Sir Oliver Letwin’s review of ‘build out rates’ was, as promised, delivered on time as part of the Budget. I suppose it had to be, given the topic. The verdict? Well, it’s hard to say.
In dealing with a complex set of issues, Sir Oliver has gone for a complex set of solutions. Trying to unpick his proposed ‘build out bureaucracy’ could become a full-time job itself.
The Letwin Review was initiated by the government as part of a broader push to get the housing industry firing on all cylinders and a lingering political concern that volume housebuilders were, in some way, not doing their bit on delivery. The Review was tasked with understanding why there is a gap between housing completions and the amount of land allocated or permissioned to build on in areas of high housing demand, and how this gap could be closed.
Having produced a thoughtful interim analysis earlier in the year, it was always going to be interesting to see how Sir Oliver could successfully tackle what is a complex issue. Based on his interim findings, he was never going to rip apart the volume housebuilder model and instead try to find a clever work around to encourage a greater diversity of housing provider to deliver a greater diversity of housing product. In other words, how could large sites typically delivering a for-sale product be encouraged to deliver other tenures of housing such as affordable or build to rent, as well as diversify the size and design of homes.
His top-line recommendations are that the Government should:
introduce new planning rules for all future large sites (1,500 homes) in areas of high housing demand, requiring these sites to provide a diversity of homes (as set out in the new detailed policy); and
create a new group – The National Expert Committee – to advise on the interpretation of the diversity requirements of the new policy and settle any disagreements between a local authority and developer.
Letwin suggests the new planning rules should kick-in from 2021, but to encourage early adoption an incentive (for that read penalty) should be offered to developers which makes future government funding for housebuilding contingent on accepting the new planning rules. If these new rules pose a challenge to the schemes viability there could be a ‘small amount of funding’ available to address concerns.
Alarm bells ringing yet? That’s another layer of planning policy and new non-departmental body created in a blink of the eye. And how realistic is it to retro-fit new policy to live schemes? Furthermore, what are the chances that adequate funding is put in place to address genuine viability concerns?
Looking longer term, Sir Oliver gets even more complex and radical. He calls for Government to:
give local planning authorities the power to designate areas as land that can only be developed as a large site and in conformity with the new diversity rules;
give local authorities the power to purchase land for large sites that reflect the diversity requirements – he suggests that the level of diversity that should be introduced should generally cap residual land values for large sites at around ten times their existing use value; and
create new powers for large sites to be brought forward through two different structures – essentially one led by the public sector and one eventually led more by the private sector.
These are potentially substantial reforms that would not only push Letwin’s diversity requirements but also start to stray into other big areas such as land value capture.
As is so often the case, a document written for central government overlooks the nuance about how the planning system operates in London. Some of the suggestions in the report, to some extent, are already features of London’s planning system, and the report’s frequent references to Homes England playing a central role in the new system would need to be modified for London where, in the main, the GLA undertakes Homes England’s role.
It is entirely legitimate for public policy to consider how large sites could be built out quicker and Letwin’s focus on trying to introduce a broader range of tenures and styles into such sites does make sense. However, overall, it feels like considerable thought has been put into producing a series of recommendations that make sense in theory but when applied to live developments and considering the real-world politicking that it will inevitably create, they might fail to gain traction or be up-ended by its own complexity.
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