manager, said: “There is clearly a demand for private and social family houses that is not being met across the region.

“But we are confident that the assembly will recognise this and take action, especially given the government’s recent focus on the Northern Way. We are confident that a better balance of housebuilding will be found.”

The review is due for consultation in September.