What about the immediate changes to the planning system?

With all of the noise surrounding the recently announced Government reforms to the planning system it's easy to forget the shorter-term measures that were published in a separate consultation document, setting out more immediate measures to change the current system. So, what are these measures and what do they mean for the industry? 

As with the Planning White Paper, the short term measures put the emphasis on the delivery of housing and supporting small and medium-size developers. The changes are:

  • Revising the standard method for assessing local housing need
  • Securing First Homes, sold at a discount to market price for first term buyers, including key workers
  • Temporarily lifting the small sites threshold for the delivery of affordable housing
  • Extending the unit limit for Permission in Principle on brownfield sites to allow major development.

Revising the standard method for local housing need

Aiming to boost supply, the new method produces a national housing need target of 337,000 units over the life of this Parliament which is consistent with Government's ambitions.

One of the key outcomes is to better distribute homes, adding significant new housing to areas with affordability problems, and where growth may have been underestimated, such as the Northern Powerhouse. There will be no cap on housing numbers and 141 Local Planning Authorities (LPAs) - excluding London - will see a change of over 25% when compared to the previous version of the standard method.

There are three steps to calculating local housing need which focuses on stock and unaffordability in areas:

  • 5% increase in existing stock or average annual projected household growth over a 10-year period (whichever is higher)
  • An affordability uplift of 0.25 for any increase in the median house price to median income ratio per above 4
  • A new additional step of an uplift of 0.25 for the absolute difference between the latest affordability ratio and the affordability ratio 10 years ago

The proposed changes are positive in removing the cap, but in areas of high demand there still needs to be a steady stream of available land to accommodate it. This raises questions around the need to look at the Green Belt; often a constraining land use factor in areas of high need and demand.

Following the outcome of the consultation, the Government will update the Planning Practice Guidance with the revised standard method. Transitional arrangements will be put in place for Local Plans that are under review.

First Homes scheme

The First Homes scheme will provide discounted homes for first-time buyers in England and it's expected to replace, as a priority, other affordable home-ownership products.

It's intended that new housing policy will require a minimum of 25% of all affordable housing to be secured through developer contributions as First Homes (the minimum discount should be 30% from market price and LPAs will have discretion to increase the discount to 40-50% in high value areas).

The intention is for First Homes to be exempt from the Community Infrastructure Levy.

The Government is also seeking to introduce a First Homes for local, first-time buyers' exemption sites policy. These are small sites brought forward outside the local plan to deliver affordable housing. The policy will not apply in designated rural areas.


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Temporarily lifting the small sites threshold

Supporting small and medium-size developers is the lynchpin of many of the Government’s reforms in seeking to deliver more housing. Therefore, raising the threshold for affordable housing contributions from the existing ‘fewer than 10 units’ to up to either 40 or 50 units on a temporary basis has been proposed. This means developers of smaller sites will be exempt from payments to local infrastructure such as affordable housing and schools.

A decision will be taken on whether to proceed with this approach by the Autumn and the measures would be in place during the period of economic recovery from Covid-19.

Extending the Permission in Principle

Permission in Principle (PiP) has been around since 2017 and applies to residential-led development on small sites (capable of delivering fewer than 10 units) that are registered on an LPA’s brownfield register. Suitable development can be granted ‘Permission in Principle’ with the application for technical detailed consent to follow.

To encourage more developers to use this simplified approach, the Government is proposing to lift the restriction on the size of sites to encompass major developments. However, the existing restrictions relating to EIA and Habitats requirements will remain. This means, for example, that PiP will not be suitable for schemes of more than 150 dwellings unless there is a screening opinion concluding that the development does not require an EIA.

It's also proposed that there will be no limit on commercial floorspace as long as housing occupies the majority of the overall scheme. A maximum height threshold parameter might be added to the information requirements, and consideration is being given to reduce the fee payable for this type of application.

If the PiP for major applications is to be introduced, amending regulations will be issued this Autumn and expected to come into force by the end of the year.

Looking ahead

Given the current economic climate, the above changes appear relevant and appropriate and look set to bring big opportunities,  particularly Permission in Principle consents. It may also pave the way for a (possible) future Zoning system.

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