Written evidence submitted by British Property Federation [FPS 127]

 

Introduction

 

The British Property Federation (BPF) represents real estate – an industry which contributed more than £100bn to the economy in 2018 and supported more than 2 million jobs. We promote the interests of those with a stake in the UK built environment, and our membership comprises a broad range of owners, managers, and developers of real estate as well as those who support them. Their investments help drive the UK's economic success; provide essential infrastructure and create great places where people can live, work, and relax.

 

Our submission has been informed by an extensive round of consultation with our membership exploring the contents of the Planning White Paper. This comprised separate workshops considering the different pillars of the consultation document, a workshop with our network BPF Futures (for those with fewer than 10-years experience), six meetings with our regional members, a well-attended webinar and several other consultation events.

 

Is the current planning system working as it should do? What changes might need to be made? Are the Government’s proposals the right approach?

  1. Government’s ambition to modernise and simplify the planning system is welcome. However, two words absent from the White Paper are ‘commercial property’. There is little detail on how the new system will work for commercial development. For example, in relation to the proposed Infrastructure Levy, it is not clear whether the levy will be the same for office development as it would be for residential (despite differing viability considerations and different impacts on local services). Also, In the context of design, where and when this will apply? Industrial parks? Mixed-use places, such as town centres?

 

  1. Our members develop some of the most complex commercial schemes in the country. They can be major regeneration projects and urban extensions, often mixed-use, and informed by significant engagement upfront to secure the trust of communities and consider their views. A repeated concern expressed to us is that the outline permission on such sites at the start of the development process (as proposed in Planning for the Future) would be unhelpful. It would not provide the level of consultation that is required, perhaps make promises to the local community that could not be kept and provide too much inflexibility on what are often projects that last years and sometimes decades. We therefore proposed a ‘long-term growth’ designation to account for this.

 

  1. If the new system is to be implemented effectively, there will need to be more resources put into planning.  The Government’s proposals are increasing the work of local planning authorities – for example, through more work being done upfront with the proposed land categories and role of local authorities in assisting local communities to produce design codes. An underappreciated element of the new system will also be the role of the Planning Inspectorate. With a new system of determining local plans, the role of the Inspectorate in terms of testing the robustness/ deliverability of these plans will become even more important. The Planning Inspectorate will also require sufficient resources to carry out this important role effectively.

 

  1. On local plans, a key focus should be on incentivising plan production.  An up-to-date local plan is an essential ingredient of an effective planning system however currently too few local authorities have up to date plans with significant gaps in the areas of greatest housing need.  Any new planning system must therefore incentivise plan production and have effective mechanisms for intervention when local authorities fall short. The Planning White Paper proposes to no longer require authorities to demonstrate a five-year land supply. Our view is this requirement, historically, has proved an effective incentive for local authorities to produce plans otherwise they risk losing at appeal.

 

  1. A further area of the White Paper that requires more work is the role of strategic planning. It is not clear what the planning powers of strategic planning bodies such as the GLA will be. However, some form of strategic planning will be an essential component of any new system. Our capital and regional cities benefit from the coordinated approach that can be fostered through the production of a strategic spatial plan and decision-taking at the larger than local level, especially on commercial property and infrastructure provision.

 

  1. The White Paper also requires further work on cross boundary cooperation between local authorities. It proposes the abolition of the Duty-to-Cooperate (DTC) however would not have our support without the introduction a more robust mechanism in its place. Whilst the DTC is flawed, it is one of the only mechanisms to get local authorities to work together in allocating need. The lack of a joined-up approach across authorities is a particular problem for allocating enough strategic employment land in the right places. There remains a significant vacuum in strategic planning following the abolition of Regional Spatial Strategies with logistics development involving complex supply chains that span across geographies with little regard for administrative boundaries.
  2. A final general concern is transition, and lost momentum in existing plans as part of moving to a new system.

 

The new ‘Infrastructure Levy’

  1.                                       We support the ambition of the White Paper to simplify. There are some positive ideas put forward particularly on some of the bureaucratic burdens and the greater standardisation of processes. 
  2.                                       The focus of reform should be on process and ensuring infrastructure delivery to meet need arising from the development proposed and the transparent and timely funding and provision of that. There is a major tension at the heart of the proposals, between maximising revenue and simplification, and that tension increases as the area covered by any levy gets larger.  If the intention is to tax development, as opposed to mitigate impact, then Government needs to be clear that is its objective and accept the consequences of increasing the tax burden on development activity.
  3.                                   A simple national Infrastructure Levy by its very nature would have to take account of the lowest possible contributor, even allowing for minimum thresholds, otherwise it would impinge on development activity. It therefore cannot maximise revenue. The more any levy can be tailored to individual circumstances the more it is likely to raise.
  4.                                   The Government has spent many years trying to perfect the Community Infrastructure Levy through numerous tweaks to the regulation. CIL began with the good intention of being simple but also reflecting the different development economics of different locations and types of development. Our knowledge of the development taxes of the post war era are that they also got mired in complexity over valuations and trigger points such as when occupation occurs.
  5.           We therefore support the need for reform that delivers simpler processes, but that also reflects the different viability of locations and types of development.
  6.                                   It is also unclear how a consolidated approach incorporating a single levy payable to the Council for both S106 and CIL would provide sufficient certainty to developers and communities that necessary infrastructure and community benefits would be delivered in practice. Such matters were considered within the comprehensive report published by the Expert CIL Review Team in October 2016.  The report concluded that it was necessary to retain Section 106 obligations that would also address the delivery of affordable housing, alongside a new Local Infrastructure Tariff to replace CIL.

In seeking to build 300,000 homes a year, is the greatest obstacle the planning system or the subsequent build-out of properties with permission?

  1.           The ambition should be to deliver the homes the nation needs, given the economic, social, and environmental consequences of not doing so. Having a root and branch review of the planning system is therefore wholly welcome and legitimate.
  2.           Build-out rates have been the subject of now numerous reviews, most recently by Sir Oliver Letwin, who identified sales absorption rates as an obstacle to greater delivery, and proposed a solution, which was more multi-tenure delivery on large sites. We supported Sir Oliver’s thorough analysis and conclusion. To get to delivering 300,000 homes per annum in any case will require all sectors firing on all cylinders, whether that social housing providers, homes for sale, or our own sector Build to-Rent (which is now making a real contribution to housing delivery and helping with absorption rates on large sites.)

How can the planning system ensure that buildings are beautiful and fit for purpose?

  1.                                   We are supportive of quality in development, which includes design and environmental performance, but also wider placemaking considerations. We are supportive of nationally set design principles, which could provide greater certainty, but should seek to avoid overly prescriptive requirements.
  2.                                   However, the heavy references to beauty within the Government’s White Paper may have unintended consequences. Whilst beauty is a virtue of design, it is largely subjective and there are a considerable number of important elements that lead to good planning, development, and placemaking and to ensuring developments are fit for purpose. The planning process should seek to deliver positive social, economic, and environmental outcomes whilst incentivising innovation. We have concerns about locally set design standards as proposed in the White Paper. There is a consensus within our membership that design should not be prescriptive, but rather a process undertaken by qualified and experienced professionals with support from key local stakeholders including communities and local government.
  3.                                   Further, the Government’s proposals focus on residential accommodation. This focus is also evident in the National Design Guide, with little attention given to the design characteristics of commercial buildings, in particular uses such as industrial and logistics facilities. Any design principles will also need to reflect different resident demands on homes that are built for sale, for rent, or for retirement.
  4. The Government intends that within the reformed system local design codes and guides are prepared where possible, and that these will primarily be brought forward through local plans, neighbourhood planning groups, and applicants bringing forward proposals for significant new development areas. We would emphasise the different inputs required for delivering design codes through these methods and likely subsequent outputs. The applicant route is supported by our members and there are examples of such codes being used successfully to date, with extensive prior engagement with stakeholders. This level of production allows for a balance between what is possible and viable on a given development site according to building uses and density requirements, and what is required to uphold quality and conformity with local character.
  5. We would also question the likely relationship between design codes set at a local level and the National Design Guide/Model Design Code. If these sources are to be informative of what goes into locally led design codes, this may conflict with what is ‘popular and characteristic in the local area’. If the intension is to have significant separation between locally lead codes and national guidance, we would question the practicality of having to adapt design processes, materials procurement, and ways of working for developers delivering projects across geographies. It is for these reasons that design principles set nationally are favoured.
  6.           We would encourage the Government and industry to embrace light touch design codes, that guide and inform rather than stipulate and require. Beauty will be delivered as a product of the correct processes, skills, and time being attributed to a project.
  7. On delivering fit for purpose buildings, we would highlight a few important considerations:

a)      Building Regulations including those relating to the conservation of fuel and power should be regularly reviewed and updated to ensure conformity with the UK’s ambitions on safety, quality, and environmental betterment.

b)      Planning policy and guidance should not only to the quantity of housing required, but also the quality and types of housing required to cater for different demographics and needs. This should include not only market for sale housing, but also build-to-rent and housing for older people. A focus on quantity can at times detract from the varying needs of the population.

c)       Whilst protections for historic buildings are important and should be upheld, thought must be given to how these buildings can be sensitively adapted to be fit for purpose into the future. This is particularly relevant in delivering energy efficiency measures in historic buildings so that they are fit for habitation and use, as well as compliant with the UK’s net zero ambitions. 

What approach should be used to determine the housing need and requirement of a local authority?

  1.           Ensuring the nation has sufficient housing is something that national governments should be held accountable for, and therefore in turn they should have sufficient policy levers. We have therefore been supportive of policies that have been put in place in recent years, including the need for up-to-date local plans, standard methodology, and housing delivery test.
  2.           An important aspect of the proposals in the White Paper, and recent consultation on the existing system, is ensuring that housing delivery supports the levelling-up agenda and growth aspirations of the North and Midlands. We are therefore supportive of a formula which better recognises this, within the overall intention to deliver 300,000 homes per annum.
  3.           Another issue, which the White Paper raises, is how individual local planning authorities have their housing numbers altered for adjustments, for example Green Belt. It is not clear from the White Paper, whether this would be done at local level or adjusted centrally. If the former, it would seem to negate the rationale for having centrally determined numbers.

What is the best approach to ensure public engagement in the planning system? What role should modern technology and data play in this?

  1. The interest of our members in community engagement extends beyond the local plan process (e.g. around major applications). This has two key implications: first, how to ensure that community feeling about development and place is accounted for in the period between Local Plan reviews; second, there may be a missed opportunity if PropTech entrepreneurs are geared to provide community engagement platforms that are solely geared toward engagement around Local Plans. It may be beneficial for the real estate sector and MHCLG to co-create some specifications for community engagement platforms.

 

How can the planning system ensure adequate and reasonable protection for areas and buildings of environmental, historical, and architectural importance?

What changes, if any, are needed to the green belt?

  1. The BPF has a long tradition of supporting brownfield-first policies. However, the Federation also recognises the need for a strategic view of Green Belt policy, by making better use of transport corridors that pass through it.

 

  1. In our view, there should be an independent (and apolitical, as much as possible) review of the role of Green Belt nationally  (e.g. with regard to preserving openness and preventing sprawl), and the role it could potentially play in contributing to meet housing and employment needs in appropriate locations. The starting point for any future Green Belt review (for housing purposes) should consider areas that relate closely to existing or future transport nodes that are of poor environmental quality.

 

In relation to employment land

  1. As land designated as Green Belt is reviewed in Local Plans, consideration should be given to the sustainable development potential of selective releases where this would assist in the siting of logistics development so as to locate logistics facilities appropriately to serve communities and to minimise road miles travelled.

 

What progress has been made since the Committee’s 2018 report on capturing land value and how might the proposals improve outcomes? What further steps might also be needed?

  1.           The way in which Government has sought new policy on land value capture since 2018 is through changes to the National Planning Policy Framework and the section on viability in Planning Practice Guidance. Changes seek to get local authorities to better reflect all policy requirements (local and national) in local plans and therefore those policy requirements get reflected in land prices.
  2.           The current system of developer contributions, though it has its problems, will generate an estimated £8bn in economic and social benefits (2019/20), including approximately 50,000 new affordable homes for communities around the country. As matters stand, the proposals for a new Infrastructure Levy are hard to truly assess as they lack detail.
  3.           There are a lot of different aspects to the new levy to comprehend and assess:

a)      The levy rate, and at what level of Government it is set?

b)      What is covered by the levy?

c)       What it is spent on?

d)      When it is paid?

 

  1.           Simplification of the process would be welcome, but it is not clear in the Government’s proposals whether any viability assessment would form part of the new levy? Assessing viability is important to ensure that any levy does not stop market activity. This is particularly important in the context of the Government’s ambitions to Build, Build, Build’ a way to recovery.
  2.           At present, viability is assessed in two ways. With CIL, there is a period of consultation on, and Planning Inspectorate scrutiny of, the local CIL charging schedule, which often reflects different rates for different forms of development. CIL payments are not negotiable and they represent a top slice at the start of the development process. S106 affordable housing requirements are then negotiated on a site-specific basis.
  3.           Gross development value can only flex in one of two ways, with most costs fixed. Either developer profits reduce with consequences for the sector raising capital; or the price of land reduces. Our concern then, rehearsed with the Committee before, is that less land is brought forward by private landowners, against the context of needing more land to deliver 300,000 homes per annum (plus the social and commercial buildings the residents of those new homes need to service them).
  4.           Significant simplification and standardisation could be achieved within the existing system. Government should consider again the proposals put forward by the CIL Review Group and standardising approaches to S106.
  5.           On level of Government, a national levy may hit specific project development economics and if set low to take account of this might not raise as much as current bespoke arrangements. A local level may not deliver much by way of simplification.  Some greater than local level (e.g. combined authorities, county councils or unitary councils) may be a compromise.  Without some flexibility a nationally set ‘local’ level would go against the Government’s drive for greater devolution.
  6.           On what is covered by the levy, any levy rates would have to take account of the different development values generated on residential (differentiating between for sale and for rent) and commercial development and between brownfield and greenfield sites.
  7.           On what the levy is spent on, given the importance that communities place on development coming with supporting infrastructure, placemaking and need for affordable housing, it is imperative that any levy funds continue to be spent on infrastructure and not on other local authority priorities.
  8.                                   There is perhaps also a missed opportunity to think more holistically about how levy funds are best used in conjunction with other infrastructure funding to ensure that all communities (and particularly those in low land value areas) get the infrastructure they need.
  9.           Paying the levy at the end of the development process has cashflow attractions but would raise considerable challenges around trigger points and valuations. It is also imperative for the large schemes our members are engaged in that infrastructure is delivered on time and members have fears about the capabilities of the proposed system to deliver this.
  10.           We support in principle allowing local authorities to borrow against future levy revenue receipts to forward fund infrastructure but that comes with risks.
  11.           It will be important to retain some in-kind (direct) provision, which is particularly important for certain parts of the sector, such as Build-to-Rent.
  12.           The Government should consider clear pathways for calculating affordable housing contributions on alternative residential sectors. Build-to-Rent already has this built into the NPPF. It would also be beneficial to have a clear pathway for later year housing products. We are also supportive of a clear pathway, with formulaic approach, for SME developers on small sites.

 

October 2020