This week’s budget saw the publication of Sir Oliver Letwin’s final recommendations for his ‘Independent Review of Build Out’ report. The review was an important undertaking that sought to square the disparity between land allocations and house completions. It took on some of the planning tensions, accusations of land-banking and problems around skills shortages facing the housebuilding industry.
Delivering his second Autumn Budget, Chancellor Phillip Hammond stated that “large housebuilders are not engaged in systematic speculative land-banking”. However, Letwin’s interim report earlier this year had already quashed this myth and instead placed the blame on absorption rates. Letwin had promised some practical solutions to the issues at hand and what the industry has been waiting to hear is his recommendations on how to address the issue of build out rates.
The headline is a new set of planning rules giving local authorities the powers to require a greater diversity of housing type and tenure on large sites. Letwin argues that this will be key to addressing market absorption rates of new homes. Under his proposals, large sites (initially those over 1,500 units) in areas of high housing demand will be required to provide a diversity of offering, in line with new principles, with a National Expert Committee advising local authorities on the interpretation of diversity requirements.
For us diversity of product is not only about increasing build out rates but is essential to building future proofed, genuine communities. We need homes for the elderly alongside large properties to keep families together. We need affordable rental properties alongside more traditional models. While the focus of the media and politicians is getting more young people on the property ladder we shouldn’t be looking at simply building new homes for them – we should also be looking at the population who are increasingly wanting something more flexible.
The master developer
We also wholeheartedly agree with the focus on large sites. While thousands of smaller sites will contribute to the numbers, they won’t deliver the transport and community infrastructure needed to support well-planned and modern communities. We’ve spoken at length about the role of the master developer in delivering large sites. Having a guiding organisation allocating and packaging a larger site, delivering the infrastructure and coordinating a masterplan, can assist the delivery process.
Letwin has fully embraced this concept, pointing to the role that local authorities could play. He recommends that large sites are designated in local plans as land that can be developed only as single large sites with local authorities creating master plans and design codes for these sites. He also suggests new powers that enable local authorities to purchase land designated as a large site at a much lower rate (around 10 times the current value) than is currently the case. He also sees a role for Homes England in providing support for these local authorities both in terms of funding and expertise.
While solving the housing crisis will undoubtedly require intervention from the public sector, the Government shouldn’t ignore the role the private sector can play. While some local authorities may be suited to taking on this role, as Letwin points out, they need to have the capacity, skills and experience if this is to work, otherwise this will ultimately slow down the process, rather than assist delivery.
Giving developers more freedom to innovate will go some way to closing the gap between consent and delivery, creating a more effective housing sector and driving real change within the industry.
It can’t be denied that addressing the skills shortage and availability of workers is needed to see a step-change in the rate of delivery of new homes. Without the right number of people with the ability to physically build the homes there will always be a lag between consent and delivery. Letwin’s plan for the Government and major housebuilders to work together on a five year ‘flash’ programme of on-the-job training may go some way to helping. However, we think there needs to be more done to provide a link between education and industry.
Whether that’s increased support and funding for apprenticeships in related industries; more tailored vocational courses packaged directly for the needs of sector; or an awareness raising campaign among young people, a rounded approach is essential.
This is a long overdue health-check for both the industry, and the planning system that underpins it, with the government due to respond to the review in full in February 2019. We urge the Government to continue to recognise and champion the role that the private sector and Master Developer can play and to recognise the positive benefits of the public and private sector working in partnership to deliver results.