• James Wyllie

Will the upcoming planning reforms really be that radical?

Updated: Jul 15, 2021

On the 30th June, the Prime Minister, Boris Johnson delivered a speech outlining how the country will respond to the challenges it faces in a post COVID-19 world. Central to that plan was the need to ”build, build, build“ and in order to enable that plan, the government would ”shortly bring forward the most radical reforms of our planning system since the end of the second world war“. The government has committed to bringing its white paper on reforms to parliament by the end of July. But what might these radical changes be and how might they affect developers?

Why is there a desire for radical change?

Since its inception in 1947, the founding principles of the planning system have remained largely unchanged; nationalised development rights with local authorities controlling land use. It is widely accepted that the system is no longer fit for purpose and change is required to meet the needs and challenges of todays society.

This desire for change, however, is not new. A seemingly endless revolving door of Housing Ministers, along with Prime Ministers have talked about the need for planning reform, only to deliver tweaks to the system rather than a full scale overhaul. But what are the common themes that drive the desire for change?

  • Complex and confusing. Applications are dealt with on a case-by-case basis, leading to uncertainty of success. Requests for changes are often deemed unnecessary and costly to developers. Planners often find themselves in a difficult position trying to circumnavigate policy objectives alongside political and private interests. This uncertainty leads to challenges in the courts at greater cost to developers.

  • Excessive delays. Despite a 26 week rule being in place, few Local Planning Authorities (LPAs) adopt it or circumvent it with extension of time requests, that then can take months if not years to be seen. The cut back of experience in LPAs and a reduction of specialist roles has seen workload outstrip resource and expertise, leaving all parties often exasperated. As a result, developers are left to carry the cost of such lengthy delays, severely impacting both profitability and the opportunity to build more schemes more quickly.

  • Restricted by personal opinion and local politics over strategic opportunity. The current system allows a ‘blocking culture’, where LPAs often appear to be swayed by those that shout loudest at the detriment to the silent majority. Ambitious development opportunities are seemingly passed over with LPA's sighting their 5 year housing land supply performance as a reason to prevent developments. The subjective nature of designs, can also mean that local opinion becomes an overriding factor rather than an upholding of high standards.

  • Inconsistency in CIL and S106 charges across different LPAs. There are examples of double charging and unrealistic charges, leading to increased complexity, costs and uncertainty. There is also a lack of accountability as to how the charges are spent rather than bolstering local authority reserves.

  • A system that works against SME's. SME's are less able to absorb the additional costs caused by the complexities and delays in the current system. CIL payments do not favour SME's in certain locations. The nature of the current system means that large scale developments get priority in order to meet quoters, to the detriment of SME's smaller more bespoke schemes. A recent report by an All Party Parliamentary Group has highlighted the challenges faced by SME's.

What reforms do we already know about?

Robert Jenrick, the Housing Minister recently announced that there would be a further amendment to permitted development rights (PDRs) to include the allowance of two storey extensions on existing flats, to a maximum of 30 metres in height. Full details of the PDR changes can be found here.

In addition, the government has also announced its intention to extend the current PDRs for the conversion of specific commercial and industrial buildings into residential dwellings, to allow the demolition of vacant premises providing new homes are built.

These changes, whilst welcomed by many, cannot be deemed radical. There are also notable restrictions to be navigated before a scheme can be deemed acceptable. Such amendments have been relatively common place in recent years as a way to speed up the process for particular types of development projects, and remove red tape.

What further reforms could we expect?

When the government puts the white paper before Parliament there are a number of possibilities that we may see.

A zonal planning system

This would be the most radical step in reforming the planning system. Zoning divides a local authority's area into different parts where some uses are permitted and others are prohibited by right. A set of complex development rules are set out both within developed areas and new development areas, meaning that developers can operate with a limited freedom to change use or newly develop sites, within rules set out in law.

There is not specific framework for a zoning system with countries such as Germany, Japan and USA all operating zoning systems, with differing frameworks. New York, for example, has strictly set out parameters within twenty one districts and further sub-districts. The zoning resolution is over 4,300 pages long. Germany on the other identifies four basic land use classed that are then split into ten further sub-classes. The only two common tools that feature in all zoning systems is a 'zoning map', and legal binding rules for each zone.

The irony is, should the government choose to move to a zoning system, it would see a notable increase in ‘red tape’. As demonstrated, by New York, this is a more prescriptive system that allows for less flexibility. This however, in turn, gives greater certainty for developers and removes both the unnecessary complexity and local political interference. There is greater potential to unleash the potential of new areas for development without interference from the noisy minority, or the frequent excuse of the 5 year housing supply performance of a local authority.

With greater certainty would come the much desired increase in pace at which applications are granted. This plays to the current frustrations that Boris Johnson referred to in his 30th June speech regarding our lack of pace in housebuilding compared to countries such as Germany, where a zonal system is in place.

We know that the government is receptive to the idea of zonal planning, as there have been trials to test its effectiveness, but there is a big potential barrier; timing. As we enter into potentially one of the deepest recessions in modern history, this wholesale change will not be cheap.

The initial set up will consume considerable parliamentary time and resource, to define and legislate for a system that will need to have been tried and tested in the first instance. This would combine with significant upfront planning and regulatory work from planning departments, that are already overworked and under-resourced. On top of this there would be the need for the engagement and training of all stakeholders in the process.

The complete cultural change involved in a move to zoning most definitely fits the bill as 'radical' reform. Will the and his government have the stomach to go this far, at this particular time? I am personally doubtful, which for many in the industry, would condemn Boris Johnson’s words to the rhetoric of previous Prime Ministers who have also failed to take the plunge.

The use of technology

Investment in technology and artificial intelligence (AI) could go a long way to unburden planning departments of administrative tasks. Changes of use, household applications and the discharching of planning conditions could all be positively impacted through such investment. Given that one of the most common issues for developers with planning applications is time delays, this would be a welcome reform. Overworked Planning Officers, would also welcome the changes.

Greater incentivising and holding to account of LPAs

There are a variety of measures that could be put in place to see LPAs both rewarded and penalised for performance. Such measures could include:

  • Strict adherence to 26 week planning guarantee

  • Extensions of time to be specifically dated

  • Specific percentages of planning awarded to SME's in order to ensure a greater variety of schemes

  • Specific development targets set by local authority, thus removing the current anti development mentality that the 5 year housing land supply can create. This can be extended to the approval of applications for specific industries such as technology and science.

It must be stated that in order to achieve the above the government will need to review the resource levels and capability of LPAs. Planning Officers need to be engaged and confident that they can deliver within their roles. Ideally an enhanced role for Planning Officers, would see them take a greater role in applications at the expense of elected members, who too often control decision making on opinion rather than expertise.

A new structure for S106 and CIL payments

A clearer, centralised criteria for costs relating to infrastructure and community support, would give greater clarity to developers in budgeting the costs of schemes. It would also save protracted negotiations over such payments and the consequential costs that impact developers.

SME’s would stand to gain most from such reforms, where there is less flexibility around costing. Such charges can render schemes unfeasible, thus reducing the variety of schemes in the market place.

When can we expect to see these reforms?

The potential for the reforms detailed could offer huge benefits to developers. When the government releases the white paper we will then get to see how radical the proposals really are.

In my opinion there are reasons to believe that there will be significant reforms. The government is operating with a sizeable majority, meaning that passing legislation is not an issue. There is the target of 300,000 new homes a year; something that appears unrealistic under the current system. So the incentives are there.

However, the economic outlook will weigh heavily on the minds of the government and a full scale overhaul in these uncertain times could prove too much to take on. The government will of course label whatever decision it makes as ‘radical‘; it can’t do anything else. Whether developers and those within the industry agree is something we will have to wait and see.

How can Montpelier Private Finance supper developers?

We have over 20 years experience in sourcing market leading development finance and bridging finance for our clients. We understand that every project is unique and take a granular approach to support developers in securing the right funding package for their scheme.

If you would like to discuss a specific scheme or learn more about we can offer please get in touch.

Please feel free to share this blog.

24 views0 comments