Planning reforms for small and community-led builders

Tom Chance will be speaking at a Labour Housing Group webinar: What should be in the Labour Government’s NPPF, on Tuesday 17th September.

The government’s consultation on the National Planning Policy Framework (NPPF) asks 106 questions. Buried in the middle are a few questions about how the planning system could support more small builders and community-led development.

Dr Tom Archer argued here in May that we need a more diverse and competitive housebuilding industry, including more community-led housing, if the government is to hit its housing targets. I represent many of the 900 community groups that have been trying to build more than 23,000 homes in a broken system. So how could the NPPF help?

Not by watering down standards and reducing the requirements for social housing. Community-led developers want to raise standards, and most Community Land Trusts (CLTs) focus on social rent.

Nor is our problem with ‘NIMBY’ planning committees overturning officers’ recommendations. If anything, we have more of a track record of the reverse, with members overturning finickity officer objections to approve community-led homes.

The Competition and Markets Authority’s (CMA) review on housebuilding concluded that the main barriers to entry for SME builders are the length and uncertainty of the planning process, and the complexity, cost and information requirements.

Take information requirements. The Housing Forum found that across 21 local authorities there were 119 different types of document that might be required to apply for planning approval. The list has grown hugely over the past 20 years. In one recent case, a CLT applying for permission to build 6 homes needed 82 documents.

Drawing this up now costs CLTs around £11,000 per home, substantially larger than the £3,500 per home estimated by the CMA for larger sites.

As for the length and uncertainty, we analysed 84 applications submitted by CLTs between 2006 and 2022. The average time to get a decision was 359 days, compared to the statutory target of 56. Some, held up by issues like nutrient neutrality, have been stuck for years.

Having spent all that money, and waited a year or more, will you get permission? Even if you think that you have met all the policy requirements, you cannot be sure.

Local planning authorities do not tend to allocate many small sites, a process which would confirm the principle that they can be developed. It is more costly and resource-intensive to allocate 20 sites of 20 homes than one site of 400 homes.

The NPPF says large sites could be subdivided to create opportunities for SMEs and CLTs. But this is very rare. The Letwin Review concluded as much in 2017, but his proposed reforms have not been acted on.

So communities generally seek permission on what are known as ‘windfalls’ – sites not allocated by planners, where the principle of whether it should be developed is in question. The uncertainty is risky.

The point about this complexity, cost, length and uncertainty is its impact on finance. You will need to find at least £100,000 to prepare and submit a planning application. You have no idea if it will succeed, or be wasted money. You do not know how long it will take to get a decision. Nobody will lend you money on those terms. So new entrants need deep pockets, or depend on grant programmes like the Community Housing Fund.

We could reduce the uncertainty in a few simple ways.

One would be to expand the community-led exception site, a policy we secured in the NPPF last year. It enshrines the principle that democratic community-led developers can develop windfall sites adjacent to settlements to meet local needs, removing any uncertainty around the principle of development. But it has an arbitrary size cap that we want lifted, and it should also apply within settlements to help community-led approaches to suburban and urban infill. Many CLTs have successfully negotiated the local politics to develop disused garages, underused open space and even back gardens, as well as brownfield and greenfield sites on the edges of villages and towns.

We would also like community-led developers to be able to propose ‘community priority projects’ when local plans are drawn up. These would allocate sites, or parcels of large sites, to meet specified local needs, ringfenced for community-led development. The process could ease the pressure on officers by having communities do a lot of the legwork to establish ownership and viability, and win round their neighbours to the principle of development.

These modest reforms will help. But we really need the forthcoming planning and devolution bills to fundamentally change the balance of complexity, cost, delay and uncertainty that is hobbling the diversification of our housebuilding industry.

You can find out more about the asks of the Community Land Trusts Network in their recent submission to the NPPF consultation.