It’s in the Way That You Use It (or Lose it)

By Paddy Kent, Account Director

Accusations of landbanking were again thrown at housebuilders this week as The Times reported that the Government is considering adding to all planning consents an expiry date (‘a sunset clause’) or levy, or both.

Of course we know that planning consents, if not implemented, already expiry. But what I think is meant here is adding an expiry date on permissions which have already been implemented, and with that, some kind of system of financial penalties that seek to improve build out rates. And these new rules would only apply to larger sites due to the current concern to support small and medium business.

It’s worth reminding ourselves of why the Government might consider fiddling in this area. Firstly, its target is to deliver 300,000 homes a year. It wants to see this target met. Measures it can take that it thinks will support this are ones it will pursue. Secondly, last year’s White Paper on the future of the planning system has faced repeated criticism as a ‘Developers’ Charter’ from Labour, the Liberal Democrats and even backbenchers like Theresa May. Almost central to the Liberal Democrat’s successful victory in June’s Chesham and Amersham by-election was campaigning against this White Paper.

So against that backdrop, along with numerous recent stories about the links between the funding of the Conservative party and property developers, we can see why the Government would announce policies (or in this case, so far just rhetoric) that ‘act tough’ on developers. Fourthly, it seems that there is a real perception that developers routinely landbank. As Jenrick told the Home Builders Federation in May, ‘we can’t deny there is a major perception problem (with landbanking). So we want to take action to ensure builders build out at the pace promised’. That the 2018 Letwin review looked into this in detail and found no evidence of it is not enough – according to the Government at least, the perception amongst the public is that it’s a problem. Personally, I’m not sure that belief that developers landbank is so common, but I’ll take Jenrick’s word on this.

I have to pick up too on his reference that build-out should occur ‘at the pace promised’. When are these ‘promises’ about delivery made? Certainly not in documents I’ve seen in pre-application or for planning. If I’m delivering public consultation for a land promoter or house builder, either to achieve inclusion in a Local Plan or as prior to a planning application, one thing we never do is over-promise. We are honest that build out rate is influenced by a variety of factors including the practicalities of construction as well as the need for supply to be compatible with local demand and market conditions.

What could a new system of planning consent expiry and/or levies actually look like? Could developers be obligated to build out a fixed percentage of the consented homes each year? If build out were less, would a levy of a fixed figure per home not built apply each year, or could an alternative punishment apply instead, such as the number of consented homes being automatically reduced? Could developers be required to set their out binding build out rates at planning application stage, alongside setting their own financial penalties were these not met?

Clearly, there are numerous ways that the current system could be altered. But it would certainly be complex to draw up rules that could apply within the existing system, to all sites, situations and developers. Time consuming technical considerations (e.g. decontamination work, utilities diversions) and land ownership issues often present very real barriers to build out – how would a system be drawn up to make allowances for this? Would LPAs welcome a further administrative burden in enforcing such a system? Perhaps they would if the revenue from levies went to them.

So will planning permissions face tighter rules on expiry and a system of levies? Certainly it is possible. There is a political rationale for taking such ‘action’. But given the regularity of concern about ‘landbanking’ without real action and more broadly recent Government inaction on planning reform (think the August 2020 Planning White Paper that’s now in the back of the cupboard) there’s certainty it won’t happen for some time and a solid chance it will disappear into the long grass.