Will Labour’s proposed planning changes really deliver more homes?

The first week of the summer holidays should have been relatively quiet, but instead the new government packed it with policy announcements. First up on Monday was Rachel Reeves’ downbeat public finances statement which included a cull of some major infrastructure projects on the grounds that these were unaffordable.

Tuesday saw Angela Rayner launch a consultation on revisions to the National Planning Policy Framework (NPPF) followed by Wednesday’s announcement of the new towns taskforce which is charged with identifying suitable sites for these. That leaves the rest of the summer to digest what the proposals mean.

Cancelling the A27 Arundel bypass and A303 Stonehenge tunnel is a concern because it shakes confidence in the new government’s commitment to long-term infrastructure planning and funding after the last government’s shock cancellation of HS2’s northern leg.

The Building the Future Commission made several recommendations in its 2023 planning report that have been adopted by Labour

The proposed revisions to the NPPF in a bid to ramp up housing supply contain better news and have been welcomed by the industry. The proposals include upping the annual new homes target from 300,000 to 370,000 units.

Critically, the NPPF reintroduces the requirement for local authorities to have a five-year plan for new housing supply. Backbench pressure saw this scrapped by the last government resulting in many local authorities delaying or putting their local plans on ice.

The Building the Future Commission made several recommendations in its 2023 planning report that have been adopted by Labour. These include  changing the standard methodology for calculating local housing need from predicted household formation to that based on the numbers of existing homes, as the household predictions were notoriously unreliable. A new formula has been introduced to adjust housing numbers according to local affordability.

The commission also called for a strategic planning tier to enable more effective cross-border decision making, something which the government will introduce through new legislation. Another recommendation was the call for an increase in fees to tackle the chronic underfunding of local planning departments. The consultation proposes a significant hike in householder application fees as these make up more than half of all planning applications.

The real battle will be reserved for the proposal to allow housebuilding in the previously sacrosanct green belt on land  redefined as grey belt

Although the proposals have been welcomed, implementing them will not be plain sailing. There are already accusations that proposed changes to local housing allocations are politically motivated. These have increased in many Tory heartlands but will be reduced in London.

There are good reasons for this; the reduced London allocation is still more than double the highest annual number of homes built in the capital in over 15 years. And the revised affordability criteria and opposition to new development means more homes will be built in wealthier areas.

The real battle will be reserved for the proposal to allow housebuilding in the previously sacrosanct green belt on land redefined as “grey belt”. Building on redundant, previously developed sites seems sensible, but allowing development on green belt areas that make a “limited contribution to the five green belt purposes” could be much more controversial.

The five purposes include somewhat nebulous definitions such as “land dominated by urban land uses” or that which “contributes little to preserving the setting and special character of historic towns”. In a bid to get spades in the ground the consultation proposes that in absence of an updated local plan or where local authorities are delivering less than 75% of their allocation, developers can make applications outside the areas defined in the local plan, assuming there is one, providing they can demonstrate the land should be defined as grey belt.

This could drive a rush of speculative applications as it will take local authorities a long time to define their grey belt, a process that could become bogged down by having to deal with those extra applications.

Grey belt permissions must meet three “golden rules” designed to make green belt development more palatable to local communities. These include 50% affordable housing, improvements to local infrastructure including new schools and GP surgeries and new, or improvements to existing green spaces.

Developers will be able to submit viability assessments to reduce affordable housing and other obligations, but these will be measured against benchmark values determined by the government. These will be based on low hope values on the basis that green belt land has little development value. If land identified in local plans is not brought forward voluntarily for development, compulsory purchase orders are on the table.

Will these proposals increase housing numbers? There is a big question mark over the latest bid to build new towns given that the past two attempts produced nothing.

Freeing up more land for development, especially in the green belt will release more sites for development so should drive a rise in numbers. But the government is relying on private housebuilders to deliver the homes, and they won’t build more homes than they can sell and maintain prices.

This could be problematic for some areas, particularly in the North where there are lots of existing homes and low demand; these have the potential to drag down the overall number of completions.

If the government is serious about making homes more affordable, it will need to promote public partnerships with housebuilders, provide mechanisms that change the land value equation … and directly fund more social housing

It will take time to train and recruit more planners to handle the increased number of applications and identify grey belt land. And the industry has limited capacity and attempts to tackle this with offsite housing production, particularly modular, have a track record of failure.

If the government is serious about making homes more affordable, it will need to promote public partnerships with housebuilders, provide mechanisms that change the land value equation so that landowners don’t bag all the increased value of land identified in local plans, and directly fund more social housing on the grounds that the costs will be offset by reduced housing benefit and temporary accommodation costs.

Based on this week’s energetic start, the government has at least a fighting chance.