Britain is struggling to build. The UK faces a notorious undersupply of housing, affecting renters and buyers alike. Despite having been an issue for many years, various administrations have failed to build enough homes to meet demand.
It’s believed 300,000 new homes need to be built every year to sustain the market and keep prices from spiralling out of control. Yet, the Government has missed its own target by around 40% in recent years. There may also be less motivation for hitting this target in the months ahead. Various ministers have attempted to move away from any specific numbered targets.
While the public sector may have left a lot to be desired in its efforts, private developers have also faced their fair share of criticism. They’ve been accused of cartel-like practices. Where new builds have been erected, defects often emerge, throwing off future potential buyers.
The reasons for our collective inability to build enough suitable, and desirable homes is manyfold. Rising costs don’t help, and nimby-ism is rife in the UK. But, few things affect developers and the wider property market than our overall planning system.
However, trying to focus on what are the changes to planning permission that need to be addressed for this imbalance can be tricky. Various forms of legislation have come and gone over the years, both restricting and opening up what developers can do. For builders and property investors, it’s crucial to understand not only the history of these planning rules, but also what could be on the horizon.
Source: Mortgage Finance Gazette, The Telegraph, This is Money
A brief history of: “What are the changes to planning permission?”
No matter how you look at it, the UK lags in its housebuilding efforts. Around 10% of our GDP is spent on building, compared with a G7 average of 12%, according to the Economist. In England alone, there are 434 dwellings per 1,000 people. By comparison, France has 590, according to the OECD.
Many experts and commentators put this down to our restrictive development rules. In some way, shape or form, legislation has always been in place to determine what can be built, and where. However, the system has been consistently tightened since the post-war years.
Towards the end of the second world war, Britain was focused on the reconstruction of its towns and communities. Additionally, plans were in the works for creating entirely new cities. To get the ball rolling on this, the 1946 New Towns Act established a programme for the development of new towns. This act provided the state with the power to designate areas of land for new projects. Stevenage emerged as the first new town created under the act. However, the 1947 Town and Country Planning Act quickly followed, pumping the breaks a bit, and limiting urban sprawls.
All developments became subject to planning permissions, which were to be issued out by local councils. Duncan Sandys, the prominent Conservative minister, set the tone for how councils should use their powers. In 1955, he implored local authorities to forbid building on the edge of cities in order to: “a) check the further growth of a large built-up area; b) prevent neighbouring towns from merging into one another; or c) preserve the special character of a town”.
Rules started to be eased from the 1990s
Understanding where these rules came from is important. But investors may be more concerned with what the changes to planning permission are that affects them now. If we fast forward to the 1990s, we can see that some of these restrictions were – somewhat – eased. The Town and Country Planning Act was updated in 1990. Planning permission would only be needed where work was carried out on projects that met a statutory definition of “development”. Interior alterations, changes in the primary use of land or buildings, and changes which didn’t alter the external appearance of buildings could all be done without the need for council approval.
In 1995, a General Permitted Development order was implemented, providing developers with more options. Albeit, these still primarily concerned alterations on existing properties, as opposed to allowing the development of new buildings. However, in 2013, the Government appeared to recognise there was a clear need for more residential spaces.
The rules were tweaked once more to allow the conversion of certain commercial properties into residential homes. Offices and the like could be turned into flats without the need for planning permissions. Following this, a wave of commercial-to-residential conversions emerged. While likely helpful for the wider market, these changes also brought forward several property “cowboys”. Some developers ended up creating tiny flats, dubbed by many to be the “slums of the future”.
Source: The Economist, UK Parliament, Gov.uk, Designing Buildings, Designing Buildings, Buckles-Law, Inside Croydon
Most recent changes to planning permission
To raise standards, the Government continued to tweak the rules up until 2020/21, when the latest changes to permitted development rules were made. In response to the impact of covid, the rules were expanded to allow more types of commercial conversions. This included gyms and medical facilities, many of which laid empty after the pandemic.
Currently, people will generally need planning permission if they want to build something new, make a major change to a building (such as an extension), or change the use of a building. This could cover a broad range of scenarios and each council will have differing criterions. Fortunately, a dedicated Planning Portal exists which aims to make the planning process simpler for applicants, agents or local authorities themselves.
Source: Planning Portal
What does the future have in store?
Looking ahead, it appears the state aims to open the planning system further. A Levelling Up Bill is making its way through Parliament which may offer residents the chance to vote on proposed projects in their areas. This is being done to try and limit pushback against new developments.
To push this further, a “Building Better, Building Beautiful Commission” has put forward proposals to build higher quality, more aesthetically appealing properties. The Government responded positively to the suggestions and Jacob Rees-Mogg, our new Secretary of State for Business, vowed to help developers build “beautiful homes for everyone” on state-owned land.
The new Prime Minister, Liz Truss, plans to scrap the Government’s building targets entirely and “rip up the red tape that is holding back housebuilding”. While public plans often change with the times, overall, the current administration appears keen to support development and help the market expand. The best answers to what are the changes to planning permission rules may still have time to present themselves.
Source: The Planner, Department for Levelling Up, Housing & Communities, The Telegraph, CoStar, Gov.uk, Ministry of Housing, Communities & Local Government
Disclaimer
MFS are a bridging loan and buy-to-let mortgage provider, not financial advisors. Therefore, Investors are encouraged to seek professional advice.
