Government publishes much-anticipated Housing White Paper

8th February 2017

Background

Following months of speculation and ongoing delays, the much-anticipated Housing White Paper has now been published. The document, entitled ‘Fixing Our Broken Housing Market’ details the Government’s vision for providing new homes and increasing delivery to deal with the country’s ongoing housing crisis.  At the Conservative Party conference in October 2016, Communities Secretary Sajid Javid pledged to take “unprecedented steps” and that housing was his department’s “number one priority”.  But how has this been followed-through by the Government?  And what does the Housing White Paper actually say?

The Problem

The document begins by setting-out the respects in which the housing market is “broken”.  The problem is seen to be three-fold, with:

• not enough local authorities planning for the new homes they need;
• house building being too slow; and
• a construction industry that is overly reliance on a small number of large operators.

The White Paper then seeks to outline what the Government regards as being the solutions, but notes that “solving [the problem] requires a radical re-think of our whole approach to home building”.

The Solution?: Key Provisions

Assessment of housing need and 5-year supply

In his statement to the Commons announcing the Paper, Sajid Javid, noted that the Government will “introduce a new way of assessing housing need…Many councils work tirelessly to engage their communities on the number, design and mix of new housing…But some of them duck the difficult decisions and fail to produce plans that actually meet their housing need. It is important that all authorities play by the same rules.”

The Government will consult on a new standard methodology for calculating objectively assessed housing need. By April 2018 (following consultation), it is envisaged that this new methodology will provide the baseline for assessing 5-year housing land supply. Local authorities will have to provide justification to the Planning Inspectorate if they do not then use the methodology.  While this approach is one that has been proposed for some time, the White Paper provides little further as to what the standard approach will be.  It is still a case of ‘watch this space’.

Local authorities will be able to agree their housing land supply annually and fix this for a 1-year period, following discussion with local development interests and key infrastructure providers. The annual 5-year supply statements are to be examined by the Planning Inspectorate for robustness.  However, the White Paper merely calls for views as to how such analysis should be undertaken and the process will work in practice.  Uncertainty remains vis-a-vis procedure and whether this will be a worthwhile exercise overall.

These measures will be brought forward by an amendment to the National Planning Policy Framework (NPPF), with the hope that it reduces the number of planning appeals relating to housing supply figures; resources being unduly engaged in negotiation and discussion with developers regarding 5-year supply; and the undermining of local development documents where figures are in doubt.

Housing delivery test

A new housing delivery test is introduced to ensure targets for delivery of new homes are met. The tiered approach proposed, to be outlined in national policy and guidance, is:

• from November 2017, if delivery of housing falls below 95% of the authority’s annual housing requirement = local authority to publish an action plan explaining the situation and actions that will be taken to “get home-building back on track”
• from November 2017, if delivery of housing falls below 85% of the housing requirement = local authority additionally expected to plan for a 20% buffer on their 5-year land supply
• from November 2018, if delivery of housing falls below 25% of the housing requirement = NPPF presumption in favour of sustainable development (Paragraph 14) to apply automatically
• from November 2018, if delivery of housing falls below 45% of the housing requirement = Paragraph 14 NPPF presumption applies
• from November 2020, if delivery of housing falls below 65% of the housing requirement = Paragraph 14 NPPF presumption applies.

In reality, this means there is little consequence for authorities where delivery is below 95% of the annual requirement from November 2017. There is simply the expectation that an action plan is produced.  Correspondingly, it requires a relatively dire situation to exist (i.e. delivery below 25% from November 2018) before the presumption in favour of sustainable development is engaged.  The tiered approach means there is a long lead-in before the Paragraph 14 ‘test’ is engaged in more instances.

Local plans and local development documents

The White Paper reiterates that powers have already been introduced, via the Neighbourhood Planning Bill, to ensure all local authorities have an up-to-date plan in place, with greater ability for the Government to intervene where needed to guarantee this.

Regulations are to provide for local plans and other local development documents to be reviewed at least every 5 years. Local authorities will have to update their plans if existing housing targets can no longer be justified against the objectively assessed housing requirement (except in certain circumstances).

A consultation is also proposed on changes to the NPPF, so local authorities have to work together more where cross-boundary issues arise in plan-making. A Statement of Common Ground may have to be prepared to show this collaborative approach is being adhered to in practice.

There is a proposal to review the test for ‘soundness’ – so that development plans only need to be “an” appropriate strategy, as opposed to “the most” appropriate strategy for the area.  While every authority is expected to have an up-to-date plan, a single local plan will no longer necessarily be required.  Joint and strategic-level planning is the overall aim, with flexibility of approach being key.  A proportionate evidence base, consultation process and independent examination are to be the only main requirements.

Neighbourhood planning

The Government proposes to amend planning policy so local planning authorities should provide neighbourhood planning groups with a housing requirement figure, “where this is needed to allow progress with neighbourhood planning”.

The Government is also to make further funding available to neighbourhood planning groups from 2018 / 2020, to support community groups throughout the process of working on their neighbourhood plan.

Ultimately, neighbourhood plans are to provide sites for local people and it is envisaged that neighbourhood plans can help to boost housing numbers. Elsewhere in the White Paper, it is noted that neighbourhood plans will be able to amend Green Belt where the strategic plan has identified a need.  New garden villages are also being encouraged.

Starter Homes

The document heralds a major change to the Government’s Starter Homes initiative. Originally, it was planned there would be a mandatory requirement of 20% Starter Homes on all reasonably-sized developments.  However, now reasonably-sized housing sites will need to deliver a minimum of 10% affordable home ownership units.  The Paper notes: “It will be for local areas to work with developers to agree an appropriate level of delivery of Starter Homes, alongside other affordable home ownership and rented tenures”.

Restrictions on Starter Homes buyers are to be introduced via changes to the NPPF, such that they:

• must have an income of less than £80,000 (£90,000 for London);
• must have a mortgage (no cash buyers); and
• adhere to a 15-year repayment period, so when the property is sold to a new owner within the 15-year period, some or all of the discount is repaid.

Additional alterations to the NPPF are also to be made so more brownfield land will be released for developments with a higher proportion of Starter Homes. The changes include:

• any proposal on employment land that has been vacant, unused or unviable for a 5-year period, and is not a strategic employment site, should be considered favourably for development that is Starter Home-led
• the current Starter Home exception site policy has been extended. This is now to include other forms of underused brownfield land
• certain development should be allowed on brownfield land in the Green Belt, but only (1) where it contributes to the delivery of Starter Homes and (2) there is no substantial harm to the Green Belt’s openness.

Redefinition of ‘affordable housing’

Somewhat hidden away in the Annex (Box 4) of the White Paper, the Government has put forward an amendment to national policy to redefine ‘affordable housing’. The proposed new definition takes a clearer, segregated format and is extended to include elements such as Starter Homes and ‘affordable private rent housing’.

Revision of the presumption in favour of sustainable development

In Annex Box 2 of the White Paper, there is the proposal to revise Paragraph 14 of the NPPF: i.e. the presumption in favour of sustainable development. Mostly this is a reordering of the text.  However, the existing footnote has been altered.  This is now a closed list, as opposed to an open frame of reference simply providing examples.

Additions have also been made to the list. Elements such as ancient woodland and “other heritage assets of archaeological interest” have been added, and so are policies to be taken into account in decision-making when considering if the presumption is disapplied.

Help for older people to move into smaller homes

The Secretary of State is to produce guidance for planning authorities, so local development documents cater for meeting the housing needs of older and disabled people. The intention is to place clearer expectations on councils in relation to such provision.  This statutory duty on the Secretary of State will come via the Neighbourhood Planning Bill.

In the longer-term, it is envisaged there will be incentives for older people to sell big family homes – including help with moving costs and lower stamp duty charges. However, this is all apparently subject to ongoing consultation and the Government building on “evidence that already exists to help deliver outcomes that are best for older people”.

These proposals follow Housing Minister, Gavin Barwell’s, comments on ITV’s Peston on Sunday programme (5 January 2016): “First of all, we’ve got a lot of demographic change in the country and an increasing elderly population, so it’s not just about how many houses you build, but are you building the right kind of houses”.

Community Infrastructure Levy

The Government will respond to the examination of the Community Infrastructure Levy (CIL) that has been undertaken by the CIL Review Committee and chaired by former BPF chief executive, Liz Peace.  The White Paper states that an announcement will then be made in the Autumn Budget 2017, once the Government has reviewed the options for reform.

The Review Committee’s report has been published alongside the White Paper. It recommends that CIL should be replaced with a ‘hybrid system’ of a low-level tariff for all developments and section 106 contributions for larger developments.

Indeed, changes to s106 agreements are also to be considered again going forward – particularly relating to:

• use of standardised, open-book agreements to reduce disputes and delays;
• reporting of data on planning obligations and increased transparency; and
• use of dispute resolution procedures as per the Housing and Planning Act 2016.

Green Belt

The Government proposes to amend and add to national policy to make it clear that authorities should amend Green Belt boundaries only when (1) ‘exceptional circumstances’ exist and (2) they can demonstrate that they have fully examined all other reasonable options.

If land is to be removed from the Green Belt, local policies are to require the impact is offset by compensatory improvements to the environmental quality or accessibility of remaining Green Belt land.

While Communities Secretary, Sajid Javid, had apparently hoped for a radical approach vis-a-vis Green Belt development, there was reluctance more generally to make any sweeping changes. However, there is a provision in the White Paper such that development on brownfield land in the Green Belt is to be allowed it if (1) contributes to the delivery of Starter Homes and (2) there is to be no substantial harm to the openness of the Green Belt.  Neighbourhood plans will also be able to amend Green Belt where a strategic plan has identified a need.

Higher density developments

The White Paper encourages higher densities. It proposes to amend the NPPF to clarify that plans and individual development proposals should “make efficient use of land and avoid building homes at low densities”.  In particular, scope for higher-density housing is to be considered in urban locations that are transport hubs; where there is scope to build over low-density uses; or buildings can be extended upwards.

This follows a Westminster debate in November 2016, when Gavin Barwell stated: “If we want to protect our precious green belt, we need to look at whether we could have more intense development on the sites that are already developed…There is huge potential in major centres and around public transport hubs“.

Planning fees

The Government will consult on introducing a fee for making a planning appeal. Developers are apparently not being discouraged from bringing forward legitimate appeals.  However, the White Paper notes that “unnecessary appeals can be a source of delay and waste taxpayers’ money”.

Local authorities will be able to increase fees on planning applications by 20% from July 2017 if they “commit to invest the additional fee income in their planning department”. In addition, well-performing councils will be able to increase fees by an extra 20% – but further details on this element are to be clarified.

Increasing build-out rates

The Government intends to encourage “more active use of compulsory purchase powers to promote development on stalled sites for housing”.

This forms part of a number of measures to ensure permissions are built out; there is a reduction in stalled developments; and an end to land-banking by developers. In particular, the White Paper suggests there will be a reduced timeframe for implementation of planning permissions – from the default period of 3 years to 2 years, except where shorter timescales could hinder viability or deliverability.  Further, developer delivery could be monitored and taken into account by local authorities when determining applications for large-scale sites from major developers.

Change to the Homes and Communities Agency

During summer 2017, the Homes and Communities Agency is to be relaunched as Homes England and progress ahead with a renewed purpose. The White Paper states: “the ambition to get more homes for communities across all housing tenures, put in infrastructure to unlock housing capacity and attract small builders and new players to diversify the market on a sustainable basis”.

In line with the above statement, other elements in the White Paper correspondingly aim to encourage more custom-built homes and diversify the housing market generally, opening it up to smaller builders and those that “embrace innovative and efficient methods”.  Local plans will need to identify at least 10% of allocated sites for housing on small sites of up to ½ hectare that are for small or medium-scale developments.  Local authorities are also to work with developers to encourage sub-division of large sites and speed-up delivery.