The impact of the Grey Belt ‘golden rules’
It’s been almost five months since Labour outlined it’s ‘golden rules’ for building on the Grey Belt. Philip Allin, Director at Boyer, examines it’s progress.
One of the key proposed changes to the government’s National Planning Policy Framework (NPPF) is to provide greater scope for new development within the Green Belt through the introduction of a new Grey Belt designation (‘land in the green belt comprising previously developed land and any other parcels and/or areas of Green Belt land that make a limited contribution to the five Green Belt purposes’), subject to complying with the government’s ‘golden rules’.
The golden rules are as follows:
- At least half of the new homes should be affordable housing
- Infrastructure – like roads, schools and healthcare provision – should be improved where necessary
- New residents should be able to easily walk to a good quality green space – which could mean providing a new one, or upgrading an existing space.
The most significant on these, from a development viability perspective, is that all new residential development would be expected to deliver 50% affordable housing.
These golden rules are expected to apply to any development within the Green Belt, be it on previously developed land, ‘Grey Belt’ or any other Green Belt land, either as part of a planning application or allocated land which was previously Green Belt. In essence these rules will be widely applicable.
The general rationale behind this is to maximise the public gain that comes from providing an opportunity for development on land that would not have previously been considered acceptable. Associated with this is the proposal, as part of the NPPF, to set out benchmark land values (BLV) for land released from, or developed in, the Green Belt. Considerable work has been undertaken in respect to viability matters with planning guidance clear that values should include a premium that provides a reasonable incentive for a landowner to sell land for development.
In broad terms it is difficult to argue against the objective of securing the greatest public benefit from development on land within the Green Belt. However, the intended implementation of this policy raises issues: for a number of reasons the policy risks being counterproductive and could in fact result in less housing being delivered.
In terms of the public benefit, increasing the supply of affordable housing is undoubtably a ‘good thing’. However, the associated viability implications raise significant concerns.
Clearly land values vary across the country, but whilst they are buoyant in the south east, there are other regions where this is not the case. As a consequence land values in some areas will not be able to support 50% affordable housing, particularly with a strong emphasis on social-rented provision, without undermining the quality of development whilst also still incentivising landowners to release land for development.
It is on this second point and the government’s proposed approach to BLV that raises concern. The viability of development is intricately tied to financial returns, which in turn dictate stakeholders’ willingness to either sell, invest in land promotion, or develop homes (both affordable housing and houses for the open market). The functions of land promotion, development and housebuilding entail distinct activities, each with its own risk and return dynamics. A fixed BLV will not accurately reflect the diverse characteristics of individual sites or local markets and will potentially disincentive development in areas where the financial returns do not justify the associated financial risks. For instance, if the BLV is set too low for a site, it could lead to stalled developments that are unviable to deliver, exacerbating the housing shortage, rather than alleviating it.
The introduction of a fixed BLV has significant implications for affordable housing provision, which is ultimately the key aim of the ‘golden rules’. The experience of planning in London and the requirements of the Greater London Authority illustrates that rigid thresholds can hinder rather than facilitate housing delivery. Setting a uniform 50% affordable housing percentage, without considering individual site viability will disincentivise the market. To this end, developers may opt for alternative non-residential land uses that yield higher returns, further limiting housing delivery. The government’s assertion that a fixed BLV would somehow compel developers to provide an increased quantity of affordable housing is, therefore, unfounded.
A one-size-fits-all approach risks oversimplifying these complexities. The diverse nature of large scale, strategic development means that a single affordable housing target together with an arbitrary BLV may overlook important nuances, such as whether a site already benefits from established amenities and services, or whether significant investment in infrastructure is necessary. Failure to account for these variations could have the practical effect of hampering new development. It is therefore clearly important that a situation whereby a landowner is not incentivised to sell land for development is avoided.
As a country we are clearly in the midst of a housing crisis and the development industry can and should play a pivotal role in delivering additional affordable housing. It is right that the quid pro quo of enabling new development on appropriate sites within the Green Belt is the delivery of multiple benefits, key to achieving some form of local acceptance. On this basis, developments in the Green Belt should deliver higher levels of affordable housing. However an alternative mechanism that ensures that development remains viable whilst ensuring an appropriate return to landowners is critical to ensure that this policy delivers on its aims.
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