21 February 2020

We are all eagerly awaiting the government’s proposed planning White Paper which is supposed to help it deliver “on the homes the country needs, building at least one million homes over this Parliament.”

But is it going to tackle the acute need or is it just going to be a sound bite? The omens so far are not good.

Our planning system works well when there is a political will to achieve, and I have seen situations where the politicians loosened their grip on the planning process and encouraged development – significantly speeding up the time it took to grant permission. In lots of cases, the process is slow either because there is no political will or a lack of resources in the overstretched planning departments.

Local authorities are rightly charged with ensuring that developers do not abuse the system – and they use the process, planning conditions and section 106 agreements to help. I have seen excellent uses of these powers – for example, a developer trying to deal with an issue on the cheap. However, in my experience, there are also far too many examples of frustration and slow delivery.

I act for housing associations, and a consistent and significant frustration for them has been the affordable housing provisions in a section 106 agreement. The National Planning Policy Framework talks about affordable housing remaining available for future eligible households, and some local authorities interpret that as meaning affordable housing in perpetuity and therefore put unreasonable restrictions on the use of the land.

Valuers then down value the land, which means that the housing association can borrow less, which in turn means less affordable housing. It cannot be sensible to tie a property to a particular use forevermore. It surely also flies against the Conservative Party’s principles of a free and open market economy.

And that brings me to the omens – the government has just published its consultation document on its First Homes policy. The intention is that these homes be sold to local people at a significant discount (likely to be around 30%). It intends “to ensure the discount is retained in perpetuity“ by placing restrictive covenants on these homes, which will require that the property is sold at the original percentage discount in each subsequent resale.

The government recognises the need for mortgagee protection clauses (allowing the mortgagee if needs be to sell free from the provisions) and that there need to be provisions allowing for sales if a local person cannot be found. However, it proposes that the definition of “local people” will be at the discretion of the local authority.

The danger with this approach is that it leaves the local authority with too much discretion. If that discretion is exercised in a protective way, that could have an adverse effect on marketability. It would be better if the government agreed with the Council for Mortgage Lenders a national template for such an arrangement and obliged a local authority to use that template. Too much regional power could otherwise lead to delays and nimbyism.

It will be interesting to see what approach the government takes in the White Paper.

Andrew Dudley

Andrew is head of the social housing team at Wright Hassall.

Andrew is head of the social housing team at Wright Hassall. He has been acting for housing associations for nearly 40 years. He specialises in stock transfer and property development.

Andrew learnt his trade for development work acting for Alfred McAlpine Homes Limited buying sites, setting up the sales documents and managing the plots sales team. This taught him how developers take risks and how they maximise their profits using ransom strips, overage and the very proactive approach to plot sales. He has used this knowledge to protect his housing association clients and advise them on the developer type approach to sales.

Government Planning White Paper 2020: will it help us to build more homes?