Housing White Paper

On the Day Briefing

Today saw the publication of the long awaited, much trailed Housing White Paper titled ‘Fixing Our Broken Housing Market‘.  Announced by Sajid Javid, Secretary of State as:

“ambitious proposals to help fix the housing market so that more ordinary working people from across the country can have the security of a decent place to live”

The White Paper acknowledges the scale of the housing crisis facing the country and recognises the fact that governments of all persuasions have not been able to sufficiently ramp up house building to meet with the backlog of under supply and projected future need. The Government’s White Paper aims to change this – but are the proposals set out today the catalyst needed or is the housing industry the proverbial slow turning oil tanker?

The Government has moved away from its all encompassing focus on home ownership, which was front and centre of the previous administration, recognising the need to address quality and security in the rental market alongside steps to support people into home ownership.

The White Paper is organised into four themes and this briefing note will follow the same format:

  1. Planning for the Right Homes in the Right Places
  2. Building Homes Faster
  3. Diversifying the Market
  4. Helping People Now

Planning for the Right Homes in the Right Places

The White Paper rightly identifies the need to plan for the right homes in the right places and sees this as critical to the success of the recently released Industrial Strategy. This is a welcome recognition of the valuable underpinning role that housing plays in supporting the Industrial Strategy – several Northern Housing Consortium (NHC) members were concerned regarding the lack of reference to housing or construction in the ten strategic pillars and the White Paper’s positioning of housing as key to the Industrial Strategy is very useful.

The White Paper accuses Local Authorities of “ducking” difficult decisions regarding planning strategies which we don’t feel is a helpful description of the challenging environment many Local Authorities find themselves in. NHC members have many examples of how they are seeking to improve delivery of new homes across the North.

Assessing housing needs

The White Paper identifies planing as “slow, expensive and bureacratic” and feels this system is not supported by the lack of standard methodology for assessing housing needs.

Government proposals in the White Paper build on the work of the Local Plans Experts Group as the Government seeks to make plans easier and provide Local Authorities with the support they need. Government plans include:

  • Intervening to ensure plans are put in place where Local Authorities do not deliver.
  • Setting out in regulations a requirement for plans to be reviewed at least once every five years – an authority will have to update their plans if their existing housing target can no longer be justified.
  • Consulting on changes to the National Policy Planning Framework (NPPF) to ensure authorities are working constructively with neighbouring authorities to delivery housing needs through a new “Statement of Common Ground”.
  • Across the North we see the emergence of devolution deals increasingly focusing on housing – the White Paper’s proposals will allow spatial development strategies to allocate strategic sites at scales broader than individual authorities and will remove the requirement for each LA to produce a single plan.
  • Consulting on the introduction of a standardised approach to assessing housing requirements and LA’s choosing not to use this approach would have to explain and justify to Planning Inspectorate. This new approach is likely to become live in April 2018.
  • Strengthening national policy to ensure local planning authorities have clear policies for addressing housing requirements of groups with particular needs – for example: older or disabled people. 

Making Land Ownership more transparent

The White Paper wishes to open up land ownership to greater transparency, perhaps taking its cue from the success of open data projects in other areas of government policy. This openness will stretch not just to land ownership but also greater transparency around land interests – for example, restrictive covenants or purchase options. The Government will also bring forward a Bill to implement the Law Commission’s proposals for reform of restrictive covenants.

The Government appears concerned that through the application of less than transparent land interest options that a degree of ‘land banking’ may be taking place which is inhibiting delivery.  We welcome these approaches to greater transparency in land ownership and land interests.

Making Enough Land Available in the Right Places

Government expects Local Authorities to have a clear strategy to maximise use of suitable land. In practice this will focus on bringing brownfield land back into use. The Government will amend the NPPF to indicate “great weight should be attached to the value of using suitable brownfield land within settlements for homes” and that greater density levels should be considered. An underlying presumption is that brownfield land within settlements is suitable for housing unless there are specific and clear reasons why it can’t be used, such as flood risk. In addition to expecting higher density levels where they can be delivered the White Paper also signals a move away from a “one size fits all” approach on space standards. The Government pledges to avoid a “race to the bottom” on this but we will need to see what safeguards the Government can bring forward.

Whilst the NHC supports the principle of brownfield first, there are some localities in the North where brownfield development will have to incur remediation costs and we would welcome Government recognition that these additional costs should not be a barrier in terms of financial viability of site development.

The White Paper continues to support accelerated delivery on public sector land and will provide a £45million Land release Fund. Consult on extending LA flexibility to dispose of land at less than best consideration is a welcome move, although NHC members have rightly pointed out that other parts of the public estate should also be subject to similar flexibilities, particularly when land or assets are sold to other public sector partners.

In a further welcome (albeit limited) announcement, the White Paper is proposing to encourage local planning authorities to consider the social and economic benefits of estate regeneration. NHC Local Authority members continue to work innovatively and collaboratively to progress housing delivery, working with developers, both volume and SME, to ensure that schemes are coming to fruition. The approach undertaken by Wakefield Council to unlock so called stalled sties was cited in the recent Commission for Housing in the North report and has been well received across the North as a model which could be replicated at scale. However, the capacity resources required by LAs to undertake such work should not be underestimated. We welcome the recent announcements regarding a  Capacity Fund to support accelerated delivery – indeed the Commission called for such an instrument – and look forward to working with our members, government and the Homes and Communities Agency (HCA) to ensure the Fund works well for the North of England.

Building Homes Faster

The second chapter of the White Paper focuses on efforts need to build homes faster. The Government identifies a lag between plans being developed, full permissions being granted and those homes being built.  They state that as of July 2016 there were almost 700,000 homes with detailed planning permissions but building had started on just under one half of these homes. Nathaniel Lichfield Partners recent January 2017 research took a slightly different position on the relationship between outstanding permissions and build out rates.

Many of the points raised by the Government in this chapter reflect the findings of the Commission for Housing in the North – in particular, a need for strong leadership, development certainty and to better support local authority capacity.

Boosting LA capacity and capability to deliver

The Government is committed to take steps to secure the financial sustainability of planning departments and ensure they have the right skilled professionals. To achieve this the Government will:

  • increase planing fees – LAs can increase fees by 20% from July 2017 if the additional fee income is invested in planning departments. The Government is further minded to consider an additional increase of 20% for those authorities who are delivering on their housing needs.
  • provide £25million of new funding to help ambitious authorities in areas of high housing need to support planning and infrastructure plans.
  • deter unnecessary appeals by consulting on introducing a fee for making a planning appeal.
  • target the £3bn Housing Infrastructure Fund (capital grant) at areas of greatest housing need.

The White Paper also identifies a need to maximise opportunities presented by strategic infrastructure investment, to ensure high quality digital infrastructure plans are developed and will work with the housing sector to ensure the 2014 Better Connected report, which sought to improve the process for securing utility provision in housing developments, is working as effectively as it could.

The White Paper sets out concerns that hold back development including dealing with protected species and greater simplification of developer contributions although the detail on Community Infrastructure Levy (CIL) changes are not included in the White Paper but will come forward in the Autumn Budget 2017.

A recurring theme of the White Paper relates to transparency – the first chapter focused on transparency of land holdings and chapter two turns its attention to transparency during planning and build out phases. Proposals set out in the White paper include:

  • More information about timing and pace of delivery on site by site basis
  • Requiring volume house builds to publish aggregate information on build out rates
  • Local Authority tools to be strengthened – able to consider how realistic site build out will be, consultation on whether a developers past performance should be taken into consideration and reducing the “completion notices” from three to two years – although on this last point the Government is keen to understand how this approach may impact on SME builders.
  • New guidance to be developed for LA’s to encourage use of compulsory purchase powers to support build out of stalled sites.

Having given local authorities some “sharper tools’ the Government will be keen to ensure LAs are held accountable and will introduce the new “Housing Delivery Test”.  From November 2017 if delivery falls below 95% of annual target the LA will be expected to publish a recovery action plan. If delivery falls below 85% of annual target the LA would be expected to plan for a 20% buffer on their five-year land supply. From November 2018 if the delivery falls below 25% the presumption in favour of sustainable development (NPPF) will apply. The following year the baseline will move upwards to 40% and from November 2020 the presumption will come into being at 65%.

 NHC Member Comment

“We welcome the Government’s housing White Paper today and its recognition of the extent of the housing crisis which is particularly acute in York with many people struggling to rent or buy suitable homes. It presents a wide ranging set of detailed proposals which we will need to consider carefully to see how they will play out in York and we look forward to responding to the formal consultation. We especially welcome measures to bring forward the supply of more affordable homes of different tenures more quickly reflecting the Government’s shift in focus”.

Diversifying the Market

The lack of diversification in the market has been a significant issue since the financial crash. Whilst registered providers were able to step in to pick up slack created by any step backs from the volume builders, the decline in the SME provider has been of particular concern.

The White Paper sets out the scale of the decline. In 2007, 44,000 homes were delivered by small builders, in 2015 this had fallen to just 18,000. The North is not experiencing a particularly different picture in this regard – throughout the Commission for Housing in the North we heard evidence that pointed to the need to reengage SME builders in housing delivery. We therefore welcome the Government’s focus on this agenda although the White Paper does not bring new initiatives with regard to SME builders in particular but recommits existing programmes such as the Home Building Fund, Accelerated Construction and publicising the Help to Buy equity loan programme. We will continue to work with our members to better understand how SME builders across the North are accessing these opportunities and what more could be done.

Similarly the White Paper flags up expansion opportunities from institutional investment in more homes for private rent. Again, we explored this in detail in the Commission for Housing in the North and have previously cited Countryside Homes and Place First as excellent exemplars of this approach.  Indeed on the day of publication of the White Paper, You and Yours on Radio 4 focused on housing and included contributions from the NHC’s Deputy Chief Executive Tracy Harrison and was broadcast from Norris Green – a private sector development led by Countryside

The White Paper recognises the need to support security of tenure in the private rented sector and is committed to exploring “family friendly tenancies of three years minimum duration. We welcome the opportunity to work with the Government on making this a reality and ensuring safeguards are put in place to ensure that family friendly tenancies are not circumnavigated by unfair rent hikes.

Additional capacity for housing delivery will come from both the RP and LA sectors according to the White Paper. To support this the Government plans to bring forward a rent policy for the social sector for the period beyond 2020 to enable the sector to support investment in new homes delivery. The Government’s expectations on RP development are further set out with an expectation that tall providers will make best use of the development capacity they have and to continue to deliver on efficiency expectations.

The White Paper hints at the availability of “bespoke deals” for those authorities in housing market areas with high demand and genuine ambition to build, perhaps paving the way for sector specific deals outside of combined authorities.

Finally the Homes and Communities Agency is to be relaunched as Homes England with a unifying purpose of “to make a home within reach for everyone”

The NHC welcomes these proposals and look forward to working with the Government to implement them. We recognise many of our members are looking at how they can boost their own capacity through innovative joint ventures – including the case study of Greater Manchester Providers from the Commission report.

Helping People Now

The preceding chapters of the Housing White Paper sought to put in the place the foundations from which we could accelerate delivery. Chapter Four seeks to provide an overview of the ongoing support from Government.

The Government reconfirms its commitment to the Lifetime ISA. This ISA product will support young people to save by giving a 25% bonus on top of annual savings of £4,000. The savings and bonus can be put towards purchase of a new home or withdrawn at the age of 60. Whilst this product is welcomed, we do hope the limitations of the previous Help to Buy ISA have been ironed out. It had a similar ambition but was “rendered technically useless” as the bonus element could not be used to fund a house deposit.

We welcome the commitment from the government to work with the sector to consider the future of the Help to Buy Equity loan scheme – at its first introduction this product worked well in Northern markets and over the past few years we have engaged with the Government to make the case for the ‘bang for buck’ delivered by HtB (E) in the North and look forward to positively engaging with them on its future beyond 2021.

Whilst we were positive about the impact of Help to Buy, we have raised concerns with the Government about its Starter Homes product. We are pleased that the Government has listened to our (and others) concerns and the White Paper signals a shift away from mandatory 20% starter homes on new developments to a policy expectation of minimum 10% affordable home ownership units and for local areas to best define the appropriate home ownership model. This reflects the calls we previously made to see starter homes as an umbrella term for a range of home ownership models rather than a tightly defined product.

The White Paper also reaffirmed changes in direction of the Affordable Housing Programme that the NHC have previously called for, including greater flexibility in the programme moving away from a focus on shared ownership and specific reference to Rent to Buy. We welcome this change and are committed to working with our members to ensure delivery is maximised.

Conclusions

Whilst the headlines of the White Paper were well trailed, there is much in the detail that will be pleasing to NHC members. The focus on right homes in the right places, the recognition that to accelerate delivery will require boosts to capacity, the value placed on security within the private rented sector, and the flexibility about tenure all reflect calls the NHC has been making with its members over the past months and years.

There are of course areas that have not been addressed by the White Paper but we knew in advance this was to be a policy framework focused on delivery and accelerating supply. That does not mean we will not continue to press for government action on these issues, particularly regeneration, and indeed we do see opportunities in both the Northern PowerHouse Strategy and the Industrial Strategy to continue to make the case for whole market housing solutions that support economic renaissance of the North.

We will be providing a detailed response to the White Paper and working with politicians and civil servants to ensure a strong Northern Voice is heard in Whitehall. These include:

• A forthcoming member dinner (by invitation) with senior CLG civil servants including Director General Helen McNamara.
• Regional roundtables looking at the scope of the White Paper.
• Thematic roundtables exploring the more technical detail of the chapters and themes.
• Existing relevant roundtables – details of which are available on the website.

If you are interested in registering for the roundtables please contact Member Engagement Manager, Callum Smith, at callum.smith@northern-consortium.org.uk and indicate if this is for wider scope or specific areas of interest.

We would be happy to provide in-house presentations to your teams or your boards on the White Paper and the work of the NHC. To progress this, please contact Kate Maughan, Head of Member Engagement at kate.Maughan@northern-consortium.org.uk