VIP, Biscuits: 2 More Refusals For Major Projects In London

Getting messy isn’t it?” was how I ended my 26 January 2019 blog post The Secretary Of State & London.

Two more decisions to note since that blog post:

VIP Trading Estate and VIP Industrial Estate, Charlton

I suspect that this is the first example of a London Mayor calling in an application for his own determination and refusing it. In the final month of his mayorality in April 2016, Boris Johnson had agreed to defer a decision in relation to Bishopsgate Goodsyard, faced with an officer’s recommendation to refuse the application (it ended up never being determined). But Sadiq Khan’s flip flopping over Leopard Guernsey Anchor Propco Limited’s application to the London Borough of Greenwich for planning permission to redevelop the VIP Trading Estate and VIP Industrial Estate, Charlton has been quite something else.

This is a scheme that started off as comprising 975 dwellings , together with non-residential floorspace, in buildings ranging from nine to 28 storeys. Following consultation responses and comments from the Mayor in his stage 1 referral report, the 28 storey tower was removed and the amount of housing reduced to 771.

Greenwich officers recommended approval but on 9 July 2018 committee members resolved to refuse it on five grounds, namely overdevelopment, insufficient proportion of family sized housing, lack of a safe access to the business premises next door (a building known as Imex House that houses Squeeze’s Glenn Tilbrook’s studio) and introduction of noise sensitive uses, failure to make appropriate replacement employment floorspace provision and daylight/sunlight deficiencies.

Having considered his officers’ stage 2 report dated 13 August 2018, the Mayor called in the application for his own determination. The report sets out the various improvements that would be sought to the proposals as part of the call in process.

Various amendments were negotiated and secured. Officers’ stage 3 report was published for the representation hearing held on 29 January 2019. The report recommended approval.

But then the bombshell at the end of the representation hearing. Despite having intervened to prevent Greenwich members refusing the application against their officers’ recommendations six months previously, and despite amendments to the scheme proposals having been negotiated to officers’ satisfaction, presumably in line with the Mayor’s instructions (if not, was he not paying attention or something?), the Mayor then announces that he is refusing the application. His reasons for refusal published a few days later on 4 February 2019 in part bear a marked resemblance to those of Greenwich’s planning committee: poor design; unsatisfactory relationship with Imex House and introduction of noise sensitive uses; failure to make appropriate replacement employment floorspace provision, and absence of a section 106 agreement to secure affordable housing and other obligations (I’m not sure whether this is a purely procedural reason for refusal or he was actually not satisfied with the affordable package negotiated by his officers: 35%, rising to 40% with grant).

I have no views on the scheme itself, and I accept that of course he must have an open mind during the representation hearing, but what a waste of six months! He says in the letter setting out his reasons for refusal that he “called in this application to subject it to further scrutiny” but that is a poor excuse. He was surely looking to use the particularly useful Mayoral call in power in order to squeeze some further enhancements from the scheme so that, when that had been done by his officers to his satisfaction, he could approve it. In turning it down, where does that leave his officers? And given that applicants are unable to engage with the man himself, can they now be sure that what they are being told by his team is necessary to secure approval will indeed be sufficient?

Bermondsey Biscuit Factory and Bermondsey Campus Site

The decision of the London Borough of Southwark at its planning committee meeting on 6 February 2019 to refuse planning permission for Grosvenor’s 1,342 dwelling build to rent scheme in Bermondsey is another one to be aware of. Members followed the recommendations in the officers’ report, the main reason being that Grosvenor’s affordable housing package was unacceptable, comprising, in summary, that 27.37% of the habitable rooms would be let at an average discount of 25% below market rents, with usual early and late stage viability review mechanisms. (The application indicated that “the depth of discount across the affordable units could vary, with greater discounts offered on some units, but this would require higher rents (up to 80% of market rents) on others to ensure that the overall level of discount does not exceed 25% overall. Grosvenor has described the sum equating to a 25% discount as the ‘subsidy pot’ and suggested whilst this could be distributed in a variety of ways, the impact of the DMR cannot exceed the financial value of that ‘subsidy pot’ “).

The Mayor of London had flagged in his stage 1 report: “Whilst the proposed increase in housing supply is strongly supported, in the absence of an independently verified viability position the proposed 27% provision of affordable housing is unacceptable. The applicant must deliver deeper DMR discounts, including London Living Rent

Southwark took an equivalent position but the report to committee is interesting in the way that it (1) transparently sets out the differences between the viability work carried out by the parties’ respective viability consultants (GVA – in old money, now Avison Young – having advised the council after the publication of the Mayor’s stage 1 report) and (2) highlights the differences in build to rent (referred to as PRS, private rental sector, in the committee report) affordable housing policy approach in two dimensions: at GLA vs borough level, and as between adopted and emerging plans. Not an unfamiliar position for any developer but particularly difficult for those promoting build to rent (which is, after all, strongly supported in principle by MHCLG and the Mayor of London) as a relatively new product in terms of determining the appropriate approach to affordable housing.

The viability differences are nicely summarised by Mike Phillips (ex Property Week editor) in his 4 February 2019 Bisnow piece Grosvenor’s Bermondsey Rejection Is A Microcosm Of London’s Affordable Housing Quandary.

As to the complexities arising from varying policy approaches to build to rent, a few extracts from the committee report:

⁃ “London Plan policies 3.11 and 3.12 and draft London Plan Policy H5 seek to maximise the delivery of affordable housing, with the draft London Plan seeking delivery against a strategic target of 50%. Policy H6 of the draft London Plan and the Affordable Housing and Viability SPG prescribe a threshold approach to affordable housing to incentivise swift delivery, and draft London Plan Policy H13 applies this principle to ‘build to rent’ products. In this case, a minimum of 35% affordable housing threshold applies.

⁃ The Mayor’s affordable housing and viability SPG “recognises that Discount Market Rent is an appropriate tenure within PRS developments and considers that the rent level for DMR should be pegged at London Living Rent levels, for households with incomes up to £60,000. The guidance requires affordable housing to be secured in perpetuity, and in addition requires a clawback mechanism if the wider PRS homes are sold out of the Build to Rent sector within 15 years. The clawback is intended to respond to the different financial model applied to the PRS sector and to ensure the developer does not benefit financially if the homes are converted to market sale.”

⁃ The borough’s core strategy “requires that a minimum 35% affordable housing is provided on all residential developments of 10 or more units, with a tenure split in the Bermondsey area of 70:30 social rent: intermediate homes. Applications would be subject to viability assessments if policy compliance is not being offered, with the expectation that as much affordable housing will be provided as is financially viable. The Core Strategy makes no specific reference to PRS housing.”

⁃ The submission version of the New Southwark Plan “requires the affordable ‘DMR’ housing to be secured in perpetuity, and the overall housing development to be secured within the rental sector for at least 30 years” [contrast with the Mayor’s 15 year requirement] with a changed tenure split of 15% social rent and 20% DMR at London Living Rent [contrast to GLA position where it can all be London Living Rent DMR]

Clearly it is going to be key for the parties to resolve their difficulties over viability, whether that requires changes to the scheme or an appeal. This was a decision taken against up to date government guidance on the approach to viability appraisals, the work was relatively transparent and there was not a major difference of principle over benchmark land value. The reality is that the process is not straightforward; there are issues of judgment, particularly when dealing with a relatively untested business model and the need to estimate the rents that will be achievable in an area that will have been significantly changed by way of development. After that, the tenure split question is surely economically subsidiary, although clearly on-site social rented housing will come at greater cost to the scheme’s viability in a number of ways and so there are political choices to be made.

More widely

I’m not sure whether the Secretary of State had either scheme specifically in mind, when he threw his own political pebble into the pond, as reported in the Planner on 31 January 2019: Brokenshire tells GLA to step up (https://www.theplanner.co.uk/news/brokenshire-tells-gla-to-‘step-up’ ). People in glass houses…

In the meantime, the examination continues into the draft London Plan. Hearing sessions are currently considering housing issues, with MHCLG participating. The Just Space website is a useful unofficial resource in relation to the examination, with links to each written statement for each session together with thumbnail-sketch type notes of the session itself.

Lastly, as a postscript to my 26 January 2019 blog post, it has now been reported that Croydon Council as well as possibly the Mayor are supporting Thornsett Group’s challenge of the Secretary of State’s Purley Baptist Church call-in decision.

Still messy, isn’t it?

Simon Ricketts

Personal views, et cetera

Peek Frean biscuits, from Bermondsey.

The Secretary Of State & London

The Secretary of State wrote last year to the Mayor of London: “I am not convinced your assessment of need reflects the full extent of housing need in London to tackle affordability problems. I have listened carefully to yours, and others, representations, and I am clear that the public interest lies with ensuring you deliver the homes London needs, including in the short term, as quickly as possible.”

Do we see this same message being delivered in his recent interventions?

None of this is news to regular readers of Planning magazine but I give you:

Purley Baptist Church site, Croydon

A scheme by Thornsett Group and Purley Baptist Church for the “demolition of existing buildings on two sites; erection of a 3 to 17 storey development on the ‘Island Site’ (Purley Baptist Church, 1 Russell Hill Road, 1-4 Russell Hill Parade, 2-12 Brighton Road, Purley Hall), comprising 114 residential units, community and church space and a retail unit; and a 3 to 8 storey development on the ‘South Site’ (1-9 Banstead Road) comprising 106 residential units, and associated landscaping and works.”

Supported by the London Borough of Croydon and by the Mayor. But opposed by, amongst others, Conservative MP Chris Philp (Croydon South). The application was called in on 12 April 2017 and, despite inspector David Nicholson recommending approval, refused by the Secretary of State in his decision letter dated 3 December 2018, essentially on design and heritage grounds:

26. Given his serious concerns about the design of the scheme as set out above at paragraphs 13 to 15, for the reasons given above the Secretary of State does not consider that the application is in accordance with the development plan overall. He has gone on to consider whether there are material considerations which indicate that the proposal should be determined other than in accordance with the development plan.

27. In favour, the scheme will provide 220 new homes which he considers should be given significant weight. The Secretary of State also affords significant weight to the benefits to Purley District Centre arising as a result of the regeneration of the site. The provision of a new church and greatly enhanced community facilities are also benefits, to which the Secretary of State gives moderate weight. He considers the level of affordable housing and the potential effects on air quality to be neutral in the planning balance.

28. Against the scheme, however, the Secretary of State gives substantial weight to the poor design of the South Side proposals, and to the height and proportions of the tower set out in paragraphs 13 to 15 above, which he considers not to be in accordance with relevant policies in the development plan.

29. The Secretary of State has also considered whether the identified ‘less than substantial’ harm to the significance of Purley Library and surrounding Conservation Areas is outweighed by the public benefits of the proposal. In accordance with the s.66 LBCA duty, he attributes considerable weight to the harm the significance of Purley Library. However, he considers that the benefits of the scheme, as set out in Paragraph 22 of this letter, are insufficient to outbalance the identified ‘less than substantial’ harm to the significance of Purley Library and surrounding conservation areas. He considers that the balancing exercise under paragraph 196 of the Framework is therefore not favourable to the proposal.”

It always feels slightly odd when the Secretary of State, on a desk-based examination of a set of papers, and following a public inquiry, considers it appropriate to overrule the judgment of local planning authority, Mayor and inspector in relation to these sorts of issues

I understand that the decision has been challenged in the High Court by the applicants.

Sir William Sutton Estate, Royal Borough of Kensington and Chelsea

By contrast, a scheme opposed both by RBKC (which refused permission) and by the Mayor for “demolition of the existing [Sir William Sutton] estate (Blocks A-K, N and O) and ancillary office; delivery of 343 new residential homes comprising of 334 apartments and 9 mews within buildings of 4-6 storeys; provision of Class D1 community floorspace with associated café; new Class A1-A5 and B1 floorspace; creation of new adopted public highway between Cale Street and Marlborough Street; new vehicular access from Ixworth Place; creation of new basement for car parking, cycle parking and storage; new energy centre fuelled by CHP, and works to adjacent pavement“.

The developer, Clarion Housing Group (formerly Affinity Sutton Homes Limited), appealed. Curiously, the appeal was only recovered by the Secretary of State for his own determination on 1 May 2018, just over a week before the start of the inquiry. By his decision letter dated 18 December 2018 the Secretary of State accepted his inspector’s recommendation and dismissed the appeal.

The main issue was in relation to the level of affordable housing proposed. After the appeal was submitted, the appellant had attempted to improve the position with changes to the scheme:

The key changes relate to the quantum of social rented housing and the number of mews houses. The Revised Scheme proposes 2,825 m2 more social rented floorspace, an increase from 237 to 270 social rented homes. The 9 private mews houses would be removed and replaced with social rented flats. Elements of the building design would be changed. The Revised Scheme results in an increase in the overall number of homes from 343 to 366.

The non-residential floorspace in the Appeal Scheme and the Revised Scheme would be the same in respect of Classes A1-A3 and B1 workspace, but there would be a decrease in the community floorspace in the Revised Scheme.”

However, applying ‘Wheatcroft‘ principles (“the main, but not the only, criterion on which… judgment should be exercised is whether the development is so changed that to grant it would be to deprive those who should have been consulted on the changed development of the opportunity of such consultation”) the Secretary of State, agreeing with the recommendation of his inspector, refused to consider the revised scheme due to concerns as to the adequacy of the consultation that had been carried out. (One legitimate criticism was of “skewed” questioning of the public in a Feedback Form which asked “Do you support the proposals to amend the scheme to provide 33 additional homes for social rent?“, although I have seen similarly skewed questioning in MHCLG consultation documents…).

The Secretary of State did not accept the appellant’s position as to whether there was existing affordable housing on the site:

vacation of a property by a Registered Provider as a preliminary step towards estate renewal cannot reasonably be a basis for disregarding that floorspace for the purposes of affordable housing policy. He further agrees, for the reasons given at IR206-218, that the AS fails to comply with the ‘no net loss’ element of development plan policy.”

He considered that for the same reason the benchmark land value for the purposes of viability appraisal should be “based on the current situation, that is based on social housing development, as the Council contends.”

He concluded that the appeal scheme failed “to satisfy the policy aims of no net loss of social housing and maximum reasonable provision, largely for reasons related to the way in which the exiting [sic] vacant units of social housing are treated.”

Newcombe House, Notting Hill

Still in RBKC and back to the saga of Newcombe House. As summarised in my 18 June 2017 blog post, an appeal in relation to the proposed development of the site had been rejected by inspector David Nicholson (as of the Purley Baptist Church site case above). The refusal had partly been on similar grounds to the dismissal of the Sir William Sutton Estate appeal.

A new scheme was brought forward by the developer, Notting Hill KCS Limited, for “demolition of existing buildings and redevelopment to provide office, 46 residential units, retail uses, and a flexible surgery/office use, across six buildings (ranging from ground plus two storeys to ground plus 17 storeys), with two-storey basement together with landscaping to provide a new public square, ancillary parking and associated works.”

RBKC resolved to refuse the new application on 31 January 2018, on townscape, heritage and affordable housing grounds. On 26 March 2018 the Mayor of London intervened and took over the application. The applicant varied the scheme to increase the humber of homes and amount of affordable housing and the Mayor resolved to approve it on 18 September 2018 subject to completion of a section 106 agreement.

However, following representations by RBKC, the local residents group and Emma Dent Coad MP, the Secretary of State has issued a holding direction so that he can consider whether to call in the application for his own determination.

Kensington Forum Hotel

Another RBKC saga. An application by Queensgate Bow Propco Limited for the redevelopment of the Kensington Forum Hotel for “comprehensive redevelopment and erection of a part 30, part 22 and part 7 storey building comprising hotel bedrooms and serviced apartments (Class C1) with ancillary bar, restaurants, conferencing and dining areas, leisure facilities and back of house areas; residential accommodation (Class C3); with associated basement, energy centre, plant, car parking, cycle parking, refuse stores, servicing areas; associated highway works and creation of new publicly accessible open space with associated hard and soft landscaping“. The scheme included 46 homes.

On 27 September 2018 RBKC resolved to refuse planning permission – as with Newcombe House on townscape, heritage and affordable housing grounds. As with Newcombe House, the Mayor of London intervened and took over the application, on 5 November 2018.

This time however RBKC has issued proceedings for judicial review, seeking to quash the Mayor’s decision to take over the application. From the 7 December 2018 pre-action letter it appears that the grounds are (1) alleged errors of fact as to the number of homes which RBKC has recently delivered and (2) a failure to take into account RBKC’s programme for building new homes (including homes for social rent).

In the meantime it is reported that the Secretary of State has, again as with Newcombe House, issued a holding direction so that he can consider whether to call in the application for his own determination.

Getting messy isn’t it?

Simon Ricketts, 26 January 2018

Personal views, et cetera

The Purley scheme, image from inspector’s report

Permitted Development: Painting By Numbers Versus Painting The Sistine Chapel?

Time now to look at some of the proposals to extend permitted development rights and to amend the Use Classes Order that are set out in the Planning Reform: Supporting the high street and increasing the delivery of new homes consultation paper published alongside the Autumn budget on 29 October 2018, and strongly criticised in Nick Raynsford’s final review of planning in England (November 2018):

The government’s announcement of its intention to extend even further this permissive ‘shadow’ planning process appears to reflect its model for the future direction of the system; and this has real implications for people and for the nature of both planning and planners. This reflects the tension recorded in evidence presented to the Review as to whether planning is a form of land licensing, which implies one set of skills and outcomes, or the much more complex and creative practice of shaping places with people to achieve sustainable development. The former task is like painting by numbers; the latter is like painting the Sistine Chapel. The difference in outcomes for people is equally stark.”

I’m not sure that sort of language (describing traditional planning applications as equivalent to painting the Sistine Chapel, a spectacularly inapt comparison, or indeed TCPA interim chief executive Hugh Ellis’ language in the accompanying press release: “‘Permitted development is toxic and leads to a type of inequality not seen in the Britain for over a century.“) is helpful to the debate.

It seems to me that the two key issues which need to be addressed in relation to permitted development rights that enable additional residential development (whether by way of conversion or construction) are the need for some control at a national or local level over room sizes and the need to provide a proportion of affordable housing whether on site or by way of financial contribution. Aside from those obvious issues (not addressed in the latest consultation paper), what is wrong with the Government looking to streamline development management processes where appropriate? Surely the question is where is the appropriate dividing line. Surely deemed planning permission should be for types of development where, given the public benefit in seeking to encourage them, the local planning authority should not need to question the principle of what is proposed up to a defined scale at a particular location (with more general powers to restrict rights available by way of Article 4 Direction) and where wider issues do not arise that cannot be resolved within a 56 day period for prior approval of specified aspects which are, as far as possible, not open to differing subjective views? Don’t we need to define some sort of principle along these lines before then considering different common types of development?

Allow greater change of use to support high streets to adapt and diversify

The Government proposes that uses in classes A1 (shops), A2 (financial and professional services), and A5 (hot food takeaways) (as well as uses as betting shops, pay day loan shops and laundrettes) should be allowed to change to “office use (B1)” (do they mean “office use” or do they mean B1 which also encompasses light industrial and R&D?). Hot food takeaways will be allowed to change to residential use (C1) as is already the case with the other uses referred to. There would be the requirement for prior approval, as with existing change of use permitted development rights.

Alongside this, the current “pop up” temporary permitted development rights to change the use from shops (A1) financial and professional services (A2), restaurants and cafes (A3), hot food takeaways (A5), offices (B1), non-residential institutions (D1), assembly and leisure uses (D2), betting shops and pay day loan shops to change to shops (A1) financial and professional services (A2), restaurants and cafes (A3) or offices (B1) will be extended from two years to three years. The temporary permitted development rights are proposed now to extend to changes to certain community uses, namely as a public library, exhibition hall, museum, clinic or health centre.

All of these proposals are put forward in the context of “supporting the high street” but no geographical limitation to the proposed changes is indicated that would prevent their application to any building in the relevant use, wherever it is located – shades of the original proposal in relation to the office to residential permitted development right, which was couched in terms of underused and empty office premises, when of course the right turned out not to have any such limitation. There is no indication of any floorspace cap. Might a department store, or supermarket, turn into an office? Nor indeed any cap on the proportion of any shopping area that might be converted to offices.

The document goes on to explore whether changes could also be made to the Use Classes Order, namely to:

“simplify the A1 shops use class to remove the current named uses and allow for a broader definition of uses for the sale, display or service to visiting members of the public.”

⁃ consider whether there is “scope for a new use class that provides for a mix of uses within the A1, A2 and A3 uses beyond that which is considered to be ancillary, which would support the diversification of high street businesses. This would replace the existing A1, A2 and A3 and result in a single use class to cover shops, financial and professional services, restaurants and cafes. This would mean that movement between these uses was no longer development and not a matter for the planning system to consider. It would bring greater flexibility but reduce the ability of communities and local planning authorities to distinguish between shops and restaurant uses“.

I agree that these parts of the Use Classes Order potentially need reform (within boundaries – is it really workable for there to be no distinction at all between A1 and A3?) but can’t this be as part of broader reform of the Order? The B, C and D classes all give rise to equivalent issues in that the old distinctions between uses have become increasingly difficult to apply.

A new permitted development right to support housing delivery by extending buildings upwards to create additional homes

This idea has been around since February 2016 without civil servants arriving at draft legislation, which is surely going to be the practical test.

Looking back, I covered this proposal most recently on 13 October 2018 in my blog post The Up Right, before that in my 17 March 2017 blog post Permitted Development: À La Recherche Du Temps Perdu and before that in my 15 June 2016 blog post Permitted Development: What Next? However, this latest version of the proposals is certainly the most far-reaching.

The permitted development right would allow additional storeys to be built above buildings in a wide range of uses, including residential, retail and offices. The Government indicates:

We want to explore whether there may also be other buildings whose use is compatible with the introduction of new homes. Given they are usually located in residential areas or high streets, would premises such as health centres and buildings used for community and leisure purposes be suitable for inclusion in the permitted development right? Out of town retail parks with a mix of shopping and leisure uses may also be suitable for upward extensions to provide additional homes.”

The consultation paper asks for “examples of how this permitted development right might be used in practice, and particularly of how the use of local design codes could help to encourage take up of the proposed right and improve the design quality and acceptability of upward extensions.”

It’s sounding complicated already. Then add the question of how far upwards the permitted development right could allow development to go. The consultation paper offers two alternatives, both of which could lead to significant factual disputes:

⁃ “A permitted development right could apply to the airspace above premises in a terrace of two or more joined properties where there is at least one higher building in the terrace. The roof of the premises extending upward would be no higher than the main roofline of the highest building in the existing terrace.”

⁃ “An alternative approach would be to permit upward extensions more widely to a height no higher than the prevailing roof height in the locality. While this may extend the proposed right to a greater number of properties, it would not be possible to define prevailing roofline in regulations. Therefore it would be a matter to be considered by the local authority as part of the prior approval. In doing so, the local authority would be able to define what it considered to be the prevailing roofline taking account of the local building types and heights and the extent of the area over which it should be determined.”

To add to the complications:

Where premises are not on level ground the impact of adding additional storeys can be significantly greater on the amenity of neighbouring premises, for example from overlooking and overshadowing and on the character of the area. We would welcome views on how best to take account of the topography of specific areas.”

The consultation paper proposes that there should be a maximum limit of five storeys from ground level for a building once extended (so the extension could be up to four storeys!). But there would be an even broader permitted development right for purpose built, free standing blocks of flats of over five storeys. “The government would also like a permitted development right to apply to such buildings, and is interested in views, including whether there should be a limit on the number of additional storeys that could be added, for example 5

The permitted development right would allow for the physical works required to construct or install additional storeys on a building. It could also, for instance, allow for “works within the curtilage where it is necessary for access to the additional new homes“.

The prior approval requirements would include appearance, ie “considering whether the proposed development is of good design, adds to the overall quality of the area over its lifetime, is visually attractive as a result of good architecture, responds to the local character and history of the area and maintains a strong sense of place, as set out in paragraph 127 of the National Planning Policy Framework. We expect prior approval on design to be granted where the design is in keeping with the existing design of the building.

Prior approval would also consider the impact of the development on the amenity of neighbouring premises, for example, from obscuring existing windows, reducing access to light or resulting in unacceptable impact on neighbours’ privacy from overlooking. It would also consider measures to mitigate these impacts, and enable the neighbours, including owners and occupiers of premises impacted, to comment on the proposal.

This is asking a lot of the 56 day prior approval process – sounds like a job for a traditional planning application to me.

Finally, yet another extension of the previous proposals: “We are seeking views on whether the proposed right to build upwards to create new homes should additionally allow householders to extend their own homes.”

This all sounds like it’s on a collision course with what the Government has set in train with the establishment of the ‘Building Better, Building Beautiful‘ Commission.

The permitted development right to install public call boxes and associated advertisement consent

I may come back in a later blog post to the Government’s proposal to remove permitted development rights for the installation of public call boxes. Since earlier blog posts on the subject, I’m now off-side from commenting in detail due to acting for an electronic communications code operator, but I would briefly note that the need for additional apparatus is about enabling electronic communications both present (3G, 4G and wifi) and future (5G) rather than just being about the old phone box concept and in that respect the terminology in Part 16 and the references in the Control of Advertisements Regulations probably do need updating without throwing the baby out with the bathwater.

Supporting housing delivery by allowing for the demolition of commercial buildings and redevelopment as residential

Well this proposal dates back to October 2015! As with the upwards extensions proposal, is it simply too difficult to draft in legislative form? The wording in the consultation paper is certainly tentative:

⁃ “It may be that a right focused on smaller sites may be more practical...

⁃ Despite the Government having set its face against affordable housing requirements in relation to the office to residential permitted development right, with this right it is said that the Government “would be interested in views on how developer contributions expected towards affordable housing and other infrastructure could be secured.

⁃ “We would welcome views as to the design of a right which could operate effectively to bring sites forward for redevelopment. The responses to these questions will inform further thinking and a more detailed consultation would follow.”

To be provocative, if additional storeys of residential development are to have deemed permission, and if new residential developments are to have deemed permission if they replace commercial buildings, what is the logic for not granting deemed permission for residential development on brownfield land more generally – what is inherently more complex or controversial arising from that than from the development that could come forward under these new rights? Why the prior complications with brownfield land, but not with these other rights, of land having to be placed by a local planning authority on a register before there is permission in principle?

The deadline for consultation responses is 14 January 2019.

Simon Ricketts, 8 December 2018

Personal views, et cetera

Oliver’s Twist: Letwin’s Proposals For Large Housing Sites

Sajid Javid had given Sir Oliver Letwin the following terms of reference for his review into the “build out of planning permissions into homes” that was announced in the Autumn 2017 budget.

The Review should seek to explain the significant gap between housing completions and the amount of land allocated or permissioned in areas of high housing demand, and make recommendations for closing it. The Review should identify the principal causes of the gap, and identify practical steps that could increase the speed of build out. These steps should support an increase in housing supply consistent with a stable housing market in the short term and so that over the long-term, house prices rise slower than earnings. The review will provide an interim report to the Chancellor of the Exchequer and the Secretary of State for Housing, Communities and Local Government in time for Spring Statement 2018 and a full report for Budget 2018.”

Has Letwin’s final report (published alongside the budget on 29 October 2018) twisted itself away from the examination question that he was set? In my view, read as a set along with the previous two stages of his work, it is pretty clear how his thinking has developed. But he has ended up making a surprisingly radical and, to my mind, impractical, set of recommendations that surely will not find traction with this Government and which on any reflection would surely not increase the “speed of build out“. Perhaps due to the deadline he was set, the recommendations in the final report are not accompanied by any evidence. They are also set out in some detail (see for example the tables embedded in a later part of this blog post) at the expense of any commentary on, for example, the proposals to encourage timely delivery that were set out in the February 2017 white paper.

Dear Philip and Sajid

There have been three stages to his work. In his 9 March 2018 letter to the Chancellor and Secretary of State he provided this initial analysis:

The fundamental driver of build out rates once detailed planning permission is granted for large sites appears to be the ‘absorption rate’ – the rate at which newly constructed homes can be sold into (or are believed by the house builder to be able to be sold successfully into) the local market without materially disturbing the market price. The absorption rate of homes sold on the site appears, in turn, to be largely determined at present by the type of home being constructed (when ‘type’ includes size, design, context and tenure) and the pricing of the new homes built. The principal reason why house builders are in a position to exercise control over these key drivers of sales rates appears to be that there are limited opportunities for rivals to enter large sites and compete for customers by offering different types of homes at different price-points and with different tenures.

When a large house builder occupies the whole (or even a large part) of a large site, the size and style (and physical context) of the homes on offer will typically be fairly homogeneous. We have seen examples of some variation in size, style and context on some large sites; but the variations have not generally been great. It has become apparent to us that, when major house builders talk about the absorption rates on a large site being affected by “the number of outlets”, they are typically referring not only to the physical location of different points of sale on the site, but also and more importantly to differences in the size and style (and context) of the products being offered for open market sale in different parts of the site. Even these relatively slight variations are clearly sufficient to create additional demand – and hence additional absorption, leading to a higher rate of build out.

It is also clear from our investigation of large sites that differences of tenure are critical. The absorption of the ‘affordable homes’ (including shared ownership homes) and of the ‘social rented housing’ on large sites is regarded universally as additional to the number of homes that can be sold to the open market in a given year on a given large site. We have seen ample evidence from our site visits that the rate of completion of the ‘affordable’ and ‘social rented’ homes is constrained by the requirement for cross-subsidy from the open market housing on the site. Where the rate of sale of open market housing is limited by a given absorption rate for the character and size of home being sold by the house builder at or near to the price of comparable second-hand homes in the locality, this limits the house builder receipts available to provide cross-subsidies. This in turn limits the rate at which the house builder will build out the ‘affordable’ and ‘social rented’ housing required by the Section 106 Agreement – at least in the case of large sites where the non-market housing is either mixed in with the open market housing as an act of conscious policy (as we have frequently found) or where the non-market housing is sold to the housing association at a price that reflects only construction cost (as we have also seen occurring). If freed from these supply constraints, the demand for ‘affordable’ homes (including shared ownership) and ‘social rented’ accommodation on large sites would undoubtedly be consistent with a faster rate of build out. And we have heard, also, that the demand for private rented accommodation at full open market rents (the scale of which is at present uncertain) would be largely additional to, rather than a substitute for, demand for homes purchased outright on the open market.

The interim report

His interim report in June 2018 then focused on three issues:

• what the build out rate on large sites in areas of high housing demand actually is;

• why the rate of build out on these sites is as it is; and

• which factors would be most likely to increase the rate of build out on these sites without having other, untoward effects.

The interim report is a solid document with strong analysis and a variety of conclusions, one of which being that “if either the major house builders themselves, or others, were to offer much more housing of varying types, designs and tenures (and, indeed, more distinct settings, landscapes and street-scapes) on the large sites and if the resulting variety matched appropriately the desires of the people wanting to live in each particular part of the country, then the overall absorption rates – and hence the overall build out rates – could be substantially accelerated. The policy levers required to bring this about without damaging the economics of individual sites or the financial sustainability of the major house builders are topics for the second phase of my work, on which I shall report at the time of the Budget.”

The final report

And this is precisely what he has sought in part to do in his final report, published alongside the budget on 29 October 2018. I say in part, as there is no real analysis as to whether his proposed policy levers would or would not damage “the economics of individual sites or the financial sustainability of the major house builders“.

Underlying his conclusions seems to be his scepticism as to whether the encouragement in the NPPF for “residential developments to have a mix of tenures, types and sizes which reflect local housing demand (as well as emphasising the importance of good design)“, together with the 2018 NPPF’s requirement for local authorities to encourage the sub-division of large sites, is sufficient to lead to less homogenous development or “the prospect of significant increases in the rapidity of build out on such sites“.

He gives no evidence for this assumption. Even the 2012 NPPF (as now revised) is, after all, still working through into plans and permissions.

Instead of trying to work with the grain of the existing system, he recommends that “the Government should adopt a new set of planning rules specifically designed to apply to large sites. The purpose of these rules should be to ensure that all sites in areas of high housing demand whose size exceeds a certain threshold are subject to an additional form of planning control that requires those owning such sites to provide a diversity of offerings on the site which are able to address the various categories of demand within the local housing market. This, in turn, should ensure that houses can be built at a greater rate than at present on such sites, because the absorption rate for each category of housing will be complementary, yielding, overall, a greater absorption of housing by the local market as a whole in any given period.”

Ahead of a new legislative structure (both primary and secondary legislation) and an annex to the NPPF (I suspect it would take more than an annex – he’s driving a coach and horses through the thing as far as large housing sites are concerned), he envisages that the new rules could first be brought in by a written ministerial statement, secondary legislation and the policy annex. “If, for example, the Government decides to adopt my recommendations at the end of 2018, I suggest that it should be made clear to the owners of existing large sites in areas of high housing demand, and to those who are taking such large sites through the current planning system before commencing works, that the new rules governing planning permission for large sites will come into force at the start of 2021, and will therefore govern any permissions granted for large sites on or after that date.”

The primary legislation would:

” • define large sites both in terms of a size threshold (which might, for example, be set initially at 1,500 units2) and in terms of boundaries (to ensure that a site which is allocated as a single entity in a local development plan qualifies, even if it benefits from a number of different outline planning permissions);

• require local planning authorities, when granting allocations, outline permissions or final planning permissions for any large site or any part of a large site in areas of high housing demand, to comply with the new secondary legislation and the new planning policy relating to large sites – and, in particular, to include within all outline planning permissions for large sites in areas of high housing demand a requirement that ‘housing diversification’ on such sites should be a ‘reserved matter’; and

• establish the principle that all permissions for reserved matters granted in relation to such large sites should contain diversi cation requirements in accordance with the new secondary legislation and the new planning policy for large sites.”

The secondary legislation would:

” • amend the Town and Country Planning (Development Management Procedure)(England) Order 2015 to include type, size and tenure mix (alongside the current provision for prescription of access, appearance, landscaping, layout and scale) as characteristics that can be prescribed as reserved matters for large sites in areas of high housing demand; and

• require any applicant making an outline planning application for a large site or an application for final permission for a phase of a large site in an area of high housing demand to prepare a diversification strategy, specifying the types of diversity that will be exhibited on that site or in the part of the site to which the application refers.”

The new planning policy document would set out the diversification principles that are to apply to such large sites in areas of high housing demand in the future. By diversification, he means, for example, “housing of varying types, designs and tenures including a high proportion of affordable housing“, as well as “more distinctive settings, landscapes and streetscapes“. By all means strengthen the NPPF if further strengthening is needed (is it?) but how much of this is specific to schemes of 1,500 homes plus.

Then it really starts to get weird. Because there will be “scope for disagreement about whether a particular applicant has made a genuine effort to provide sufficient diversity to address multiple markets simultaneously and hence to increase the overall absorption rate and build out rate. Accordingly, in order to minimise recourse to appeal or litigation, I recommend that the Government should establish a National Expert Committee.

The primary purpose of this Committee should be to arbitrate on whether any application that causes a disagreement between the local planning authority and the applicant (and consequently comes to appeal) satisfies the diversification requirement, and is therefore likely to cause high build out rates.

The secondary purpose of the Committee would be to offer informal advice to any developer or local planning authority that was considering a large site application. I recommend that the Housing Secretary should guide local planning authorities to consult the National Expert Committee before approving any such large site application in an area of high housing demand.”

Why on earth would a new quango such as this be created?

For sites that will already have an outline planning permission before 2021, Letwin recommends that there should be financial incentives (ie government funding) for house builders to accept changes to their existing site plans. Developers would enter into a section 106 agreement to document their continued commitment to the diversity requirements. Letwin says that he has taken legal advice and is confident that the “voluntary transaction” that he proposes will prove to be lawful – perhaps, but it would certainly be unusual. Would the local planning authority be a party? Who would enforce?

One Step Beyond

He then goes “one step further” in relation to “large sites that have yet to be allocated within a local authority’s local plan“. He recommends “that the Government should, as part of the new primary legislation, introduce a power for local planning authorities to designate particular sites within their local plans as sites which can be developed only as single large sites and which therefore automatically become subject to the new planning rules for large sites. In addition, I believe that the local planning authority should be empowered to specify, at the time of designation, strong master-planning requirements including a strict design code as well as landscaping and full and specific infrastructure requirements.”

This in part appears to be a device to ensure that “the land value of those sites is not raised as far above the alternative use value as would be the case if a site were allocated in a local plan and subsequently obtained outline permission under our current rules“. But this can already be done by local planning authorities for good planning reasons, where comprehensive development is required for reasons of, for instance, sustainability or viability. Is Letwin going further than that?

What if there is no good planning reason why the site could not be sustainably be built out in parts? And what is indeed a single development? This will all prove hugely contentious. Particularly given that he goes on to indicate that to “ensure that a reasonable balance is struck between promoting the public interest through increased diversity and faster build out rates on the one hand, and proper recognition of the value of the land on the other hand, I recommend that the Housing Secretary (when issuing updated viability guidance alongside the new planning framework) should guide local planning authorities towards insisting on levels of diversity that will tend to cap residual land values for these large sites at around ten times their existing use value.”

No evidence is given as to why the level above which land values would be expropriated by the state without compensation (which, after all, would be the effect of the proposal) is set at 10 x EUV.

Letwin recognises that significant support will be needed from Homes England: “planning rules are by their nature passive and reactive. They can prevent things from happening (if they are properly enforced); but they can only do a very limited amount to encourage applicants to follow the spirit of the rules and hence to achieve fully the outcomes the rules have been created to achieve.”

He then goes on to visualise local authorities being empowered to bring forward sites themselves via a development vehicle, in one of two ways:

(a) the local authority could use a Local Development Company (LDC) to carry out this development role by establishing a master plan and design code for the site, and then bringing in private capital through a non-recourse special purpose vehicle to pay for the land and to invest in the infrastructure, before “parcelling up” the site and selling individual parcels to particular types of builders/providers offering housing of different types and different tenures;”

(b) the local authority could establish a Local Authority Master Planner (LAMP) to develop a master plan and full design code for the site, and then enable a privately nanced Infrastructure Development Company (IDC) to purchase the land from the local authority, develop the infrastructure of the site, and promote a variety of housing similar to that provided by the LDC model described above.

He sees local authorities that use these vehicles being given “clear” compulsory purchase powers over the large sites that the authorities allocate and indicates that “it would also make sense to consider the possibility of giving local authorities such CPO powers in relation to large sites that have been allocated in their local plan in the past but which have not obtained outline permission after a long period has elapsed.”

Even when compulsory purchase compensation values have been reduced by the mechanisms requiring build out as a single site (query how that is defined in practice) and by increasing the required diversity until the 10 x uplift on EUV is not exceeded, will development (with the required diversity) be viable for a local authority to bring forward? Will any authority have the resources for the task? Will non-recourse lending really be available to the extent that would be required? Why would anyone start on the process of promoting a large site for development when it can be snaffled as part of a larger “single site” in this way?

The notions in the report could be read as moving to the public sector the role of strategic land promotion companies, which I suspect (for all that they are maligned) to be responsible for a high proportion of the major housing sites that do come forward at present. So, to misappropriate Kit Malthouse’s recent analogy that he applied to Homes England, we would lose some WD40 in the system: the companies with the incentive to identify sites, assemble them, identify and overcome infrastructure constraints, devise a viable and acceptable form of development, pursue allocation and permission, open up land with strategic infrastructure and dispose of parcels to house builders. And, going back to the original terms of reference, this will “increase the speed of build out“?

I appreciate that this report was delivered to a deadline, which it achieved, but (unlike the previous stages of Sir Oliver’s review) it seems to me to lack any robust evidential basis at all to justify the wholly new structure that it proposes for allocating, permitting and delivering schemes with 1,500 or more dwellings. Nor does the review interest itself with any more practical nudges that could be introduced into the current system. If it just goes on the “nice but radical ideas” shelf, another year will have been wasted, without any real progress towards making practical improvements that might improve build out rates. After all, Homes England is already playing a hugely positive role in unlocking large-scale housing development and indeed on 30 October 2018 published its strategic plan for 2018/2019 – 2022/2023, setting how it intends to go much further to use its “land, money, powers and influence to increase the pace, scale and quality of delivery“. When the Government responds to the Letwin report in early 2019 I will be looking to see whether any measures that are to be taken forward will pragmatically assist Homes England’s practical work – they are the ones rolling up their sleeves on all this.

Lastly, if as a consequence of implementation of these proposals we were to see the private sector focusing its attention on smaller sites, in preference to these sites which can really make a difference in terms of delivering at scale, that would in my view be inconsistent with the brief that was set.

Stick or twist?

Simon Ricketts, 3 November 2018

Personal views, et cetera

PS No sooner had I finished this post and poured some strong coffee than I saw this morning’s announcement that the Secretary of State has appointed Professor Sir Roger Scruton to chair a ‘Building Better, Building Beautiful’ Commission – no-one could criticise the current build out rate of MHCLG when it comes to reports and reviews.

LAMP lighter

MHCLG Consults On A Changed Basis For Assessing Local Housing Need & Other Urgent Repairs

I’m not sure anyone was expecting MHCLG to act quite so quickly to try to mend a number of problems that have been arising from the July 2018 NPPF (although perhaps problems of its own making).

Its technical consultation on updates to national planning policy and guidance (26 October 2018) invites comments by 7 December 2018 on the following:

Local housing need assessment

I referred in my 29 September 2018 blog post OAN Goal to the confusion caused by the publication by the ONS on 20 September 2018 of updated 2016-based household projections that resulted in the national minimum housing need calculated by the NPPF’s standard method falling significantly from data published in September 2017 which had been based on 2014 household projections.

There was widespread concern that the updated figures were not reliable. The Government had indicated that the figures would not lead to a reduction in the national 300,000 new homes target. A revision to the standard method was to be made so that the new household projections did not cause that target to be missed but in the meantime how were authorities to plan?

The consultation paper is unambiguous: the Government has decided that it is not right to change its aspirations and the ONS figures are indeed misleading due to the way that they only draw from two censuses (rather than previous projections based on five censuses) “which focuses it more acutely on a period of low household formation where the English housing system was not supplying enough additional homes“. In addition:

⁃ “Household projections are constrained by housing supply

⁃ “The historic under-delivery of housing means there is a case for public policy supporting delivery in excess of household projections, even if those projections fall“.

⁃ “Other things being equal a more responsive supply of homes through local authorities planning for more homes where we need them will help to address the effects of increasing demand, such as declining affordability, relative to a housing supply that is less responsive“.

⁃ “The above factors have led to declining affordability…This indicates that the Government should not be less ambitious for housing supply“.

The Government has decided that the best way of responding to the ONS household figures is to ignore them completely, ie in its language:

1. For the short-term, to specify that the 2014-based data will provide the demographic baseline for assessment of local housing need.

2. To make clear in national planning practice guidance that lower numbers through the 2016-based projections do not qualify as an exceptional circumstance that justifies a departure from the standard methodology; and

3. In the longer term, to review the formula with a view to establishing a new method […] by the time the next projections are issued.”

So for local plans submitted from 24 January 2019, the 2014-based household projections as per the September 2017 data are to be used but with current figures used for the calculation of the ratio of local median house prices to local median earnings (where the ratio exceeds four the standard method formula will continue to increase local need above household projections). This all provides authorities with welcome clarity – ignore the September 2018 ONS projections and no need to wait for tweaks to the methodology.

Housing land supply

The 2018 NPPF provides that in calculating how many years’ supply of housing land supply each authority has, the standard method for assessing local housing need is to be used as the baseline for housing land supply calculations where plans are considered to be out of date. The NPPF is to be amended (and updated planning guidance is to be published) so as to clarify that whilst in exceptional circumstances authorities can use a justified alternative approach to the standard method for calculating housing need, this only applies to plan making rather than in the calculation of need in the determination of applications and appeals where the scale of housing land supply is relevant.

The definition of deliverable

In order to determine whether an authority has a five year supply of deliverable sites, the definition of “deliverable” is critical. The Government has held its hands up: the definition of “deliverable” in the 2018 NPPF could be clearer. It proposes the following revised definition:

To be considered deliverable, sites for housing should be available now, offer a suitable location for development now, and be achievable with a realistic prospect that housing will be delivered on the site within five years. In particular:

a) sites which do not involve major development and have planning permission, and all sites with detailed planning permission, should be considered deliverable until permission expires, unless there is clear evidence that homes will not be delivered within five years (for example because they are no longer viable, there is no longer a demand for the type of units or sites have long term phasing plans).

b) where a site has outline planning permission for major development, has been allocated in a development plan, has a grant of permission in principle, or is identified on a brownfield register, it should only be considered deliverable where there is clear evidence that housing completions will begin on site within five years.”

There will be further guidance in due course “to provide further information on the way that sites with different degrees of planning certainty may be counted when calculating housing land availability“.

Development requiring Habitats Regulations Assessment

The Government belatedly intends to address a problem that has arisen from the European Court of Justice’s ruling in People Over Wind (see my 20 April 2018 blog post EU Court Ruling: Ignore Mitigation Measures In Habitats Screening). The 2018 NPPF followed the 2012 NPPF in disapplying the presumption in favour of sustainable development where appropriate assessment is required, even though the effect of People Over Wind is that appropriate assessment is now routinely required in relation to proposed developments where mitigation will avoid any potential from harm, thereby removing the presumption in relation to many more development proposals than had previously been the case.

Paragraph 177 is now proposed to be amended to read:

The presumption in favour of sustainable development does not apply where the plan or project is likely to have a significant effect on a habitats site (either alone or in combination with other plans or projects), unless an appropriate assessment has concluded that there will be no adverse effect from the plan or project on the integrity of the habitats site.”

So now the need for appropriate assessment will not be a bar to the presumption applying. The wording in fact now allows the presumption to apply to more schemes than was the case pre People Over Wind.

The Government could have dealt with this issue before the 2018 NPPF was published. It makes the rather weak excuse: “Although some consultation responses asked for an amendment to the Framework in the light of the ruling, there was not an opportunity for all interested parties to comment at the time.” Well, why was there not even a written ministerial statement to clarify the position? I’m sure I am not the only one to have lost a planning appeal partly due to the absurd position that arose.

The government also indicates that it is “considering what other changes to regulations and guidance may be necessary following the European Court’s ruling“.

In my view MHCLG should take some credit for trying to sort out all of these issues. It is also interesting that the previous approach of avoiding making running repairs to the NPPF has been abandoned – we can soon expect NPPF version 2.1.

Simon Ricketts, 26 October 2018

Personal views, et cetera

The Up Right

In his speech to the Conservative party conference on 1 October 2018, James Brokenshire announced that the Government will consult “in due course” on “introducing a new permitted development right to allow property owners to extend certain buildings upwards, while maintaining the character of residential and conservation areas and safeguarding people’s privacy“.

Not that one again?!

My second ever blog post, on 15 June 2016, Permitted Development: What Next? summarised the February 2016 consultation paper jointly published by DCLG and the previous Mayor of London, which sought views on proposals “to increase housing supply in the capital by allowing a limited number of additional storeys to be built up to the roofline of an adjoining building through permitted development rights, local development orders or development plan policies”. The paper set out in some detail the criteria and prior approval requirements which would apply.

Nothing then happened, perhaps due to the change in Mayor and the ministerial changes that followed the June 2016 referendum, or perhaps it was always going to be a difficult piece of legislation to draft in a way that arrived at a mechanism that would be simpler for developers than a traditional planning application but which secured necessary amenity protections.

My 17 March 2018 blog post Permitted Development: À La Recherche Du Temps Perdu reported on the conflict between on the one hand a ministerial policy statement on 5 February 2018 which appeared to make it clear that the initiative (now across England, not just London) would be dealt with by policy, within the NPPF and then on the other hand Sajid Javid’s speech launching the draft revised NPPF on 5 March 2018 which had this passage:

And there are also other areas in which we’re ready to go further to take the delivery of housing up a gear.

Including a new permitted development right for building upwards to provide new homes”.

Paragraph 118 (e) of the new NPPF does specifically address upwards extensions: Planning policies and decisions should “support opportunities to use the airspace above existing residential and commercial premises for new homes. In particular, they should allow upward extensions where the development would be consistent with the prevailing height and form of neighbouring properties and the overall street scene, is well- designed (including complying with any local design policies and standards), and can maintain safe access and egress for occupiers.”

In the light of the Javid speech, the Brokenshire announcement was not a big surprise but I do wonder how the permitted development will be drafted so as to avoid the obvious issues that arise and why that NPPF statement isn’t considered to be sufficient.

The RTPI’s response to the announcement on 2 October 2018 was surely right, in which its chief executive, Victoria Hills, said:

Densification of built-up areas can bring about much needed housing supply, but quality is as important as numbers. Blanket height extensions come with issues that have potentially serious impact on streetscape and people’s access to light. National policy can provide a favourable steer, but local communities should be able to set standards which enable higher buildings to make a positive contribution to housing supply.”

There is no indication as to when the consultation will take place. For instance, is the Chancellor’s 29 October Autumn budget statement too soon?

It is interesting that Brokenshire did not take the opportunity at the party conference also to reheat the Autumn 2017 budget policy paper announcement that “the government will consult on introducing… a permitted development right to allow commercial buildings to be demolished and replaced with homes“.

In the meantime, the existing office to residential permitted development right continues to be controversial.

Earlier this year, the RICS published a research paper, Extending permitted development rights in England: the implications for public authorities and communities (1 May 2018)

The study estimated that “between 86,665 and 95,045 dwellings (depending on how student accommodation is classified) might potentially have been created under the extended PD rights between 2010 and 2017. The bulk of these additional dwellings arises from small-scale (less than 10 units created) conversions from commercial uses (including offices) to residential use and from agricultural buildings use to residential use.

These small schemes have been broadly distributed (largely in locations with relatively low property values) through cities and towns without any marked regional patterning. The large-scale conversions of office and other commercial uses to residential use that are a key matter of concern to policy makers are less important with regard to the overall number of dwellings delivered and are overwhelmingly concentrated near the cores of major urban areas. These large scale office conversions (excluding student accommodation) are concentrated in the South East. The scale of PD occurring entirely within the industrial and commercial use classes is relatively modest.

Cost-Benefit Analysis (CBA) compared the direct costs and benefits to local authorities of extended PD rights with the outcomes of an identical development that had obtained formal planning permission. The key findings were that:

The largest estimated financial impact is the loss in affordable housing contributions. This amounted to about £42.5m.

The benefits arising from savings in staffing costs within planning departments (£14m) are not enough to offset the loss of fees (£22m).

Overall, this part of the analysis estimates that the direct financial impact of the extension of PD rights is a net loss to all the Local Authorities across England of around £50m.”

The research indicates that office to residential conversions under PD have also produced a higher amount of poor quality housing than schemes governed through full planning permission.”

But the mechanism still has its cheer leaders. Conservative MP Nick Herbert wrote a piece in the Standard, Permitted development is key to race to build homes on 8 October criticising the London Mayor for encouraging, in the draft London Plan, boroughs to use article 4 directions to remove the permitted development right.

Then a penny dropped. Nick Herbert is chairman of a think tank, called The Project for Modern Democracy. Who should be the research director for the “Planning Change” strand of the think tank’s work but Alex Morton? As set out on the Project for Modern Democracy’s website:

“Alex was Special Adviser to then Prime Minister (David Cameron) for two and a half years, focused on housing, planning, and local government. He also drafted the Conservative 2015 Manifesto on those areas. Prior to working in No.10, he led on housing and planning at the Policy Exchange think tank.”

He was lobbying for a permitted development right to convert offices to residential as long ago as 2011 in a Policy Exchange paper, More Homes: Fewer Empty Buildings.

Morton has now published a short paper, A backwards step on Permitted Development (26 September 2018) on which the Nick Herbert article was based. The piece seeks to rebut criticisms of the office to residential permitted development right, particularly that it has led to shortages of business space, lower affordable housing and “unsuitable homes“. Read it for yourself but I found it a pretty weak analysis. I also found it strangely inconsistent with a comment piece he had written in the Independent in 2013, which contained passages like this:

Finally, there are unnecessary and unhelpful side-shows like the extensions debacle last week, which stripped immediate neighbours of their powers to object to major changes next door, and which even most supporters of planning liberalisation felt went too far.

I wonder what the Project for Modern Democracy thinks about the proposed Up Right?

Simon Ricketts, 13 October 2018

Personal views, et cetera

OAN Goal

The Government’s goal remains as per Philip Hammond’s 22 November 2017 Autumn budget statement:

So today we set out an ambitious plan to tackle the housing challenge.

Over the next five years we will commit a total of at least £44 billion of capital funding, loans and guarantees to support our housing market.

To boost the supply of skills, resources, and building land.

And to create the financial incentives necessary to deliver 300,000 net additional homes a year on average by the mid-2020s.”

Will that number be reached? What pressure will the Government be under from its supporters, at next week’s party conference and subsequently, to resile from that 300,000 target in the light of the Office of National Statistics’ statistical bulletin, household projections in England published this month?

After topdown targets for individual authorities, derived from regional plans directly overseen by government, were abolished by the incoming 2010 coalition government, the 2012 NPPF has required each local authority to work out for itself, without any centrally prescribed methodology, what the objectively assessed need for housing is in its area. That quickly proved to be a recipe for complexity, uncertainty, local politicking and delay.

So the Government has been trying since 2015 to arrive out how to arrive at a simpler system that isn’t seen as centrally prescribed. As set out in my 20 September 2017 blog post Housing Needs: Assessed Or Assumed?, the Government decided to consult on a new “standard method” which would provide authorities with a minimum figure, desired from a formula based on household projections, local affordability and a cap on the extent of any increase deriving from the new formula.

Alongside its 14 September 2017 consultation document it published a spreadsheet showing “indicative” figures that would result for each authority from the new method, draft figures which it warned should be “treated with caution“. The total number totted up to 266,000 – a number that made the 300,000 look like a decent stretch target.

All admirably transparent and fascinating at the time, but surely in retrospect it was not helpful to publish those figures, particularly given that it was also stated that the new standard method would apply to local plans that weren’t submitted for examination by the later of 31 March 2018 and publication of the new NPPF?

Numbers drive actions. For some authorities there was clearly an immediate incentive to rush to submit their plan before the standard method was imposed, for others quite the reverse. We have seen corners cut by some authorities in their haste and the position became even more confused once (1) the possible 31 March 2018 deadline became, once the new NPPF was published containing a six months’ grace period, 24 January 2019 and (2) it became clearer that the figures and methodology were liable to change in any event.

The numbers were always likely to change given that the September 2017 household formation projections were arrived at by MHCLG using date going back to 1971 and the task for arriving at the final numbers was to be given to the Office of National Statistics, who would use the 2016-based population projections published in May 2018. When the ONS published its proposed methodology in June 2018 it became clear that ONS would only use trends in household formation back to 2001. Lichfields were expressing concerns about the likely consequences in a 27 June 2018 blog post:

We know that in the decade 2001-11 housebuilding fell to its lowest level and household formation amongst young adults changed significantly. If the new household projections only draw upon this (relatively) short term trend for projecting future household growth, is there a significant risk of ‘baking-in’ trends which are not reflective of future ‘need’ but simply an illustration of what the number would be if we continued more of what has been before?

ONS had consulted on its approach in 2017, and many respondents (including Lichfields) pointed out the need for the methodology to reflect not just a ‘purist’ demographic approach, but reflect on the real-world implications for housing need. Suggestions were made that ONS might wish to consider producing local ‘variant’ projections (as DCLG used to do at a national level) with modified formation rates as the basis for the standard methodology. It does not appear ONS intends to follow this advice.”

To be fair, the Government was not blind to what was likely to happen. As I set out in my 5 August 2018 blog post Housing Needs, Housing Shortfalls, when it published the final version of the NPPF on 24 July 2018, it published on the same dayits response document to the consultation on the draft, with this passage:

A number of responses to this question provided comment on the proposed local housing need method. The government is aware that lower than previously forecast population projections have an impact on the outputs associated with the method. Specifically it is noted that the revised projections are likely to result in the minimum need numbers generated by the method being subject to a significant reduction, once the relevant household projection figures are released in September 2018.

In the housing white paper the government was clear that reforms set out (which included the introduction of a standard method for assessing housing need) should lead to more homes being built. In order to ensure that the outputs associated with the method are consistent with this, we will consider adjusting the method after the household projections are released in September 2018. We will consult on the specific details of any change at that time.

It should be noted that the intention is to consider adjusting the method to ensure that the starting point in the plan-making process is consistent in aggregate with the proposals in Planning for the right homes in the right places consultation and continues to be consistent with ensuring that 300,000 homes are built per year by the mid 2020s.”

So, as at July the position was that updated household projection figures would be released in September and the Government would then “consider adjusting the method after the household projections” and would “consult on the specific details of any change at that time.

The updated figures were indeed then published, on 20 September, and show significant downward movements in the projections for individual authorities and an overall decrease in the total required, from 266,000 to 213,000. There has been a quick succession of excellent blog posts from planning consultancies, going into the statistical detail and likely implications, including (with apologies to those I don’t mention) Bidwells, Barton Willmore, Turley and Lichfields. There have inevitably also been many calls from objectors to housing numbers within emerging local plans for those numbers to be reviewed in the light of the new figures.

But the goalposts haven’t moved (yet). I assume that the Government will now indeed consult on changes to the standard method to increase numbers back within spitting distance of the 300k. There is surely no point in any authority taking any steps in reliance on the September 2018 ONS figures, but then again the September 2017 MHCLG figures have a large question mark against them. If you are an authority looking to make progress with your plan with a view to submission after 24 January 2019 you really have very little to go on as to the approach to be adopted.

So it is urgent that the Government consults as to proposed changes to its methodology and what that is likely to mean for individual authorities – although that consultation paper is going to end up running very close up to the 24 January 2019 date, leaving very little time for, er, planning.

Furthermore, I’m not sure that the ONS numbers are going to be standing still. As Planning magazine have identified in their useful coverage of the new numbers, ONS’ analysis that accompanies their figures makes it clear that it is aware of some of the deficiencies in the data. It refers to responses to consultation on its proposed methodology:

There was a view that only using the 2001 and 2011 Censuses would result in a downward trend in household formation for the younger age groups, which in turn would downplay the need for housing for younger people. With these views in mind, Section 8 shows the results of sensitivity analysis in which 2014-based HRRs (projected using 1971 to 2011 Census data) are applied to the 2016-based subnational population projections (SNPPs), should users wish to investigate the impact of the change of HRR methodology on the household projections.”

ONS is also “planning to publish a set of variant 2016-based household projections in which household formation rates for younger adults (those aged 25 to 44 years) are higher – provisionally scheduled for 3 December 2018. The purpose of this variant would be to illustrate the uncertainty in the projections around the future household formation patterns of this age group.”

You numbers people will know better than me whether this is also likely to have an appreciable effect on the numbers, at least in some areas.

But it does seem odd that in order to gauge the level of housing need, in order finally to look to put right the increasing shortage and unaffordability of housing, the starting point has been to look at the rate at which people have been able to form households in particular areas, during that very period where lack of supply and high prices have led to them sharing with others or not moving from the parental home – or, in areas of particularly high demand and/or restraint, not having a hope of living near their family or job (or the job that they would seek were suitable affordable accommodation available).

There is now the dilemma at a national level that echoes the dilemma that local plan inspectors have had to grapple with at an individual authority level: whether to accept a coarse, hypothetical approach that can be implemented with relative ease or whether to insist on getting to a “pure” statistical answer. The latter may in my view be unrealistic: we need targets, with consequences if they are not met and we need to avoid giving convenient excuses for delay. Those targets need to be based on the best evidence but are ultimately political choices where national leadership is essential – this is not a local issue where individual authorities can operate without regard for wider consequences.

I would be disappointed if the Government, faced in any event with the prospect of not meeting its current target (which conveniently is expressed in any event by reference to a time frame, the “mid-2020s“, that takes it past the next election), were to see this current position, which should be a surprise to no-one, as an excuse to retreat from the 300k commitment. But they won’t get an easy ride from some I’m sure.

Simon Ricketts, 29 September 2018

Personal views, et cetera