Changes in the UK Housing Market: What Developers and Landowners Need to Know
The recent election of Keir Starmer as Prime Minister and Rachel Reeves in her first speech as Chancellor under the Labour government has ushered in a wave of plans to rebuild Britain. The urgent need for decisive reform to our planning system aimed at addressing the longstanding housing crisis and important infrastructure projects that have been caught up in red tape often for years and years before shovels ever get into the ground. Here’s a comprehensive look at what has changed and proposed changes that both developers and landowners should be aware of.
Onshore Wind Farms Ban Lifted
One of the initial moves by the new government was to immediately lift the ban on new onshore wind farms and promised consultation to bring back onshore wind back into the Nationally Significant Projects regime meaning that decisions on large developments will be taken nationally not locally. This decision is part of a broader strategy to promote energy independence and sufficient renewable energy and creating more sustainable development across the UK.
A Bill will be introduced to set up Great British Energy, a publicly owned clean power company headquartered in Scotland, which will help accelerate investment in renewable energy such as offshore wind [Great British Energy Bill]. Legislation will be brought forward to help the country achieve energy independence and unlock investment in energy infrastructure.
Brownfield First Approach
The Labour government continues the theme to prioritize a brownfield-first approach. This includes the introduction of fast-track planning approval for urban brownfield sites, although the specifics of this process are still under consideration. This continued approach is intended to maximize the use of previously developed land and reduce the pressure on greenfield sites first. Something that already sounds familiar, with permission in principle and associated brownfield registers however as always, the devil will be in the detail as to how this will fast track.
Ambitious Housing Delivery (Planning Reform/New Towns/Grey Belt
Labour has pledged to build 1.5 million homes during its first term in government, equivalent to 300,000 units per year. This ambitious target aims to tackle the housing shortage that previous governments have struggled to address. However, while it can take a number of years to build out a development if we consider average planning consents over an eight-year period to 2022 this would stand at 301,000 homes per annum. This has only translated into 212,750 new build completions and this does beg the question whether further planning reforms are the only issue to address towards achieving this delivery target. In 1998 SME housebuilders delivered 39% of all homes built in England but this had fallen by 2020 to only 10%. There clearly also needs to be more support for SMEs as even radical reforms will not address delivery if there is not a sufficient and more balanced approach towards the build sector work force to build the homes this country needs. If we further, consider historic housing delivery and look at the highest housing completions a year since 1949 that would be the year 1968 where an impressive 425,840 homes were completed. Local authority housing made a significant contribution to this by completing 190,670 homes. Since 1949 there has more or less been a steady increase year on year where there was both the need and political will following the destruction caused by the second world war and the replacement of slum housing and the introduction of the New Towns Act 1946. The 1946 New Towns Act established an ambitious programme for building new towns. It gave the government power to designate areas of land for new town development. A series of ‘development corporations' set up under the Act were each responsible for one of the projected towns. Stevenage, in Hertfordshire, was the first new town created under the Act, with ten others following by 1955. Most were intended to accommodate the overspill of population from London. Since the 1950s, Parliament has authorised further developments in England, Scotland and Wales. The post-war New Towns programme was the most ambitious large-scale town-building programme ever undertaken in the United Kingdom and was described by the late Sir Peter Hall as ‘perhaps the greatest single creation of planned urbanism ever undertaken anywhere’. The New Towns were direct descendants of the Garden City movement, upscaled in size of population and strategic economic purpose, and with very different methods of delivery, but with many shared objectives. The current government also proposes further New Towns to assist in achieving the 1.5 million homes over the next five years. These are likely to be prioritised in part to high demand locations where existing underutilised existing infrastructure exists for example out of town railway stations or suitable locations with access to existing train lines and the introduction of new stations or along planned railway routes such as the east-west rail line and HS2. Synergy may also exist with the proposed renationalisation of the railways.
Grey Belt Land Utilization
The term "grey belt" refers to poor, underutilized land within the designated greenbelt, such as disused car parks or brownfield sites currently washed over by the green belt. The government is considering the development of such land, emphasizing a 50% affordable housing provision for these areas. This approach could unlock significant development potential while still maintaining a focus on affordability. There may also be some synergy between settlements that are constrained by the green belt and “grey belt” land for more modest settlement expansion where appropriate so called “grey belt land” is identified. The five functions of the green belt will also still be a consideration in identifying appropriate grey belt land although the “openness” function will need to carry less weight for grey belt land to be viably and effectively realised.
Few can question the demonstrable need, but questions may remain as to the endurance of the political will. The industry has broadly welcomed the proposals announced by government to address the housing crisis in cutting bureaucracy and having adequate staff resources within local authority planning departments to determine applications in a timely manner. The government have pledged more resources to planning authorities including the recruitment of 300 additional planning officers although questions remain on how this is to be achieved. The industry would welcome this as it is widely acknowledged and too often experienced that this is also a contributing factor to lengthy planning application delays too often going considerably beyond the statutory deadlines for determination. Virgin land have carried out extensive research into land banking and although there have been some limited examples of this process it is not as common or as widespread as it was once was. House builders want to build, and the perception of land not being realised in more recent times is often planning related.
Updating the National Planning Policy Framework (NPPF)
There are plans to reform the NPPF which will also offer further support for the creation of new towns.
The Re-introduction Of Mandatory Housing Targets for Local Authorities
Mandatory housing targets are set to be reintroduced. This change means that local authorities will once again be required to meet specific housing land supply targets and delivery, with penalties for those that fail to do so. This policy aims to ensure consistent progress in housing development and delivery across all regions.
Task Force to Accelerate Stalled Housing Sites
A new task force will be created to accelerate stalled housing projects and ensure that planning authorities have up-to-date local plans. This task force will have the authority to take decision-making powers away from underperforming local authorities, centralizing the process to ensure progress.
Grey Belt Land Utilization
The term "grey belt" refers to poor, underutilized land within the greenbelt, such as disused car parks or brownfield sites. The government is considering the development of such land, emphasizing a 50% affordable housing provision for these areas. This approach could unlock significant development potential while maintaining a focus on affordability.
Compulsory Purchase Compensation Reforms
Significant reforms to compulsory purchase compensation rules are on the horizon. The current system recognizes hope value (the potential future value of land) above existing use value. The proposed changes would remove this hope value, potentially reducing compensation for landowners closer to the existing use value. This could prompt landowners to act quickly to avoid lower valuations in compulsory purchases.
Emphasis on Cross-Boundary Strategic Planning
The new government is also focusing on strategic planning across local authority boundaries. This approach encourages cooperation between neighbouring authorities to develop broader regional plans rather than isolated local plans. This change is expected to foster more cohesive and effective planning strategies.
Implications for Developers and Landowners
These changes present both challenges and opportunities for developers and landowners:
Developers will find opportunities in the fast-tracking of brownfield sites and the potential development of grey belt land. The reintroduction of mandatory housing targets could also lead to a more predictable pipeline of projects and planning reforms that will hopefully address uncertainty and reduced time scales to the decision process and pre-commencement red tape.
Landowners may face challenges with the proposed compulsory purchase compensation reforms, making it crucial to stay informed and consider the timing of any land sales or developments.
Conclusion
The new Labour government’s proposed strategy signify a robust effort to address the housing crisis with bold and sometimes controversial measures. Developers and landowners must stay informed and adaptable to navigate this evolving landscape effectively. By understanding and leveraging these changes, they can capitalize on the opportunities presented while mitigating potential risks.
New homes completed by private companies, housing associations and local authorities in the United Kingdom for the year 1998 compared to 2020 and 2022.
Private enterprise Housing Associations Local Authorities Totals
1998 207,390 13,490 21,450 242,330
2020 138,290 29,111 2,640 170,041
2022 170,970 38,020 4,230 213,220
Highest year of completions (Post 1948)
1968 226,070 9,100 190,670 425,840
