Budgeting and planning

I’ve been asked to make some comment on the planning reforms in the budget. Not quite sure how the Treasury got control of the planning system? But moving on… I’m a bit nervous about commenting on planning reform since I don’t feel that I’ve got any special insight here (I know that there’s a flaw in this point). It seems to me that George Osborne has been trying to turn on the housing supply tap since 2010.  Initially it was about stimulating the economy during a recession. Now the focus seems to have turned to productivity. This seems to be the latest instalment of a series of ‘tweaks’ to the planning system. The low housing supply condition has been diagnosed as being caused by a costly and restrictive planning system that has been overly obstructive and led to reduced housing. I agree that the system is pretty costly. A planning consultant that I know well tells me that it can cost millions to promote a large, strategic housing site through the planning system – albeit the rewards in increased land values can be huge. The planning application alone can sometimes require a van (well, an estate car) to submit a paper copy – highway studies, EIA report, ecological studies, design statements etc. Going to appeal often requires very deep pockets. But it’s not just planning. It’s also the case that housing completions tend to be closely linked to the performance of the macro-economy. Anyway, Oliver Wainwright in the Guardian is always good on this stuff. He sees the changes as pretty significant and quotes the RTPI in support of his arguments. It’s interesting the Shelter have recommended specially zoned sites.

In itself, I don’t see it as a major change. It seems to be yet another tweak and possibly a case of mis-diagnosis.

  • I don’t think that the redevelopment of brownfield sites for housing is particularly problematic for developers. Sometimes communities are keen to see new building on ‘eyesores’. Afterall, the current development surge in central London is taking place on brownfield sites. It’s the development of any greenfield sites that tends to create most community opposition and controversy. This is where there is perceived to be a substantial loss of amenity. The Chancellor didn’t seem to want to go there.
  • I doubt whether the housing building sector is capable of producing tens of thousands of additional homes. I’ve heard a number of senior people involved in real estate development comment on major labour shortages that exist right the way through the development industry. I remember my colleague, Peter Wyatt at University of Reading, telling me that the private sector has hardly ever managed to build anything like 200,000 homes in the post-war period.
  • I’m not clear yet on the detail (that may be my own fault). Will zoned sites have affordable housing requirements and other planning obligations? If so, will they need to be negotiated? Will detailed planning permission still need to be obtained? If so, then there’s still lots of work to be done by planners.   In terms of the housing market, I think that the more important and surprising changes in the budget are the reductions in tax incentives for buy-to-let investors.   Patrick Collinson in the Guardian and Merryn Somerset Webb (behind paywall) in the FT provide good analyses of the changes. If we accept that BTL investors in the housing market have been driving up prices by adding to demand, any reduction in demand from BTL investors could halt and even reverse the growth of this sector.

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