- Housing supply in England has fallen every decade since the
1960s.
- Past efforts to fix this have focused on increasing the
number of planning permissions granted, but this has failed to
feed into enough homes being built.
- Currently planning permissions are a one-way gift which
boosts the value of the land with no obligation to build,
creating a bottleneck that concentrates land supply in the hands
of large house builders.
- The six biggest house builders alone currently have roughly 1
million plots in their strategic land banks, nearly the
equivalent of the target land supply across England over the next
five years.
- New CPS report argues that SMEs need to play a much greater
role in the sector, including getting priority when public sector
land is sold for housing.
- The report also proposes turning planning permissions into
delivery contracts, binding developers to build within mutually
agreed timeframe.
- It also argues for putting a Housing Delivery Test at the
core of the system so councils have to ensure delivery of
sufficient homes not focusing on land available.
Since the 1960s, housing supply has fallen steadily each decade,
and that attempts to fix this have mostly focused on increasing
the number of planning permissions flowing through the system.
However, while the 2010 planning reforms led to permissions
rising to over 350,000, the number of new homes actually built
was just over 200,000.
A new report by the Centre for Policy Studies, praised by Housing
Minister , therefore calls for changes to the planning system
to open up the market and allow better access for small and
medium sized companies and to diversify the housing supply.
As highlighted in ‘The Housing Guarantee’ out today, the top 10
house builders currently build 40% of all new homes, with the top
six controlling around 33% of the market. Facing challenges to
obtain land, smaller builders face being squeezed out of the
system – falling from building around 40% of homes in the 1980s
to around 10% now.
The six biggest house builders alone currently have roughly 1
million plots in their strategic land banks, nearly the
equivalent of the target supply across England over the next five
years.
The report sets out three key reforms that the think tank argues
must be made to address the systemic failures in the current
system and support delivery of more homes:
- Changing permissions to delivery contracts based on an agreed
timeline. Where house builders cannot deliver this, they would
have to pass the land on at an agreed price to local SMEs. This
would mean as land came forward for development, it was actually
translated into new homes.
- A renewed emphasis on the Housing Delivery Test, ensuring
councils are assessed on the basis of numbers of homes built, not
on planning permissions granted – and are penalised if they are
not delivering for their community. This would increase not just
the number of homes built, but their speed, diversity and
quality.
- Introducing panels of local house builder SMEs that public
sector land is sold to, with challenging delivery targets to
ensure the quality and diversity of local housing supply, and
support competition within the sector.
Over time, these reforms would modernise the new build housing
market, making it more transparent, and ensure the flow of land
actually turns into new homes via a clear and obvious build-out
trajectory. It would mean a higher delivery of housing and a
greater role for SMEs as well as higher overall supply.
Minister of State for Housing, the Rt Hon MP, responded:
‘This CPS report is a very welcome contribution to the debate
around both house building and planning reform. I am particularly
pleased that the report has highlighted the important role that
SMEs can and should play in delivering more homes and helping the
United Kingdom’s economy build back better.
‘A successful SME sector is crucial in our shared objectives of
planning reform and increased house building.’
Report author and CPS Head of Policy, , said:
‘The Government’s planning reforms are very welcome. But we need
to focus on delivery and learn from previous attempts to fix
England’s housing supply problems.
‘The reforms we are proposing would help create a new, better
planning system that focuses on ensuring delivery, working
alongside the other proposals Government is bringing forward.
‘We have a once-in-a-generation opportunity to fix these issues,
and with a Planning Bill under way, now is the time for action.’
Chief Executive Officer at Regal London, Jonathan Seal,
commented:
‘We welcome today’s report from the CPS and supportive comments
from the Minister. Both make clear the important role that SMEs
have to play in shaping the debate about housebuilding and
planning reform.
‘As one of London’s leading residential-led, mixed-use
developers, we are proud to have been a part of the city’s
transformation but are confident there is more to be done in
improving supply to London. We are committed to delivering more
high-quality homes as part of the important contribution SMEs are
making.
‘This report is much-needed recognition of the need to reassess
how we achieve that and for SMEs to have an important seat at the
table.
