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A welcome budget for housing and planning reforms

 

Sara Parkinson, Programme Director, London First

Some might say the Chancellor left the best for last when he announced the housing and planning reforms in yesterday’s Budget Statement. The Chancellor placed a strong emphasis on planning, acknowledging that tackling the housing crisis is more than a money issue – it needs planning reform.

Although the Chancellor reinforced continued protection of the green belt, he committed to building ‘high quality, high density’ homes in city centres and around transport hubs, alongside new measures to ensure that councils in high demand areas permit for more homes to be built for local first time buyers and affordable renters.

The chancellor also emphasised the gap between the number of planning permissions and the homes being built, citing the 270k unbuilt but consented homes in London as prime example. A review on this will be undertaken with the report published in Spring 2018 and where “land is being withheld from the market for commercial, rather than technical, reasons”, the government will directly intervene, using compulsory purchase powers, if necessary, too ensure such land is brought forward for development.

At the same time, DCLG has committed to a review of CIL and Section 106, but this hasn’t delivered the simplicity that we have asked for in our recent paper, and is a bit of a mixed bag.

Whilst we welcome removing the pooling restrictions on Section 106 monies, this will only be in certain circumstances – and could have gone further. In addition, we welcome speeding up of the process for setting and revising CIL charges, as we would not want less rigorous testing of CIL rates.

The central plank of Liz Peace’s Review’s recommendation in 2016 was reducing the complexity of the current CIL regime through the introduction of a low flat charge. The government proposals will introduce another layer of CIL charges for changes of use increasing the complexity. There is also a missed opportunity to simplify the way in which CIL charges are calculated – the government have only committed to review increase over time (the index link) is calculated  – changing it from a retail base to a house price base. For London, this could spell very bad news given the significant increases that can happen. It is also difficult to comprehend how an increase in charges from commercial use can be calculated from this.

With regards to setting higher ‘zonal CIL’, around stations, for example, is entirely possible under the current CIL regime. This proposal appears to respond to calls for a Land Value Tax model to capture land value uplift. As always, the devil will be in the detail, so we eagerly await what further changes to the CIL process there may be to support this.

We support the principle of an ongoing Mayoral type CIL for Mayoral or joint planning areas, a Strategic Infrastructure Tariff (SIT). However, we had hoped that this would sit alongside a much simpler CIL process.

In effect, the reforms are allowing multi layering of CIL across the UK and introducing new types of charges, including for change of use. We would not want to see this adversely affect viability of development by charges being set too high (and still remaining complex), which would impact on viability affordable housing delivery foremostly.

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