The Seismic Potential of Planning and Development Aspects of the Budget to Turnaround the UK Economy - commentary from Lanpro's Director of Planning

The planning and development sector has been stifled by uncertainty for far too many years. This has resulted in a housing crisis, general malaise in the industry and missed opportunities for the wider UK economy.

Despite an initial rush of activity by the new government, the time taken to respond to the NPPF consultation had added to the uncertainty for planning and development. But next Wednesday’s Budget is an opportunity to turn that around.

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Affordable housing

The National Housing Federation has called for a new long-term Affordable Homes Programme and minimum funding of ￡4.6bn per year.

Something needs to change to boost the housing sector. Recently many housing associations have reduced their development programmes and expenditure on Section 106 homes due to regulatory and cost pressures. Not only are too few affordable homes being built, but this is having a knock-on effect on market housing because it slows down the rate at which homes can be handed over to registered landlords and schemes completed due to planning permission constraints.

Furthermore the contribution of affordable housing by the private sector is dependent upon viability factors which are very nuanced, depending on the location and land values. Take the government’s ‘golden rule’ that 50% homes to be built in the 'grey belt' must be affordable housing, for example. We agree that Green Belt development should result in a higher proportion of affordable housing as an incentive for it to be released, but we feel that rather than a crude 50%, the percentage should be additional to the existing affordable housing requirement and determined on a case-by-case basis – 10% above the policy permission for example. This way the requirement would reflect commercial and locational realities and have regard for other factors that might be required, including provision of transport and community infrastructure through Section 106.

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Removal of agricultural relief on Inheritance Tax

It has been rumoured that the Budget will remove an allowance which enabled landowners to pass on farmland free of Inheritance Tax.

This may result in land being passed on to the next generation, landholdings being divided up, or sold at an earlier stage, thus releasing more land for development.? It would also impact the value of landed estates which are often asset rich but cash poor, possibly necessitating the need for land sales.

Another possible impact may be that rather than sell land for housing, farmers may lease land for renewables (wind and solar farms) thereby avoiding the need to sell which would incur both Inheritance Tax and (we anticipate higher levels of) Capital Gains Tax. The government should be mindful of unintended consequences.

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First time buyers

With recent research showing that 60% renters have accepted that they will never become homeowners, clearly much more needs to be done to support first time buyers getting on the property ladder.

Sadly, for a generation of young (and increasingly not so young) adults, the dream of home ownership is becoming increasingly distant.

With the government ruling out a return of Help to Buy, shared ownership failing to meet demand and First Homes failing to scratch the surface of the problem, we clearly need a new mechanism to help people onto the property ladder.

On affordable housing, the government’s focus to date has been social housing for rent, rather than other tenures including intermediate housing.

Shared ownership can be provided by the private sector, but this requires government support through policy. So a very a low-cost initiative by the government to make shared ownership a requirement and support its implementation (as the previous government did with Help to Buy) would provide a considerable economic boost.

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SME housebuilders

I hope that the Chancellor prioritises much-needed support to SME housebuilders. Less than 10% of new homes are built by SME housebuilders today, compared with 40% 40 years ago, and the impact on housing delivery is clear.

Labour’s ambitious plans for housebuilding can only materialise if small-scale developers are seen as part of the solution.

The benefit of local companies using local suppliers would boost local economies in line with the government’s broader objectives.

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Conclusion

The Home Builders Federation recently published research demonstrating that the government’s?1.5-million-homes target?could boost the UK economy by ￡330bn and provide an extra 350,000 jobs a year.

Furthermore the National Housing Federation has calculated that 90,000 social homes per year would result in net economic benefits worth ￡51.2bn.

And the government itself recognises the significant benefit that property development and its ‘domino effect’ can bring to public finances.

For those of us in the planning and development sector, Wednesday’s Budget is not only about what the Budget can do to support our work, but what our sector can do to support the economy. The potential is seismic but the solutions must be finely tuned.

As the consultation on the NPPF and the longer than expected timeframe for the government’s consideration shown, grand statements mean nothing until they are supported with actions. We hope that Wednesday will being a bold and yet considered approach to the future of the property sector.

Commentary from: Tom Pike - Director of Planning

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