Like the rest of the planning world, CPRE eagerly awaits the final report of Sir Oliver Letwin’s review of ‘build out rates’ – how quickly, or not, housing developers are building homes - which is set to be published alongside the Budget this month. Sir Oliver’s draft analysis was clear that the business model of large developers is slowing the system down.
The final recommendations are expected to focus on improving the variety of types and tenures of home on large sites. The principle is that different kinds of property could speed up build out rates without significantly affecting house prices.
CPRE believes that we should prioritise development on brownfield sites. But, across the country, large greenfield sites are also being approved for development, usually on the edge of towns and cities. We support the ambition to improve the mix of homes on all large sites, especially increased provision of affordable and specialist housing by local authorities and registered providers.
But what does the review need to recommend to improve how we use land, protect our countryside, and increase affordability of homes that are built?
First, we need fundamental reform to stop developers hoarding land. Local authorities must be given stronger powers to compel developers to build out sites with planning permission.
CPRE’s own analysis found that the largest housebuilders increased the amount of land held with planning permission by 20% between 2006 and 2016, but the number of homes built by these companies over the same period fell by 13%. The review should recommend strong ‘use it or lose it’ measures for large housebuilders. This would allow local authorities to compulsorily purchase sites where build out is not progressing quickly enough according to an agreed timetable, and bring in another builder to finish the job.
Secondly, we need a more diverse mix of homes to address local housing needs and improve affordability. The mix of homes permitted on large sites should be dictated by planning policies seeking to meet locally identified affordable and social need. In the absence of an up-to-date local plan, there should be stronger expectations of a mix of tenures and sizes.
Dramatically shifting how Government spending on housing is allocated could also play a crucial role in improving diversity in housebuilding. Redirecting the 2017 Budget’s projected housing spend of £44bn away from stoking demand and towards increasing supply would enable this without additional funding.
Money currently allocated for schemes such as Help to Buy should be redirected into Homes England’s Affordable Homes Programme. This could help the programme provide more homes for social rent, affordable rent and low cost home ownership - all would add to the mix of homes and help speed up delivery.
Delivering more homes through Homes England would also provide more guarantees of high housing design standards as it is more committed to these than some private housebuilders.
Furthermore, amending the model for how the New Homes Bonus is paid could encourage local authorities to grant permission for well-planned developments with a diverse range of types and tenures, rather than just ‘executive homes’ which fall within high council tax bands.
Lastly, we must also address the broken land market that underpins the housebuilding industry. Developers are able to bid up the price of land to eye-watering levels, and still make healthy profits by squeezing design standards and affordable housing provision.
Reforms of compulsory purchase are needed to address this fundamental problem. These might range from incremental changes to make it easier for local authorities to acquire sites; to truly transformative reforms to compensation rules in order to exclude ‘hope value’ from the price paid for land.
As long as developers continue to focus on building larger and more expensive houses, slowly enough to keep the prices high, we will continue to sacrifice countryside needlessly.
We need to do more to provide the truly affordable homes we need. Sir Oliver Letwin’s report offers a golden opportunity for Government to show that it is serious about tackling the housing crisis and safeguarding the countryside.
A version of this blog was first published on Inside Housing.
