Planning rule relaxations introduced by the last government are holding back the construction of cheap housing — and contributing to Britain’s “severe” housing crisis — according to local councils.
Chancellor George Osborne liberalised planning rules in 2012, arguing that it would help kick-start what was then a moribund housing market. Since then housebuilding activity has edged higher and house prices have begun to rise steadily.
But the changes, in a new National Planning Policy Framework, watered down the requirement for housebuilders to construct a proportion of properties on their sites priced below market value in exchange for planning permission.
That has made it easier for developers to argue they cannot afford to build “sub-market” homes, according to more than half of local authorities surveyed by the Town and Country Planning Association for the Association for Public Sector Excellence. Only 14 per cent said the changes to planning rules had been helpful.
Councils have few alternative sources of new sub-market housing, the TCPA found: more than two-thirds of councils surveyed said that housebuilders’ planning agreements were the main source of new subsidised homes in their area.
The findings come amid concerns that the new administration’s flagship policy of extending the “Right to Buy” scheme to housing associations could exacerbate the shortage of social housing.
Lord Kerslake, former head of the civil service, will warn this week that the policy will not address the urgent need to build more affordable homes.
The crossbench peer will use his maiden speech in the House of Lords to argue that extending the right-to-buy scheme is “wrong in principle and wrong in practice” and will do nothing to address Britain’s housing shortage.
Meanwhile the New Homes Bonus — a government grant intended to reward councils that approve higher levels of housebuilding — has been ineffective, the majority of councils surveyed by the TCPA said.
Last year the National Audit Office concluded there was little evidence that the NHB had made a difference.
Kate Henderson, chief executive of the TCPA, said the UK faced “big questions about how we fund affordable housing” in a planning regime which asked less of developers.
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The relaxed planning rules had “really disenfranchised councils and made them feel disengaged from their communities” by removing their discretion on decision-making, she said.
Councils should instead be “genuinely empowered to make decisions about the future of their area”, Ms Henderson added.
Britain needs to build 200,000 to 300,000 homes a year in order to meet the needs of its growing population, according to economists. Paul O’Brien, chief executive of the APSE, said Britain had only ever managed to achieve that in the years after the second world war, when councils had a much more dynamic role in housing.
Councils’ construction activity peaked in 1954 at 240,000 homes — more than two-thirds of the total. In 2012 councils across Britain built just 2,500 properties, 1.7 per cent of all homes built.
“It’s very difficult to defend the situation we’re in. It is ridiculous that we have such a housing shortage and there’s an obvious solution out there; local authorities could make a major contribution,” Mr O’Brien said.
The TCPA and APSE called on the government to give councils a more proactive role in assembling land for development and coordinating new housing schemes, and more freedom to borrow money to finance housebuilding.
Financial viability assessments should take into account the wider economic benefits of new sub-market housing, the TCPA report suggested; in some cases this would override developers’ arguments that they could not afford to build the homes.
The planning system is set to see further changes as a result of measures announced in last week’s Queen’s Speech.
The government will introduce time limits within which councils must make decisions on some local matters, a proposal originally announced by the coalition government. If a council fails to make a decision within eight weeks, the applicant will receive a refund of the fees paid.
The policy would “simplify and speed up” the planning system, the government said in a briefing document accompanying the Queen’s Speech. Other planning changes are expected to be announced.
The changes are the latest evidence of the fundamental tension between two Conservative party policies: planning system liberalisation, and giving local communities a greater say in the planning process.
The most high-profile example has been permitted development rights — rules which make it easier for property developers to change buildings from one use class, such as offices or shops, to housing.
Councils in Britain’s biggest business districts, such as Westminster, complain that the relaxation of the rules gives them too little discretion. The former communities secretary Eric Pickles backtracked on a further relaxation of permitted development rights shortly before the general election.
Local campaigners have been particularly vociferous about the impact of the rule relaxation on pubs, which are a popular target among developers for conversion into homes.