Alec Cropper of Walton & Co gives the prognosis for meeting Labour’s 1.5 million new homes goal, and the key changes needed in the housebuilding sector.
Following its victory in the 2024 General Election, the Labour Government has put housebuilding and economic growth at the forefront of its agenda. Describing the need to see more homes being built as a ‘moral obligation,’ the Government has announced a raft of proposed planning reforms that are intended to facilitate the building of 1.5 million new homes.
A New Approach to Calculating Housing Need
The Government announced a consultation on revisions to the National Planning Policy Framework (‘NPPF’) in July. Amongst the proposed changes was the introduction of a new ‘Standard Method’ for assessing housing need in England.
The current methodology involves calculating the projected household growth for the next 10 years using 2014 household projections, which are then adjusted to take account of affordability. Caps and urban uplifts may also be applied as circumstances require. The current method is designed to provide a total of approximately 305,000 net additional homes per annum.
The proposed new Standard Method would utilise a baseline set at a percentage of existing housing stock levels, and apply an uplift based on median workplace-based affordability ratios. Government calculations indicate that application of this new methodology would generate a total of circa 370,000 net additional homes per year. Most councils will therefore see a notable increase in the number of homes it needs to plan for, with 90% of local planning authorities outside of London needing to increase their current housing need figures.
The new Standard Method would also be required to be used by councils to assess housing needs in their areas, rather than being an advisory starting point as is currently the case. Housebuilders and developers will therefore want to consider how the introduction of any new housing need methodologies affect the areas in which they have an interest.
Introduction of the Grey Belt
The concept of the ‘grey belt’ was discussed prior to the General Election. The Government has now provided further detail as to what grey belt land is, and how it can contribute to housing delivery.
The consultation version of the NPPF defines grey belt as brownfield land in the green belt that makes a “limited contribution” to the five purposes that green belt land is expected to serve. However, land located within specific protected areas (such as Areas of Outstanding National Beauty, National Parks, or habitats sites) are excluded.
Development of grey belt land for residential purposes would be appropriate where the site is in a sustainable location, the local planning authority cannot demonstrate a five year housing land supply, and the following “golden rules” are met:
- At least 50% of the dwellings are secured as affordable housing (subject to viability);
- Necessary improvements would be made to local or national infrastructure; and
- New, or improvements to existing green space would be provided.
The proposed introduction of the grey belt represents a marked shift toward encouraging development of ‘low performing’ sites within the green belt to meet housing needs. However, developers will need to be confident that schemes can satisfy the above requirements. Arguments as to the extent to which potential grey belt land contributes to the five green belt ‘purposes’ and whether
sites are in a sustainable location may also provide potential planning battlegrounds.
Green Belt Opportunities & Hurdles
The proposed revisions to the NPPF make clear that exceptional circumstances for altering green belt boundaries through the plan-making process include where housing needs cannot be met through other means. In such circumstances, authorities will need to alter green belt boundaries to meet their needs in full, unless there is ‘clear evidence’ that such alterations would fundamentally undermine the function of the green belt across the plan area.
Planning authorities will therefore be obliged to review green belt boundaries where they fall short on housing need, with the draft NPPF proposing a sequential approach to guide release. Brownfield sites would be considered first, then grey belt land in sustainable locations, and then other sustainable green belt locations.
However, where green belt land is released through plan preparation or review, development proposals would be expected to deliver the ‘golden rule’ contributions discussed above, including 50% affordable housing provision. Viability assessments for development in the green belt would also be expected to utilise nationally set benchmark land values that are based on existing use value plus a “reasonable and proportionate premium for the landowner.” If land was transacted above the benchmark land value, and a proposed scheme could not deliver policy-compliant development, planning permission would be expected to be refused.
Housebuilders will therefore need to monitor whether the adopted version of the NPPF sets a benchmark land value for green belt land, and the level at which any such value is set.
Such matters may be particularly relevant for those currently promoting green belt sites through emerging plans, and whose schemes may be expected to provide a higher level of affordable housing than previously envisaged.
Regional Planning & New Towns
The Government has confirmed that it intends to implement new legislation enabling universal coverage of strategic planning in England within the next five years. Elected mayors and combined authorities are expected to have a central role in overseeing the preparation and adoption of ‘Spatial Development Strategies’, with the Government also exploring the most effective means through which such Strategies can be brought forward outside of mayoral areas.
Further detail as to the nature of Spatial Development Strategies is expected to be forthcoming in the short-term future. However, the Government envisages that they will have an important role in meeting housing needs, delivering strategic infrastructure, building the economy, and planning for environmental improvements. Developers will therefore want to ensure that any draft Spatial Development Strategies that are consulted upon make adequate provision to meet identified needs, and respond to market demand.
The Government’s Policy Statement on New Towns has also reaffirmed its commitment to building new large-scale communities across England. An independent New Towns Taskforce has been created that will advise ministers on appropriate ‘New Town’ locations, with a final shortlist expected within 12 months.
The Government’s new town programme will include new settlements built on greenfield land, as well as urban extensions to existing settlements and regeneration schemes. The unifying principle being the programme is that each new settlement will contain at least 10,000 homes, with a target rate of 40% affordable housing.
With planning overhauls at the front of the Government’s drive for economic growth, developers and their advisers will want to keep informed of all legislative and policy changes that are introduced.