UK Planning Laws Contradict Government Targets

Tom Bulford - Wed 16 Apr, 2008

UK planning laws stand in the way of the government’s 3m house building target

Owners of luxury flats mugged by their drug-addled neighbours… building plans altered to save crayfish and scraps of old wallpaper… developer’s cash siphoned off to help struggling sculptors… a planning process that is slow, creaky, unpredictable and bizarre. These are just some of the reasons why Gordon Brown’s target of three million new homes by 2020 has no chance whatsoever of being achieved.

The government is living in fantasy land. The supply of new homes could easily be increased – if only the government’s own policies were not so unrealistic.

Let’s start with the planning process. At present plans have to be submitted to the local planning officer, an overworked individual whose morale is not helped by the knowledge that he could be earning twice as much in the private sector. If he approves a plan then it must be put before the planning committee, a group of local busybodies who can choose to accept or reject the plans just as they like. There seem to be no rules. There is nothing to say that if every box has been ticked then the plans must be approved. If the committee does not like them, if perhaps the chairman happens to live next door to the proposed development, then it will get the thumbs down and that is the end of it.

John Prescott, in an excellent illustration of utter stupidity, tried to do something to speed up the process. He gave money to any planning office that dealt with an application within thirteen weeks. But rather than ensure that all applications were properly reviewed in that period, planning officers simply dropped the guillotine upon them after twelve weeks and six days, just to get Prescott’s money. Money that, by the way, did not go back into the planning department but was simply dropped into the yawning coffers of the local authority.

Then we have Section 106. Under this rule local authorities can, as a condition of giving planning permission, demand contributions towards local amenities. This is to be spent on parks, playgrounds, schools - the latter even if the proposed development is of an old person’s home and brings no new children into the area – and hideous stone eyesores that only serve to demonstrate why the local sculptor cannot make a living without handouts from the public purse. Developers are blackmailed. They need to get on and build. They want to get through the planning process as quickly as they can. So if at the eleventh hour they are asked to chip in a few more thousand towards a new merry-go-round they are inclined to give in. No other industry is held to ransom in this way. Some builders are starting to ask whether it is even legal.

Builders have long been resigned to the demands of the conservation lobby. The Dartford Warbler and the Great Crested Newt have held up many a planning application, as has the white-clawed crayfish. Recently I met a developer who told me how he had been required to preserve an old radiator and some wall-paper contained within a Gothic abbey that he was converting. But what is really upsetting the whole economics of house building today is the requirement for social housing.

Any development of more than nine dwellings must devote half of this to social housing. This is council housing by another name, and must be built at between 45% and 55% of its market value – effectively the build cost. Because this is basically subsidised by the profits from building homes for private sale, this insistence upon social housing pushes up the price of the former or else renders some proposed developments uneconomic.

Here in Oxford a proposed development of eighty-five new homes has been abandoned for this very reason. In its misguided desire to engineer cohesive ‘local communities’ (how I hate that phrase!) the government insists that social housing is mixed in with private housing. This is known as ‘pepper-potting’ and has led to horrendous incidents where private home-owners are mugged and otherwise abused by their socially-housed neighbours. This of course has the effect of reducing the value of the private housing, undermining the economics of any new project.

Now, as if all this were not enough, house builders are faced with the cost of the government’s latest vote-winners. In an attempt to keep the elderly out of publicly-funded care homes it has said that in future new homes must be built with downstairs bathrooms, staircases that can accommodate stair-lifts, entrances and hallways wide and flat enough for wheelchair access, and ‘bathrooms planned with side access to toilet and bath’ – whatever this means. All this is regardless of whether or not an elderly person is actually likely to live there.

This additional cost comes on top of Gordon Brown’s commitment that within ten years all new homes will be ‘carbon neutral,’ meaning solar panels, wind turbines, pipes to suck hot water up from the earth’s core, triple glazing etc.

This crowd pleaser will add £30,000 to the cost of a new home, and when added to the requirement for social housing and the expensive demands made under Section 106, it will mean that a developer of a one hectare plot will be committed to shelling out £2m-£3m before he can even think of making a profit on the basic business of building private homes. At the typical plot density of forty homes per hectare this means that every buyer of a private home is making a £50,000 contribution towards government initiatives.

There could be even worse to follow if the mooted plan to levy capital gains tax on the uplift in value that follows planning permission is introduced. But even as things stand the hopeless morass that is the planning process and the cost and social impact of the government’s own policies, means that its targets for new homes are just pie in the sky.

Regards,

Tom Bulford
For the Daily Reckoning