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Autumn Budget 2017: Planning to blame (again) for housing under-supply but no real solution in sight

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Summary: The Autumn 2017 budget did not break new ground, but with housing a central theme, it did contain a welcome funding boost for housebuilders and developers and details about the targeted delivery of housing. However, this boost was balanced against a potential end to land banking which could have serious implications for developers if followed through.

Fix or spin?

The ongoing challenge of fixing the housing market both in terms of home ownership and the affordability of rental market was, as expected, a central theme in the first Autumn Budget since 1996.

Building on the themes in the Housing White Paper that the only sustainable way of making housing more affordable in the long term is to build more homes in the right places, the Government announced a £44bn boost in funding over the next five years (with some of that money allocated to get SME housebuilders building again) to help deliver the 300,000 additional homes the Government has committed to build each year by the mid-2020s. 

Whilst this additional funding will be welcomed by housebuilders and developers, there were no ground-breaking planning reforms that will have any real impact on the mechanics or speed of the planning process.  

The headline details which will be of interest are the geographical focus for housing delivery and a potential end to land banking.   If there are other significant implications for housebuilders and developers they will not be apparent until further details by DCLG and a report on the review on land banking are published in due course.

Targeted housing delivery

Some detail was given about where and for whom the new homes should be built, with a focus on high density developments in urban areas and around transport hubs, but with no changes to green belt protection.  Whether the 300,000 new homes target can be delivered without a change in green belt policy is likely to be a challenge.

Of particular interest was the announcement that Councils will need to ensure more homes are permitted for local first time buyers and affordable renters in high demand areas.  With specific detail lacking, developers will have to await the publication of further information by the Communities Secretary to establish the implications of this announcement.    

We will apparently see the delivery of five new locally agreed Garden Towns in areas of demand pressure using New Town Development Corporations and through public-private partnerships.  There is also a commitment to build up to 1 million homes by 2050 along the Cambridge-Milton Keynes-Oxford corridor.  Interesting for the chosen few, but why stop short? 

The end of land banking? 

An urgent review was announced to examine the gap between the number of planning permissions granted and housing starts with an interim report to be delivered for the 2018 Spring Statement. London was given as an example, where 270,000 planning permissions have been granted but not built.   

If the reason for the gap is identified as being for commercial rather than technical reasons, then the Government has said it will use a stick in for the form of compulsory purchase powers.   Trouble is if a scheme is not viable it is not viable. 

Inappropriate extension of CPO powers will be of concern to developers and could influence development strategies.  If developers are less willing to take planning risks, this could have the opposite effect and reduce supply.  Besides, who will pay for the use of the powers and the land compensation due? 

Homes England to replace the Homes and Communities Agency

A new body called ‘Homes England’ will be created to deliver new, affordable homes by bringing together funding, expertise and planning and compulsory purchase powers.

What did Hammond not say?

The Government did not respond to the CIL Review as was promised in this year’s Housing White Paper, other than to launch yet another consultation on reforms to CIL to be conducted by DCLG. The consultation will consider proposals to remove restrictions on pooled s106 obligations for infrastructure, speed up the process of setting and revising CIL,  remove the flat rates for CIL so authorities have the option to set different rates for different changes in land use, indexation of CIL and the option to set a Strategic Infrastructure Tariff in the future.

More to come, we are told

This was never going to be a ground breaking budget.  It contained a carrot of funding but also the CPO stick.  Whilst the budget did have a strong housing focus, if there are significant implications for housebuilders and developers they will unfortunately not be apparent until further details  by the Communities Secretary and the report on the review on land banking are published.

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