The housing white paper – worth the wait?

Will the government's long-awaited housing white paper help to solve the UK's housing crisis? We look at the implications for developers, planners and investors.

08 February 2017

The much anticipated housing white paper published yesterday contains a few surprises and a wide ranging consultation – here are the headlines:

Use it or lose it?

The government will consult on new guidance to local planning authorities to encourage more active use of compulsory purchase powers to promote development on stalled sites for housing. Also the government will investigate whether auctions, following possession of the land, can establish the site value (and so the compensation to be paid) where compulsory purchase powers have been used to acquire the land.

Planning policy

National planning policy will be amended to encourage local authorities to consider the likelihood of the development taking place when deciding whether to grant planning permission for housing development, on sites where previous permissions have not been implemented. It is intended to consult on whether, in the case of applications for large scale sites and where the applicant is a major developer, an applicant’s track record of delivering similar housing schemes should be taken into account by local authorities when determining planning applications. A change to national planning policy is also contemplated to encourage local authorities to reduce the time developers have to implement a permission for housing development from three years to two years, unless that would hinder the viability or deliverability of a scheme.

Green belt

National policy is to make clear that authorities should amend green belt boundaries only when they can show they have properly examined other options for meeting their identified development requirements, such as effective use of suitable brownfield sites and surplus public sector land, "optimising" (increasing) the proposed density of development and that local authorities have explored whether other authorities can help to meet some of the identified requirement. Where land is removed from the green belt, the impact should be offset by compensatory improvements to the remaining green belt land. The government is to explore whether higher contributions can be collected from development facilitated by land being released from the green belt.

Planning delivery

The carrot: local authorities will be able to increase planning fees by 20% if they use the funds generated for their planning department.

The stick: a new housing delivery test is to ensure that local authorities are accountable for ensuring new homes are delivered in their area. From November 2018, if delivery of housing is less than 25% of the requirement identified in the local plan, the presumption in favour of sustainable development in the National Planning Policy Framework would apply so developers will be granted automatic planning permission on sustainable schemes apart from in exceptional circumstances. From November 2019, the presumption would apply if delivery falls below 45%, and from November 2020 it will apply if delivery falls below 65%.

Build to rent

The government is consulting on changes to the National Planning Policy Framework to encourage authorities to plan proactively for Build to Rent where there is a need and to make it easier for Build to Rent developers to offer affordable private rental homes (at least 20% below market rent) instead of other types of affordable housing. It is also looking at making family-friendly tenancies of three or more years available on BTR schemes. The stated objective is to attract major institutional investment in new large-scale housing which is purpose-built for market rent, and a separate consultation Planning and affordable housing for Build to Rent will run until 1 May. There is no suggestion of any change to the 3% SDLT levy on additional homes.

Starter homes

The government starter homes policy has been watered down so that starter homes (discounted by 20% to first-time buyers) or “affordable home ownership” units will only have to make up 10% of new developments rather than 20%. Starter homes will only be available to households with an income of less than £80,000 – or £90,000 for London –purchasing with a mortgage (to stop cash buyers) and with a 15 year repayment period so when the property is sold on to a new owner within this period, some or all of the discount is repaid. The target of 200,000 new starter homes by 2020, a manifesto pledge, has also been revised to 200,000 new home owners – including shared ownership, Help to Buy and Right to Buy as well as starter homes – by 2020.

Leasehold and other law reform

The paper expresses concern about the position of long leaseholders and in particular, ground rents with short review periods and the potential to increase significantly throughout the lease period. It announced that the government will consult on a range of measures to tackle unfairness and to improve consumer choice in leasehold. The government confirmed that – as announced in the Queen's Speech – it also intends to simplify the current restrictive covenant regime by implementing the Law Commission’s proposals for reform in its report Easements, Covenants and Profits à Prendre and will publish a draft bill for consultation. 

Density

It is proposed to amend the National Planning Policy Framework so that plans and individual development proposals should avoid building homes at low densities where there is a shortage of land for meeting identified housing requirements and address the potential: for higher-density housing in urban locations that are well served by public transport; to replace or build over low-density uses (such as retail warehouses, lock-ups and car parks) and where buildings can be extended upwards by using the ‘airspace’ above. It is also proposed to review the Nationally Described Space Standard to make sure the standards do not rule out new approaches to meeting demand, e.g. the compact living model of developers such as Pocket Homes.

Source: DCLG white paper Fixing Our Broken Housing Market (PDF).

For more information contact Ross Polkinghorne or Liz Dunn.

Key contact

Ross Polkinghorne

Ross Polkinghorne Partner

  • Head of Real Estate Development
  • Real Estate
  • Infrastructure

Subscribe to news and insight

Real Estate

Our multi-disciplinary real estate sector lawyers combine in-depth real estate sector knowledge with technical legal excellence to deliver an exceptional transactional, disputes and advisory service.
Find out more