Harry Quartermain is a Chartered Town Planner and a member of the South West Regional Management Board and the England Policy Committee for the RTPI. He has worked in the private sector in the UK and Australia for over 13 years and is now the Head of Research and Insight at LandTech. His guest blog is a part of the RTPI’s NPPF series.
What’s the problem?
England has consistently failed to hit the 300,000 dwellings per year target that it set for itself - a target that has not been met since the 1970s, and then only with a significant contribution made by local authority building projects. Research by the Laing O’Rourke and Cambridge University suggests that just 10 companies are responsible for around 60% of the houses built in the UK, and that over the last thirty years the number of SME developers has dropped by 65%.
Recognising a correlation between the drop in SME developers and a fall in housing delivery, and assuming the associated causation, the government included provision in the 2019 version of the NPPF to encourage diversification of supply by encouraging SME developers. The theory here seems to be that a large number of small allocation sites may be able to deliver houses at a quicker rate than a small number of large allocation sites. The NPPF suggests that 10% of the total allocation of dwellings in a Local Plan be within smaller sites (<1ha). The changes to the Framework that are currently being consulted on retain these provisions.
So, has this worked?
In short, no it has not. We looked at the planning application data available within LandInsight and took a straw-poll of LPAs that have adopted local plans since the small sites requirement was added to the Framework, we compared this to a control group of LPAs that have not refreshed their local plan since before 2019. We were looking for some evidence that a requirement to allocate 10% of dwellings within sites of under 1ha would result in an increase of dwelling delivery on these smaller sites. No such trend was evident.
As well as being ineffective, the Framework’s small sites requirement appears to be unpopular. At the recent RTPI Policy Round Table events related to the NPPF review, several individuals called for the small sites provision to be removed from the Framework as an ineffective one-size-fits-all solution to a problem that is not consistently experienced around the country.
So if simply allocating housing on small sites does little or nothing to give support to SMEs and Community Developers, what challenges need to be overcome to encourage these sectors, and what support could be offered?
What are the Challenges?
Many of the challenges facing housing delivery are well-documented, having been outlined in the 2018 Letwin Report. More recently, research undertaken by the HBF highlighted some of the key challenges felt by developers related to supply chain and workforce restrictions. These issues are felt most acutely by SMEs who don’t tend to have the breadth of work and or range of sites (when compared to the larger developers) to ensure a more regular supply of materials and labour.
These issues can’t easily be overcome by a change to planning policy - instead requiring someone to sensibly look at the current situation regarding the movement of goods and people with our nearest trading partners. But that’s beyond the scope of this blog.
The planning system itself also comes in for some criticism for standing in the way of housing delivery (quelle surprise), for being overly complex and under-resourced. Unfortunately reform takes political capital, and resourcing takes funds, and neither of these are in ample supply in Westminster at present.
Finally, developer funding has been identified, both by the HBF and by our own SME customers at LandTech, as being a constraint on development delivery - even when the hurdles involved at the site finding and planning permission stages have been overcome.
What are the Solutions?
Very little additional explicit support for SMEs or Community Developers is offered within the revised NPPF - with the focus clearly being on supporting the existing communities, rather than those to come.
Further watering down the housing delivery requirements will make it harder, not easier, to get planning approval - particularly in areas affected by Green Belt designation. This will have an impact across the construction sector, but it will be felt particularly hard by SMEs.
Can we do better?
If we look overseas, work is already being done to help write policy that can be machine-readable to allow a more streamlined approach to interpreting policy. Streamlining of decision making (i.e. supporting rather than replacing the human planner) can be taken forward into the post approval process too. Litchfields’ much-cited report on delivery, Start to Finish, identifies that at all scales of site the period taken from approval to delivery hovers around two years, which for sites of under 500 dwellings is similar to the period taken to get permission in the first place. Speeding up the condition discharge process is therefore something that would disproportionately assist SME developers and those delivering smaller sites, while speeding up delivery across the board.
To improve access for SMEs to developer finance, another major hurdle for smaller developers, there has to be a smarter way to assist developers to present their sites to lenders in a professional and consistent manner. The rising build costs and increase in interest base-rates over recent months have placed a much greater level of scrutiny on developers’ financial appraisal. LandTech has developed a range of tools to help here that have been assisting SME developers to secure funding for over a year now, and more is in the pipeline.
Finally, until some of these improvements can be introduced to the system, the most simple way that the Government can support housing delivery, particularly from SMEs, is to properly fund the system that we have now. Allow LPAs to compete with the private sector for the best talent by paying them comparable wages, and in so doing reduce the public sector’s reliance on agency staff and consultants.
Take a look here for more details about the consultation.
