‘Step into my office’ with Jo Hanslip – coffee and a White Paper

11th March 2017

I’m sitting in my office in a comfy chair with a pretty comprehensive 104-page Housing White Paper in front of me. Two coffees and a muffin later – I finish the last page of the document that was finally released on the 7th February!

I was interested and slightly disheartened to see a raft of additional supplementary documents also for review, including:

As such I knew I had quite a lot more reading to go!

All of that information was a lot to take in and a lot to sift through. So, I have decided to pass on a few thoughts in relation to the White Paper and what it means for us planners and developers. I’m going to follow this up with what I hope is an insightful summary of some of the supporting technical documents.

If you don’t have the time to read all the essential documents listed – call me. I will give you a quick synopsis and fill you in on the need to know aspects!

I do sense changing times in the media and political rhetoric in relation to the emphasis placed upon the need for additional housing, especially in a post – Brexit era where the construction industry has the potentially significant role to play in supporting the UK economy going forwards – if it was not already important! This is especially true if the recent Budget is anything to go by! As such the principals underpinning the White Paper can only be welcomed. The question will be the timescales and scale in which the ideas and initiatives proposed take to become reality.

We note that there are significant proposals to review the NPPF and Regulations as well as several consultations proposed, such as:

  • Amendments to the tests of ‘soundness’
  • Consideration given to the standardisation of the methodology for calculating land supply
  • Clarification of the presumption in favour of sustainable development
  • A 5-year review of Local Plans
  • Variation to General Disposal Consent, allowing LPAs to dispose of land without SoS approval
  • Power of direction to require Local Authorities to work together and revisions to the HM Land Registry
  • Revised definition of affordable housing

As so often is the case, ‘the proof will be in the pudding’ as to how such measures are brought into force and the period over which debate and discussion takes place on matters which so often, result in highly politicised discussion at a local level. We must hope that the Government’s intention to deliver on its promise is a strong, and implementation is effective.

There is scope for optimism if the Housing and Planning Minister Gavin Barwell’s recent comments at a speech to the CPRE on the 20th February noting that the links between the CPRE and the department rightly, remained strong, and noting that highlighting that CPRE’s input had been taken on board, issues such as: the protection of the green belt, opposition to speculative development and its insistence on community involvement in planning and design.
Importantly however, he then indicated that whilst the Department had listened to CPRE’s concerns, and adopted many of its ideas, the Department now asked the CPRE to reciprocate with ‘positive and practical support for new homes built in the right places’.
He continued stating that the DCLG ‘counted the CPRE as a friend, because friends could occasionally disagree, they could also have honest conversations and Britain urgently needed to have an honest conversation about housing because the lack of affordable homes was one of the greatest barriers to progress the country faced’.

He indicated that there was a growing consensus about the need to build more homes. This emphasis on the need for delivery of housing and clear political pressure on the CPRE will I am sure not change the CPRE’s position greatly, but I am convinced will show the political focus on housing delivery, might just change the degree of regard had to ‘NIMBY” lobby….

Finally, if you had not read enough already, or perhaps just want to pick up some CPD points, we have summarised three of the more significant consultation documents for your review. We have created 3 summaries on the following consultation documents:

1. Build to Rent – download PDF: Document 5
2. CIL (this is 3 documents) – download 3x PDF: Document 1 | Document 2 | Document 3
3. Starter Homes – download PDF: Document 7

In addition, there are three other documents that we don’t need to summarise but simply provide reference to and offer the link to download the material.

  • Neighbourhood Planning – download PDF: Document 7
  • Rural planning Review Call for evidence – download here: Document 8
  • NPP consultation – download here: Document 6


Summary 1: Build to Rent Consultation 

A consultation paper on Planning and Affordable Housing for Build to Rent was published alongside the White Paper and seeks to make a positive contribution to affordable housing by promoting “family friendly” tenancies of 3 years and longer. The government now intends to revise the NPPF to explicitly make reference to this form of housing so that Local Authorities can consider them when developing local plans.

What are the benefits of Build to Rent housing?

  • Boost housing supply
  • Speed of bringing housing units to the market
  • Quality and choice in the PRS
  • Investment appetite

What are the potential barriers?

  • Policy uncertainty
  • Teething issues
  • Marginal financial viability and unpredictability of planning outcomes

What are the key proposals and considerations?

  • Build to Rent has not yet been formally defined. There are currently ongoing discussions on the size, tenancy length, management and ownership and typology. Although there have been suggestions for the government to include a covenant in relation to the minimum renting period, the government however, is not minded to include a minimum covenant period in the definition
  • The government has introduced a “claw-back” agreement should a developer switch out of the Private Rented Sector and into other tenures. The arrangement would enable developers or owners to change use at any stage provided they make an appropriate contribution towards affordable housing provision in the area
  • The paper seeks views on Affordable Private Rent, a new form of affordable housing, in place of other forms of affordable housing on Build to Rent schemes. There is a proposal that Affordable Private Rent requirement should be set at 20% of a site, with the minimum discount being 20% of market rent in perpetuity
  • Determination of eligibility and nomination criteria for Affordable Private Rent (APR) to negotiation will be decided between developers and LPAs
  • The following suggestions have been proposed, however the paper notes that the government has no plan to consult, or to implement them:
    • Permission in Principle in favour of Build to Rent schemes meeting certain characteristics
    • Presumption in favour of Build to Rent schemes meeting certain characteristics
    • Permitted Development Rights for Build to Rent schemes meeting certain characteristics
    • Creation of a restrictive zone or specific planning use class for Build to Rent

Summary: 2 A New Approach To Developer Contributions

A report by the CIL review team, submitted October 2016.

The Community Infrastructure Levy (CIL) review group was established by the former Communities Secretary, Greg Clark and the former Minister of Housing and Planning, Brandon Lewis MP, in November 2015.

The purpose of the review was to:

“Assess the extent to which CIL does or can provide an effective mechanism for funding infrastructure, and to recommend changes that would improve its operation in support of the Government’s wider housing and growth objectives.”

The CIL Review Group were specifically requested to look at:

  • The relationship between CIL and Section 106 in the delivery of infrastructure, including the role of the regulation 123 list and the restriction on pooling planning obligations
  • The impact of CIL on development viability, including any disproportionate impact on particular types or scales of development
  • The exemptions and reliefs from CIL
  • The administrative arrangements and governance associated with charging, collecting and spending CIL
  • The ability of CIL to fund and deliver infrastructure in a timely and transparent way
  • The impact of the neighbourhood portion on local communities’ receptiveness to development
  • The geographical scale at which CIL is collected and charged

The CIL Review details the progress by LPA’s in preparing CIL:

CIL Report October 2016

 

CIL (this is 3 documents) – download 3x PDF: Document 1 | Document 2 | Document 3

Source: A new approach to developer contributions October 2016

In March 2015 the Department for Communities and Local Government (DCLG) commissioned research into the value, impact and delivery of CIL from the Three Dragons consultancy in conjunction with the University of Reading. The investigation covered five broad areas:

  1. Implementing and operating CIL: The extent to which the levy is simpler and quicker to operate than individually- negotiated Section 106 agreements.
  2. The value of CIL: How much money is being raised and what it is being spent on (or intended to be spent on).
  3. Who is paying CIL: The types of development that are paying the levy.
  4. The neighbourhood portion of CIL: How much money is being passed on to local communities and how the ‘neighbourhood portion’ of CIL is being administered.
  5. The impact of CIL on development viability: What, if any, impact it is having on development viability.

Key Recommendations of The CIL Review Group:

  • Government should replace the Community Infrastructure Levy with a hybrid system of a broad and low level Local Infrastructure Tariff (LIT) and Section 106 for larger developments
  • Combined Authorities should be enabled to set up an additional Mayoral type Strategic Infrastructure Tariff (SIT)

The Local Infrastructure Tariff (LIT)

  • The setting of the LIT should be linked to the Local Plan process wherever possible and should feed into local and ‘bigger than local’ infrastructure plans
  • The LIT should be calculated using a national formula based on local market value set at a rate of £ per square metre
  • They recommend that the LIT should continue to apply to ‘development’ as defined in the existing CIL regulations
  • Further work by government to devise a LIT formula for commercial development that ties it to the residential rate but which does not exceed it
  • There should be a cost of collection cut-off below which local authorities do not have to collect a LIT
  • The LIT should be charged on gross development
  • There should be no (or very few) exemptions to the LIT
  • If needed in the new LIT regime, the process for exemptions and reliefs should be simplified
  • Agricultural buildings should be covered by the LIT but that local authorities should be encouraged to include this type of structure in its low or zero rated bands
  • The examination process should be replaced by a simple mechanism to address any representations on coverage or quantum of the LIT rates
  • The requirement for a Regulation 123 list should be removed and spending of the LIT should be reported through the Authorities’ Monitoring Report
  • Other options should be explored that would enable local authorities to forward fund infrastructure provision

‘Lit LIT’ and section Section 106

  • Small developments (10 units or less) should pay only the LIT and no other obligations, unless exceptional circumstances apply
  • Large/strategic developments local authorities should be able to negotiate additional and specific Section 106 arrangements and that these should be subject to strengthened Regulation 122 tests
  • The pooling restrictions set out in Regulation 123 should be removed
  • Standardised Section 106 obligations should be subjected to particular scrutiny to ensure they meet the Regulation 122 tests and that the NPPG in this area should be strengthened
  • Local authorities should be given the flexibility to offset the LIT against Section 106 and other requirements for their larger/strategic developments
  • Larger developments developers should be able to make infrastructure provision in kind, and if appropriate, the LIT contribution should be able to be delivered by way of in kind provision
  • Further measures are introduced to standardise and streamline the Section 106 process
  • Proposed heads of terms for Section 106 agreements be submitted with planning applications and that local authorities be given clear guidance on the publication requirements for Section 106 agreement

The Strategic Infrastructure Tariff (SIT)

  • Provision is made for Combined Authorities to agree the imposition of a low level ‘Mayoral’ type Strategic Infrastructure Tariff to be imposed across the Combined Authority area
  • Strategic Infrastructure Tariff should be restricted for use on a small number of major projects that will benefit the wider area
  • Further consideration is given to enabling Combined Authorities to use the Strategic Infrastructure Tariff funding as a mechanism for raising additional finance

Specific Supporting Proposals

  • Close integration between local plan-making and planning for LIT/Section 106 contributions so that the latter can properly inform infrastructure funding provision
  • Local authorities engage with delivery and funding bodies as part of their plan-making and infrastructure planning to consider ways of closing the inevitable local infrastructure finding gap
  • Government should incentivise more meaningful cooperation between local authorities over Housing Market Areas/Functional Economic Areas
  • Local authorities provide annual Infrastructure Delivery Plan updates as part of their Authorities’ Monitoring Reports
  • Closer integration at both the Local Plan and Neighbourhood Plan making stages between the local authorities and the community to ensure agreement over how the neighbourhood share of LIT is allocated
  • Local authorities work closely with both parishes and neighbourhoods over the actual spending of any neighbourhood allocation of LIT to ensure that the delivery of infrastructure is supported and best value obtained
  • Government should consider how environmental mitigation for small sites can be addressed as part of reforms to streamline Section 106
  • A new set of consolidated and simplified regulations be drafted
  • Government considers amendments to the regulations as an interim measure to address the most immediate issues arising from CIL
  • LIT should be a mandatory charge except where it would bring in insufficient funds to justify the cost of collection
  • Government allows for sufficient transitional arrangements to be put in place. 2020 would appear to be a sensible date for transition to be completed

Summary 3: Government Responses Toto The Consultation On Starter Homes Regulations

The Housing and Planning Act 2016 provides a statutory framework for the delivery of starter homes. The government technical consultation on starter homes regulations took place between 23rd March to 30thJune 2016. The consultation dealt with post-sales letting and resale restrictions, the starter homes requirement and exemptions, monitoring arrangements and transitional provisions.

Starter homes are one form or affordable housing available to 23-40 year olds with a discount of at least 20% below market value. The max cost for a starter home is £250,000 outside London and £450,000 in London.

In response to the questions asked and the responses received:

  • Government will restrict the sale and sub-letting of starter homes following initial sale and will set out its plans in regulations. The restricted period will be 15 years and the detailed operation of the restricted period will be set out in the regulationsRegulations. Mortgage requirements will also be incorporated into the regulationsRegulations
  • On the matter of age 40 and eligibility for purchase of a starter home, there will be no cap on age if one purchaser is under 40 years old and both are first-time buyers
  • Government will exempt injured military services personnel and those whose partner has died in service from the age restriction
  • Government are consulting on the intention to make clear through the NPPF that starter homes should be available to households with an income of less than £80,000 (£90,000 for London)
  • The government have removed the statutory requirement for starter homes on all sites, given that 78% of respondents preferred the requirement be set at a local level.  The duty of councils to promote starter homes will be triggered through section 4 of the Housing and Planning Act 2016
  • The proposed exemptions, transitional provisions and commuted sums will no longer be required
  • Local authorities will have the option to set out starter homes monitoring through the AMR

In response to concerns regarding market distortion, the government believes that the steps it is taking around the repayment taper will help to address the risks of market distortion. They also believe that allowing more local flexibility will also reduce the likelihood of market distortion.

Phew… that’s it for now, it’s time to step out of my office and into the sunshine!

In conclusion…

There is a new urgency to government policy. Homelessness is rising fast and a whole generation finds itself priced out with eye-watering rents that are crippling finances. Levels of home ownership have been falling sharply since 2003 – to only 51%, no wonder the government is anxious!  All before have failed, for the same fundamental reason – for decades now we have been unable to address, or even understand, the role of land in the economy.

I’m always happy to discuss the topics that we have covered so far and if you haven’t stepped into my office before, here are my most recent articles:

Hello 2017! Read more…

The East of England planning capacity. Read more…

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