Landbanking gives LURB a bad name

Grant Leggett, Executive Director, Boyer, looks at how housing developers are likely to be impacted by amendments made to the Levelling Up and Regeneration Bill.

Related topics:  Planning,  Government,  Developers,  Housebuilders
Grant Leggett | Boyer
19th June 2023
construction UK
"It’s a shot through the heart, and whoever is to blame, the abolition of the targets gives LURB a bad name"

In its recent revisions to the NPPF, the Government committed to ‘build enough of the right homes in the right places with the right infrastructure’. Unfortunately, it has set out to achieve this by blaming the failure to do so on developers – specifically ‘bad developers’ who ‘play the planning system’.

Michael Gove also tabled an amendment to the Levelling Up and Regeneration Bill in a similar vein. The amendment would require developers to report on the build-out rates of residential planning permissions and also enable councils to take account of applicants’ records of delivery in deciding whether to approve or refuse future applications.

This should be considered in light of the furore over housing targets: the fact that housing targets have all but ceased to exist in the recent re-writing of planning policy. Not only are housing targets effectively over, but it is hard to imagine how housing needs can be met in current circumstances.

It’s not clear how one reconciles the need for developers to report on housing delivery whilst at the same time doing away with any requirement for councils to meet any defined target.

More to the point though, the abolition of housing targets is of seismic consequence compared to the tremor of a developer’s annual report on delivery. It’s a shot through the heart, and whoever is to blame, the abolition of the targets gives LURB a bad name.

Nevertheless, what would the need to report on delivery and its consequences for future applications mean for developers?

I will skip past the nuisance impact of this, and the question of how over-stretched local planning authorities will resource the administration of this new reporting task. Perhaps they can re-use some of the leftover red tape that will be lying around to wrap this process up in.

Developers’ main concern will be that planning permissions can quickly change from being a benefit they have earned to a millstone around their necks. Securing planning permission will mean they enter into a new contract, of sorts, being to ‘deliver or else’. The ‘else’ being they risk being blacklisted on future applications.

And not necessarily just in an authority they may have failed to deliver in. There seems no limitation in the amendment as to whether a planning authority may examine a developer’s record nationally, and it may be that developers are required to submit their records in support of applications as a validation requirement.

It is also not clear what justification developers will be able to rely on in explaining away the non-delivery of a permission. Developments sometimes just go wrong, despite the best endeavours of developers. They would at least need comfort that misfortune in one instance would not mean they are fettered in future.

Ultimately the amendment will mean developers will either make fewer applications or refuse to sign Section 106 agreements unless they are absolutely certain they can be delivered.

This will unduly affect smaller developers who are already the most disadvantaged. Like it or not, a lot of smaller developers’ business is based on selling on land with permission to other parties who have the capability to build.

And building is riskier than ever at the moment due to uncertainties around build costs and supply chains, and the looming threat of interest rate hikes and decreasing residential property values.

The amendment also seems to undermine the use of Section 73 to amend planning permissions in order to optimise them or to make them viable. The more flexible use of Section 73 to more readily amend planning permissions was one of the Government’s tools to kick-start development after the last recession.

The amendment seems to create a Catch-22 whereby if a developer applies to amend an unimplemented (unviable) permission a Council could refuse it on the basis it hasn’t been delivered. Protracted discussions over scheme viability will therefore no doubt abound prior to Section 106 agreements being signed, delaying applications further, and affordable housing will be the main casualty.

Developers would of course welcome some carrot along with what seems like a weighty stick. Exploring a form of incentive for quick delivery might be a better option rather than a punishment for non-delivery. This might be a fast track for developers that have a positive record of delivery, or a ratcheted infrastructure levy that encourages development more quickly.

But one senses that any hint of mercy to developers would be seized upon by those that oppose development and be torn up. LURB is increasingly becoming a NIMBY charter that will tragically stifle delivery.

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