Written evidence submitted by GL Hearn [FPS 141]

About GL Hearn
GL Hearn is a UK real estate consultancy, providing successful planning, development and occupier advisory outcomes for both public and private sector clients. GL Hearn provide commercially driven advice through all stages of the property life cycle, specialising in a variety of sectors including retail, residential, mixed-use development, commercial office space, education and healthcare, and transport infrastructure

GL Hearn provide a wide range of specialist planning services from town and country planning, landscape and public realm, and noise, acoustics and air quality, to economic planning, infrastructure planning and strategic communications and consultation.

 

Detailed responses to the inquiry questions

 

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?

GL Hearn welcome the government’s review of the planning system in England and, in particular, the headline objective of simplifying Local Plans. The plan-led system has historically suffered from the production of long and overly complicated documents that duplicate national policy and guidance and include other material that is already published elsewhere. 

The proposals to replace the current range of policies with three broad zones has the potential to be an extremely positive evolution. Care will need to be taken to ensure that the differentiation between policies that protect different kinds of landscapes and heritage assets as well as other qualities of the built and natural environment is not over-simplified or reduced by this approach. The risk is that introducing zones that are too blunt in their content will diminish quality in the built environment through a one-size-fits-all approach that does not recognise the different qualities and constraints of the various designations.   

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?             

Undoubtedly, the planning process is often too lengthy, complex and expensive and that constrains delivery, particularly for SME builders. The proposal to strip out much of the generic development management policies from Local Plans and provide such in a revised NPPF will improve matters. Primary legislation will be required to place the NPPF (or that part that contains the Development Management policies) on an equivalent footing as the Local Plan for decision-taking purposes.

It should also be recognised that delivery challenge also concerns the time it takes to negotiate s106 agreements, address reserved matters and provide necessary infrastructure.

The Letwin review recognised that product diversity often improves the build out rate although the major housebuilders are fully capable of responding to market forces by deploying multiple branding and wider unit typology. However, a wider diversity of house builders encompassing the SME companies that used to deliver such a large proportion of homes, would improve build out rates. The challenge in this is to simplify planning, reduce development risk and improve funding availability.

It is noted, however, that increased supply is unlikely to significantly alter the cost of homes, which are under pressure from further regulatory requirements like energy performance, biodiversity and design qualities. Pricing is fundamentally governed by interest rates and the availability of mortgage finance and not by the annual supply of new homes.

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

The championing of design is vital to securing better and more beautiful places. Some successes have been achieved through the former Commission for Architecture and the Built Environment (CABE) in the past, and the current network of Design Panels, on which some members of GL Hearn serve, can have a positive impact, although their existence is patchy and their resources are frequently stretched. We therefore welcome proposals to either support a national network of such bodies or the creation of a new body that can champion design.

We welcome the proposal to create a chief officer for design and place-making in each local planning authority. The former position of chief architect within local government certainly improved the ability of local government to secure their design objectives. That, together with design codes/pattern books, will ensure that focus is brought to quality place-making.

There is clearly a tension between the objectives of making the Plan-making process faster and introducing greater levels of detail in terms of design guides and codes. The option of the latter being prepared as SPD is of course valid, albeit that the weight attached would be less than if they were prepared as part of the Development Plan. There needs to be adequate resourcing of the system to ensure that priority is given to production of these guides and codes as part of the Plan-making process where practical.

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

There are two questions here: how to quantify need and the extent to which individual local authorities should be expected to satisfy their need in full.

In terms of the quantification of need, a suitable approach is essentially a choice between the two extremes of a nationally prescribed figure produced by a formula that allows for a limited measure of local specificity and leaving it to individual authorities to evidence their own need.

Given the politicised nature of the debate about housing numbers at the local level, it is right that the decision about the housing need figure for individual authorities is addressed by a readily understood formula. The formula the government has come up with rightly identifies the highest level of need in areas of high demand. The alternative approach will not deliver the new homes the country needs in the places where people actually want to live.  It is not useful to provide housing allocations that don’t match market demand.

Major housing development is as much a vital part of national infrastructure as transport and should be planned at the national and regional levels. Guidance can then be provided to sub-regions (and districts) as to what their individual contribution should be. How the need is apportioned should allow for some debate at the sub-regional/local level.

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

We wholeheartedly support the proposals to shift to a digitised planning system in which all the data sets and information can be shared and read across platforms and accessed easily by all in the community. There is such a wealth of data that is currently and has been submitted as evidence to support Local Plans as well as in support of planning applications and Environmental Impact Assessments, but almost all of this is in reality stored in paper form or read-only pdf format. It is not ‘live data’ and we are therefore losing enormous amounts of data that could play a large part in helping us to make progress across all areas of planning and environmental impact.

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

The current system provides sufficient protection providing that adequate funding is available to maintain the quality. This is often not the case.

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

The principal aim of the government’s planning reforms is to reduce risk, thereby improving the capacity of the house-building sector to deliver homes by reducing cost and increasing competition. This, in theory, will lead to a greater diversity of higher quality dwellings sold consumers in greater volumes.

The reforms overlook, however, an important dimension to the industry capacity. This is a readily available supply of building land.

Frequently, it is not Local government that is primarily responsible for constraining the supply of land by failing to allocate enough sites, but national policies, in particular Green Belt. Until the process of Green Belt release is simplified and the bar lowered, we are unlikely to see a significant change in developer behaviour given that intense competition over land in high demand regions and the need to protect margins will remain.

A Ministerial Statement should be issued asserting that meeting evidenced need for general housing does constitute “exceptional circumstances” under paragraph 136 of the NPPF and where the development is proposing to deliver a policy-compliant level of Affordable Housing this will constitute a substantial benefit for the purposes of assessing whether the test has been satisfied.

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?

The Committee previously concluded that planning permission led to a substantial increase in values by having regard to evidence that didn’t fully account for how much of that gain is already surrendered to local communities; now typically 25-30% of residential development value. Frequently, and particularly in London, the residual value to landowners does not exceed ‘existing use value plus incentive’ and leads either to complex viability negotiations or no development. The residual land value is commonly a low proportion of total development costs outside prime markets. There is the clear danger that increased value capture mechanisms that are not intensively focused on specific value areas will merely reduce housing delivery and the provision of affordable housing. Over half of developer contributions are generated in London and the South East and 67% of all contributions are for affordable housing[1].

The Committee did previously note viability negotiations that improperly rested upon what the developer paid. Following the Islington case, as noted by the Committee, that avenue is generally accepted in the market as being closed.

The planning reform proposals aim to address the shortfalls of CIL as a funding mechanism and retain s106 as a delivery mechanism, but no details are yet available.

The Committee previously noted the role of the Mk1 New Town Corporations and their ability to acquire land at agricultural values. Most were funded by 60-year HMT loans at 2% over LIBOR with most satisfactorily settling the loan within the period. Harlow, for example, repaid its loans within 15 years. This type of development vehicle could still operate and could acquire land at proper ‘open market value’ where, as would be the purpose of deploying such vehicles, the development hope value did not materially exist without the proposed infrastructure the principle commonly referred to as the Pointe Gourde rule in CPO compensation.

Finally, it is noted that the Committee referred to tax increment financing (TIF) which originated in post war Californian development for scheme specific financing on the principle of ‘no new tax, no lost tax’. Despite urging from a number of industry bodies since the 1990s, this only been used in a limited and ineffective fashion and more normally on an area wide basis unrelated to specific proposals by allowing local authorities to retain more of the business rate revenue generally.

 

November 2020

 


[1] MHCLG ‘Incidence, Value and delivery of Planning Obligations’ August 2000