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Could a politics-free development sector become reality? Because that’s where we’re headed

With the General Election just around the corner, Toby Lambert, head of residential development at Carter Jonas, discusses how politicians urgently need to buck their ideas up regarding the property sector.

a sign that is on a fence that says parliament square sw1

The position of the two main political parties could not be more diametrically opposed: Labour as YIMBYs, Conservatives as NIMBYs; Labour in support of Green Belt release, Conservatives opposed; Labour committed to housebuilding targets for both market and social/affordable housing, Conservatives blocking development through indecision and delay. This contrast is exemplified in the fact that housebuilding was a major focus of Labour’s autumn conference, whereas it was notably absent from the Conservatives’ conference agenda.

The need for change

Most of us in the development industry recognise the need for change. As the Home Builders Federation (HBF) says in the introduction to their recent report Firmer Foundations, ‘The UK is in the midst of a housing crisis, where politics has too often got in the way of practical solutions’. Its ten-point plan for government action states that England is the hardest place in the developed world to find a home, with the lowest rates of vacant homes across all OECD nations.

Despite there being demand for change, however, I am beginning to question whether politics is the force to bring it about. Should something as important as a home become a political football, with approaches to development radically shifting with political whim or a change of government, and should the output of the development industry be so intrinsically linked to politicians’ and pundits’ desire to talk up or down the housing crisis?

It was over a year ago, following a rebellion by backbench Conservative MPs, that Michael Gove promised to make government-set housing targets more flexible. The statement resulted in many local authorities stalling their local plans in anticipation of further clarification – clarification which is still awaited. And whilst the new NPPF shows that we delivered 232,820 net additional dwellings in 2021/2022, this still falls short of the government’s stated target of 300,000 homes to be built year on year from 2025.

The shortage of consented land is compounded by delays in the planning system – the latter the result of the failure to resolve the nutrient neutrality problem, the under-resourcing of local planning authorities and the inertia in local plan production, especially in authorities dependent on Green Belt release for growth.

The impact on the development industry is intense competition for available land, with higher bids than anticipated and less of a variance between conditional and unconditional offers. This immediately factors into viability assessments. In some cases it dilutes the quality of new communities or substantially reduces the benefits that can be provided – from open spaces and community infrastructure to social / affordable housing, and it invariably perpetuates house price rises. With the PLC housebuilders competing for smaller sites than before, SME housebuilders are often priced out of the market. Unsurprisingly, the HBF despairs of a housing crisis, ‘decades in the making’.

In part a consequence of slower development, in part a consequence of increased house prices and increased mortgage rates, sales rates are currently as low as 0.5 sales per week per operational outlet compared to an average of 1.5. This then impacts on financing of development schemes, which is already stretched by the considerable hike in interest rates.

With each of these factors the result of recent political decisions, I believe the argument in favour of separating land from politics has never been more valid. There are many levels on which this could occur, and in doing so substantially benefit the functioning of the sector and the supply of new homes.

A long-term approach to land assembly

Land assembly is a long-term process which invariably extends beyond a single political term. But the release of land must be a continual process – not one to be delayed because greater restrictions on the Green Belt (under the Conservatives) might raise values or rushed through because the potential for CPO by Local Authorities (under Labour) might reduce values.

five people laying on grass field making star sign

Strategic planning should operate outside the remit of local authorities, the elected members of which are too easily swayed by constituents’ sentiment, especially in the run up to an election.

Consistency in planning gain

Greater clarification and consistency are required over the provision of community benefits, social / affordable housing, biodiversity net gain and the many other demands made on developers throughout the planning process – demands which have the potential to threaten the viability of an entire scheme when announced at a late stage in its conception.

The proposed Infrastructure Levy is probably not the ideal – not least because, being determined by development profits – it cannot be budgeted for and therefore considerably increases uncertainty.

Greater consistency in housebuilding input can only be achieved through greater consistency in the requirements made of developers.

Objectivity in decision-making

The developer’s utopia would include the abolition of planning committees. This would deliver the much-needed separation of development from local politics and an increased consistency and transparency in planning decisions, based on universal, objective principles. The policies need not be put in place by the Secretary of State as is currently the case with the NPPF (although that said, at the time of writing, the revisions first proposed a year ago are yet to be implemented) – but might be better drawn up by nationally based arms-length organisation.

While the Regional Spatial Strategies of the early 2000s were far from utopia, the majority of the development industry would, I believe, agree that they are the closest we have been to achieving utopia when it comes to allocating land for development, and that coupled with the ‘zoning’ process that is proven to work in other countries, may provide the best solution to date.

Longevity and political separation in planning principles

This process would have the further benefit of allowing policies to extend beyond a five-year parliamentary term, as is necessary for example in implementing a wholescale review of the Green Belt, establishing investment zones or new towns, or of any development reliant on new transport infrastructure.

aerial photography of white high-rise concrete building

The positive elements of politics

With the development industry representing such a large portion of the UK economy, the variance in economics, market forces and social demands would mean that politics could not be disassociated from the sector entirely.

The involvement of politics would be largely fiscal – for example, in providing initiatives for first time buyers to get onto the property ladder or incentivise downsizing through Stamp Duty reductions. Both are crucial to re-starting the market after a slow-down but may require a shorter-term, closely monitored application which does not create a disruptive bump in the market (as was said of Help to Buy). A single initiative to encourage baby boomers to downsize could release trillions of pounds of equity from homes, ultimately cascading down to ensure we stimulate the market from the bottom up.

Conclusion – is politics-free development a reality? 

Within its first 100 days, the 1997 Labour government took interest rates out of politics. This move was previously unimaginable – although it has largely been seen as successful. Could a 2024 Labour government take planning out of politics? Perhaps not – not because it would be impossible to do so, but because the Labour party is intent on resolving the housing crisis, and to succeed in doing so would not only be an unparalleled achievement but would almost certainly guarantee a second term. However, elements of the planning system, as we saw with Labour’s Regional Spatial Strategies and Regional Assemblies, can be successfully disentangled from politics to the advantage of all involved, politicians included.

Images: Gary Walker-Jones, Sidharth Bhatia and Ivan Bandura

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