A blog about planning, planning law and planning policy

Disclaimer

The information on this blog is not intended to be advice, legal or otherwise. You should not rely on it and I do not accept liability in connection with it. If you do have a planning law question on which you would like advice, seek legal advice from a suitably qualified solicitor. Specific advice should be sought for specific problems.

Fixing the Foundations

Sajid JAvid

Sajid Javid

The Secretary of State for Business Innovation and Skills, Sajid Javid, launched proposals for productivity on Friday 11th July, in a Command Paper called “Fixing the Foundations”. The parts which got press coverage were the reforms to planning.

In outline, the major changes are to adopt a zoning system for brownfield sites, under which sites on the statutory registers of brownfield land suitable for housing would have an automatic deemed planning permission; and to allow upward extensions in London up to the height of adjoining buildings, where neighbours do not object. This is coupled with allowing housing proposals to use the Nationally Significant Infrastructure Project process in the Planning Act 2008, a fast-track certificate to establish the principle of minor development proposals and a dispute resolution process for s.106 agreements. There will also be a tightening of the planning performance regime. The local plan process and length will be streamlined and the Secretary of State will intervene to write local plans where local planning authorities do not meet a deadline, to be set before the summer recess, for plans to be put in place.

It is interesting that the paper recites the removal of the “top down regional strategies”, putting “local authorities at the forefront of deciding how to meet the need for housing through their local plans”. Yet this manifestation of localism is having to yield to reality, with the Government having to force authorities to get on with the job.

But it is a sad turn of events that leads us to abandon, in the case of brownfield sites, our well developed case by case planning system, in favour of a presumption that they are suitable for housing. The trouble with the well developed system is that for twenty years from 1990 it was not under-pinned by the presumption in favour of development that accompanied the existence of planning controls for the previous eighty years. The legacy of those twenty years, notwithstanding George Osborne’s announcement in the 2011 Budget of a presumption in favour of sustainable development, is a culture of control rather than enablement.

George Osborne

George Osborne

Fixing the Foundations describes it like this: “Previous studies have found that the country’s planning system –where development proposals require individual planning permission and are subject to detailed and discretionary scrutiny –can create the sort of “slow, expensive and uncertain process” that reduces the appetite to build.” Government is now committed to removing all unnecessary obstacles to the redevelopment of brownfield land, “including these sorts of planning obstacles”.

It is obvious that other aspects of the proposals challenge localism to its core. Authorities without local plans will find they are written for them, by the Secretary of State. The NSIP process, where the decision is taken by the Secretary of State, and practically everything is done in writing with minimal opportunities for public hearings, will be available to housing. Will the Conservative party actually stand for this in the long run? Just as George Osborne rediscovered the presumption in favour of development, last in favour during Mrs Thatcher’s Government, and used to great effect by Nicholas Ridley, the then Secretary of State with responsibility for planning, will he also rediscover the Conservative voter’s aversion to being told what to do by central government? The Thatcher/Ridley approach led to a lot of development, sometimes at odds with rather long in the tooth local plans. But it was at Foxley Wood, a proposal for a new town at Bramshill Plantation near Reading that it met its nemesis. Chris Patten, by then Secretary of State in place of Nicholas Ridley, refused permission, finding that he was at odds with the local somewhat Conservative electorate. This led eventually to the s.54A duty to take decisions in accordance with the local plan unless material considerations indicated otherwise.

Will this pattern repeat itself? The reaction to Sir Howard Davies’ Airports Commission report into where to site the next runway in the South East is not encouraging. On the day the report was published – 1st July 2015 – recommending a third runway at Heathrow, the Prime Minister, who some years ago rejected that idea but set up the Commission, announced that a decision would be taken by the end of the year, clearly signalling that the Government is willing to overrule the Commission’s recommendations, which have cost £20 million and taken two and half years’ work. (figures from The Times online, 1st July 2015).

Greg Clarke

Greg Clarke

It is probably significant that the lead on planning policy is, under this and the previous government, to be found at the Treasury and BIS. But the question is will the current Secretary of State with responsibility for planning decisions, Greg Clarke, turn out to be a Ridley or a Patten?

Here is a link to Fixing the Foundations.

Clandon Park – what next?

Clandon Park fireThe fire last week at Clandon Park in Surrey has reduced the house to a shell. It was an imposing 18th Century house, built in the Palladian Style for Thomas Onslow whose great-grandfather. Sir Richard Onslow, an MP in the Long Parliament had acquired the estate about a hundred years earlier. His family have been active in English political life since then but by the 1950s the cost of maintaining Clandon Park had become prohibitive and it was given to the National Trust.

Clandon Park had marble chimney pieces by Rysbrack. It housed the Gubbay collection of furniture and porcelain; Meissen figures; and Mortlake tapestries. It was also the home of the Surrey Infantry Museum.

But now it is no more. Aerial photographs show it to be a shell, open roofless to the sky. Sir Simon Jenkins, the chairman of the National Trust until last year, wrote in yesterday’s Sunday Times urging its reinstatement as a facsimile, as it would have been when first built. “What better task for a new generation of curators and craftsmen? What more intriguing process for visitors to witness?” he writes.

But this is a sad attitude. It suggests that the past was always better than now. It lacks confidence in today. And it ignores what Clandon really was. The house burnt out last week itself replaced an Elizabethan building. Its interiors were altered later in the 18th century. And as Jenkins himself writes, “Its porch was Victorian”. Whilst the house, designed by the Italian architect Giacomo Leoni who helped bring Palladianism to England, is reckoned to be his masterpiece, the truth is that it is no more. The building’s contents had been assembled by the National Trust since the 1950s. In reality it was a museum, and Jenkins’ proposal is to refurnish it commenting that “The world has 18th century furniture and artworks aplenty”. Would that really be so special? To bring some of the world’s abundant 18th century artefacts to a house rebuilt to pretend to be the original. But that would not recreate the original, because the original was a home, and the rebuild would be a museum. A facsimile will not be truthful. Rather it will promote a rose-tinted view of the past. We forget when we look at these places that life expectancy in the 18th century was short, infant mortality high, hygeine poor, pollution abundant, travel and leisure the preserve of the rich. We forget also that the architects of the past used the best of the technology of their day. We forget that Georgian windows owe their beautiful proportions to the technology of that day – the panes were the largest that could be produced using the most advanced techniques.

Why not instead accept that a catastrophe has occurred a Clandon? The house of yesterday has been lost. It may be that there is a desire still to admire the beautiful Palladian architecture (though, as with 18th century furniture the world is not short of glorious Palladian architecture either, e.g the Queen’s House at Greenwich and the White House in Washington, not to mention many of Palladio’s own masterpieces around Vicenza) in which case Clandon could be retained as a ruin. But surely we should ask rather what is actually needed at Clandon Park in the first quarter of the 21st century. Is the need actually for a museum? What are the choices? Might someone want an isolated new house in the countryside?

If there is some need, then let us build something which has the confidence to anounce that it is a 21st century creation, something in today’s style, designed by one of today’s great architects, someone with the confidence to change what we see, to leave a visible mark, to do better? Let us use the technology of today to produce a building of significance, perhaps better than the Clandon Park of yesterday. Or will we just produce a replica, something which pretends to be that which it is not, which deludes its visitors and the uninformed, a monument to backward looking thinking?

Deemed discharge of conditions – does it actually work?

The procedure for deemed discharge of conditions came into force on 15th April. It is contained in the new Town and Country Planning (Development Management Procedure)(England) Order 2015 (“DMPO”). DMPO is a development order made under (amongst other powers) s.59 of the Town and Country Planning Act 1990. It seems to me that there is a serious flaw in the deemed discharge provisions.

In simple terms they work like this. An application is made in the usual way for the approval under the condition. Any time after six weeks later, a “deemed discharge notice” can be given by the applicant to the local planning authority under Article 29 specifying a date on which deemed discharge will take effect. That date is no earlier than when the period for determination in Article 27 elapses (eight weeks) and 14 days “after the day immediately following that on which the deemed discharge notice is received. (Actually all the periods are calculated in ways like that, so we need to read the small print carefully. Serving notice a day early is not a good idea.) Unless the local planning authority give notice of their decision on the Article 27 application before that deemed discharge date, or a later date agreed in writing, deemed discharge occurs on the date specified in the deemed discharge notice.

So, thinking about the small print, the deemed discharge is all subject to Article 30. This says that deemed discharge does not apply to conditions in the exemptions listed in Schedule 6. To address the environmental impact directive problems (encountered especially in the review of minerals permissions conditions over the past twenty years or so) the exemptions include permissions for EIA development, and development which would have been EIA development but for the condition. There are other exemptions for environmental and sensitive matters. And it does not apply to the approval of reserved matters. This post does not address them all.

But I do want to address a very significant exemption in Schedule 6 (paragraph 10). This states that the deemed discharge procedure does not apply to conditions attached to the grant of planning permission under a development order pursuant to s.59 of the 1990 Act. DMPO is just such a development order, made under s.59 – see my opening comments, and the deemed discharge provisions must be contained in a development order (see s.74A). DMPO gives the procedure for the grant of planning permission. As s.59 says:

“A development order may either—
(a) itself grant planning permission for development specified in the order … ; or
(b) in respect of development for which planning permission is not granted by the order itself, provide for the granting of planning permission by the local planning authority … on application to the authority … in accordance with the provisions of the order.”

Category (a) is an order like the “Permitted Development Order” (defined by DMPO to mean the GPDO 2015). Category (b) is the ordinary grant of permission. The grant of planning permission is made under DMPO. So paragraph 10 of Sch 6 appears to mean that all conditions on ordinary planning permissions are outside its scope. If that is right, deemed discharge does not work. If there is a clear contrary view I would be delighted to hear it – the comments facility is open.

Of course, we know what Para 10 is meant to be addressing; it should refer to conditions under Schedule 2 of the Permitted Development Order. Elsewhere in DMPO, the Permitted Development Order is correctly referred to. For example, in Article 27 where the time periods for decisions on conditions applications are made.

A simple amendment to paragraph 10 would deal with the problem, and I would urge DCLG to make that amendment without delay. Not to do so will leave a flaw to be exploited by those who would seek to stop development. It will be a trap for unwary and busy lawyers. It will create uncertainty, which funders will hate. The development industry will be very disappointed by this problem. I have not alerted DCLG to this view separately, though I will be sending them a link to this, because my experience of doing so on other errors in the past has been highly unsatisfactory.

More relief from CIL

ParliamentIn a pre-election clear out a new category of social housing has been added to those which qualify for relief from Community Infrastructure Levy. The 2015 amendment regulations (keeping up the tradition of amending the original regulations every year) come into force on 1st April. They make a dwelling let by a person other than a local housing authority, private registered provider of social housing or registered social landlord, if it is let to a person whose needs are not adequately met by the commercial housing market at a rent which does not exceed 80% of the market rent including service charges, eligible for social housing relief. It must be let on an assured tenancy (including a shorthold), an assured agricultural occupancy or arrangement which would be one of those but for paragraph 12(1)(h) of Schedule 1 to the Housing Act 1988.

But, irony of ironies, to qualify it must also be subject to a s.106 agreement in relation to the planning permission for the development of which it comprises, which ensures compliance with the rent and occupation conditions. All from a levy which was supposed to remove the need for s.106 agreements.

The full regulations (which have other effects as well) are The Community Infrastructure Levy (Amendment) Regulations 2015/836

Ten ways to speed up the negotiation of planning agreements.

SpeedThe Government consulted on this on 20th February. To follow up my earlier post on it here are my ten suggestions.

1 Amend s.106 to remove the restrictions on what a s.106 agreement can do, and particularly improve it for affordable housing

2 Revoke Reg 123 of the Community Infrastructure Regulations 2010 which restricts pooling

3 Revoke Reg 122 of the Community Infrastructure Regulations 2010, which has spawned at least eight cases in the less than five years since coming into force, in an area which was practically devoid of litigation. The cases are now even stopping planning authorities from recovering their legal costs, which in an area where the consultation acknowledges there is “limited legal capacity” is counter-intuitive.

4 Make the presumptions of due execution apply expressly to s.106 agreements and expand the rules on searches and priority periods so that they apply to s.106 agreements

5 Revoke that part of the Planning Inspectorate’s guidance on s.106s which discourages the use of counterparts; they considerably speed up the entirely uncontroversial task of executing and completing s.106s

6 Allow s.106 agreements to contract out of the requirement that all persons deriving title are bound by the agreement. It cannot be right always to make all successors liable.

7 Follow and enforce the long-standing policy advice to use conditions rather than s.106 agreements unless the matter cannot be addressed by a condition

8 Encourage applicants to appeal where a s.106 agreement cannot be agreed or is delayed. They are reluctant to do so because they fear the Secretary of State will open up areas of the planning application they have agreed with the local planning authority. But a well prepared application should have little to fear on that issue

9 Use twin-tracking positively – the practice of appealing while simultaneously negotiating a settlement of the dispute has fallen out of favour; planning authorities have seen as having a gun to their head. But it is no different from ordinary dispute resolution, where the parties can compromise up to the door of the court.

10 Recognise that s.106 agreements are complicated – fund and equip planning departments and their legal departments accordingly

Consultation on speeding up section 106 agreements

sign here pleaseThe Government issued this consultation last Friday, 20th February. The period closes on 19th May, so a rapid response is necessary.

The proposals in brief are:
1 Issue new guidance emphasising the need for speed, early engagement and use of standardised clauses.
2 A system for resolving disputes about s.106 agreements.

It is good to see encouragement on the use of standardised clauses. The Law Society issued a model s.106 agreement in 2006, followed by a second edition in 2010. The 2006 edition was endorsed in Circular 5/2005. It would be good to see new official encouragement to use the model.

What about dispute resolution? I want to highlight two things – the consultation asks whether resolution of the planning agreement should include the grant of planning permission and which bodies would be appropriate to adjudicate.

Can you resolve the s.106 without resolving the application? The terms of the permission and its conditions are often affected by what is in the s.106. Some matters can be dealt with by either mechanism, for example a restriction on opening until a construction contract is let. That was in a s.106 in the case of Derwent Holding v. Trafford BC (1), but where demolition of listed buildings is concerned the statute says use a condition to ensure a construction contract is let. If it is needed it needs to be in one or the other and what we don’t want is inconsistent provisions in both. In complex developments, clauses in s.106s are used in combination with conditions to resolve difficult issues. So the two need to be settled together.

But more importantly, what is to happen if the permission issued is different from what the parties expect, or indeed is delayed, or not issued at all? The Law Society’s model is largely conditional on the issue of the permission in a form attached to the s.106, and also conditional on implementation of the permission which can help. But that is in the context of “agreement”. In a case where the planning authority “loses” the dispute resolution, there is a stronger possibility of a non-compliant permission, or delay, or refusal. The applicant has a right of appeal against refusal, whether express or deemed, but there will be delay and in the meantime circumstances may have changed. The s.106 agreement however will have been signed, perhaps many months before, and given that the parties have just fought an appeal, the desire to renegotiate it is not likely to be found on both sides.

If we are to have a dispute resolution mechanism for s.106s, who should adjudicate? There are two areas of conflict; content and legal drafting. Lawyers are used to addressing both. Planning solicitors draft s.106 agreements day in, day out, and we should recognise that some of the delays come from having to draft in the current unhelpful statutory framework. They should hold the necessary expertise, especially members of the Law Society’s Planning Panel, and be the first choice for dispute resolution.

Section 106 agreements are used much more now than they were 25 or so years ago, when s.106 was last given a fundamental overhaul by the Planning and Compensation Act 1991. Government needs to recognise that they are not simple documents. They affect the title to the land and need to be negotiated and drafted properly. The 1991 reform introduced quite unnecessary complexities which are still causing problems for practitioners (see my comments on Savage v. Mansfield (2) for a recent example).

Regulations 122 and 123(3) of the CIL Regulations 2010 making the policy tests law and restricting pooling have made matters even worse. The Planning Inspectorate has found it necessary to require confirmation that s.106s are properly executed, which reflects concerns about whether the presumptions of due execution lawyers rely on in sales and purchases apply to s.106 (there is no obvious “sale” particularly not of a planning permission). It is not possible to carry out a search of the Land Registry with priority either, as priority is not conferred where there is no purchase of land. And there are some problems which are not well known. These issues need to be addressed.

But as everybody knows it is the negotiation of affordable housing provisions which regularly delays and complicates s.106 agreements. The 1991 reforms limited what can be done in a s.106 and they make it difficult to draft for affordable housing. If these provisions could be turned into money payment provisions that would greatly speed things up. But that is not attractive to developers who when on-site can build more cheaply than an affordable housing provider. And as long as the State is not going to build housing itself, is not attractive to local or central government.

These documents secure important benefits for authorities, and if they are not right, the community will lose out, and the planning permission will become voidable.

The consultation is open until 19th March and can be read here.

(1) [2011] EWCA (Civ) 832
(2) [2015] EWCA Civ 4

Planning obligations – perpetuating misunderstandings

Planning obligationsEarlier this month, DCLG issued a “Plain English Guide to the Planning System”. It is only 20 pages long, including title pages, so it’s bound to be something of a summary. But on planning obligations is continues to misrepresent the position. It says:

“Planning obligations are used to mitigate the impact of proposed developments. They are commonly secured under section 106 of the Town and Country Planning Act 1990 (as amended). A developer may be asked by a local planning authority to enter into an obligation to, for example, undertake works, provide affordable housing or provide additional funding for services. Any planning obligation must meet the tests of being:
• necessary to make the development acceptable in planning terms,
• directly related to the development; and
• fairly and reasonably related in scale and kind to the development. “

There are three things wrong with this.

1 It confuses the desire to secure certain things with the tool used to achieve that. So the wish is to ensure that impacts are mitigated. There are several tools to do that. The first tool is conditions. Many impacts can be mitigated by imposing a condition. For example particular materials can be specified, or the construction of protection required as part of the development or before development occurs. Planning policy has for many years been to use conditions in preference to section 106 agreements. Other tools are the description of the development permitted, and of course s.106 itself. This distinction is important because the confusion fosters the now deep-seated tendency to call for “planning obligations” to secure extraneous benefits, or some sort of community gain.

2 It says that planning obligations can be secured under legislation other than s.106. “They are commonly secured under section 106” Let’s get this clear; planning obligations can only be secured by s.106. They are a creature of s.106 which defines them very closely. My post of a couple of days ago shows what happens when people go outside what s.106 allows – the promise is no planning obligation at all, and cannot be enforced against successors in title using the mechanism specifically designed for that purpose – s.106 itself.

3 It says that all planning obligations must meet the tests now found in Reg 122 of the Community Infrastructure Levy Regulations 2010. This completely ignores the fact that Reg 122 simply prevents a non-conforming planning obligation from being taken into account in the grant of planning permission. There is nothing to stop a planning obligation being given separately from the grant of permission, though that is rare. But also, it ignores Derwent Holdings v. Trafford BC [2011]EWCA Civ 832 and Savage v. Mansfield [2015]EWCA Civ 4 which clearly allow planning obligations which deliver the desirable and not only the necessary, directly related and reasonable.

Why is this important? Firstly, it leads to the sort of errors we saw in Savage v. Mansfield. Where planning permission is granted relying on a benefit which is not secured within s.106 it will mean that the planning permission is voidable, unless (as is rarely the case) it is enforceable under other legislation. Section 16 of the Greater London Council (General Powers) Act 1974 is one such example, but as it says on the tin, it doesn’t apply outside Greater London. This is a very easy way in for objectors to quash a valuable permission.

Secondly, it delays planning and gives planning obligations a bad name. It takes time to negotiate s.106 agreements, and conditions are much faster. By suggesting that planning obligations are the device of choice to secure mitigation, simpler solutions are ignored.

Thirdly it leads legislators and policy makers to focus on s.106, which is just a legal device to make promises enforceable against successors in title, rather than policy. Positive promises do not run with the land, and negative promises can only enforced by landowners who own land designed to benefit from them. So, planning authorities were given the statutory mechanism of s.106 to enforce these. But as long ago as 1991 John Gummer limited what old s.106 could do and imposed the current straitjacket on drafting in, it is reckoned, a desire to put an end to “planning gain”, the buying and selling of planning permissions. But this laudable policy objective is best controlled by the Secretary of State intervening where he or she sees abuse of the system. The call-in power is there for situations like that. But instead, the wide powers to ensure that promises can be enforced were cut down by the Planning and Compensation Act 1991 which required promises to fit within a narrowly drafted s.106(1) in order to be enforceable against successors in title. The result has been convoluted drafting of s.106 agreements ever since, and cases like Savage v. Mansfield.

Fourthly it leads to mistakes by legislators and Government legal draftsmen who in Regulations 122 and 123 of the Community Infrastructure Levy Regulations 2010 ban things from being done under s.106 which with a little legal ingenuity can be done under other powers. Regulations 122 and 123 ought to focus on the substance of the promise rather than the legal route used to enforce it.

And fifthly, it suggests the policy makers at DCLG really don’t understand the system. Which would be a shame because the rest of the guidance is very helpful and definitely clearly written.

“Faith based planning?”

The Expanding Universe

The Expanding Universe

Ouch. My planning law colleague Stephen Ashworth of Dentons has put up a post today on their UK Planning Law Blog with this title. He reports that the Government’s changes last November to make development easier for small developers by reducing the thresholds for affordable housing and tariff style contributions are being challenged in the High Court by Reading and West Berkshire Councils with the support of a number of others.

One of the issues will be that DCLG did not carry out any analysis of the numbers of affordable homes or cash likely to be lost before promoting the policy. Stephen writes, “Whilst there may well be good public policy justifications for the changes, promoting new policy without at least some public understanding of the consequences is just daft. It is tantamount to faith based planning.” I hope that Stephen doesn’t mean that faith is daft. We do things by faith all the time. Presumably he – like me – takes Paracetamol when he has a headache and has faith that it works. And by faith I accept that the universe is expanding – scientists and astronomers I do not know tell me this but even they know that is only a theory to which they subscribe until there is a better one. And the Bible tells us that “Faith is confidence in what we hope for and assurance about what we do not see” – Hebrews Chapter 11 verse 1. At the risk of inviting Richard Dawkins to contribute, there is plenty of good evidence for the death and resurrection of Jesus, and as a practising Christian myself I do not regard it “daft” to believe and to have faith in God.

Here is a link to Stephen’s post. Thanks Stephen for giving me the opportunity to bring the important things in life into my blog.

Drafting section 106 agreements – more lessons

The Court of Appeal issued its decision in Savage v. Mansfield [2015]EWCA Civ 4 on 15th January. The case is interesting for those involved in section 106 agreements for two reasons, both dealt with in a few admirably pithy paragraphs at the end of the judgment of Lord Justice Lewison.

The first is that the agreement contained a covenant by the landowner not to claim compensation if the permission was revoked. That provision was redrafted before the decision to say that the landowner would repay any compensation. That is because, though the judge refrained from pointing this out, the way it was originally put was simply not within s.106. The second formula is within s.106(1)(d) – a payment to the planning authority. There is earlier authority on just this point – R v. Somerset County Council, ex p Dixon [1997] JPL 1030.

The second point concerns Reg 122 of the Community Infrastructure Regulations 2010 which enshrines the policy tests for s.106 agreements in law and says that a planning obligation which fails to meet the tests of necessity, direct relation to the development and reasonableness, may not be taken into account as a reason to grant permission. The provision was addressing the possibility that the permission which might have to be revoked under the Habitats Regulations, in which case in the normal run of affairs the planning authority would have to pay compensation. Lewison LJ held that because revocation could only occur to the extent the development was not built the obligation could not have been a factor which was taken into account in deciding to grant permission. It did not overcome a planning objection, and therefore Reg 122 was not engaged. Now this strikes me as odd, because the argument against the clause was precisely that – it did not overcome a legitimate planning objection, and was not necessary to do so.

Lewison LJ went on to point out that in the reasons for the grant of permission the clause was not mentioned, which sounds like pretty good evidence that it was not taken into account in the decision to grant. I am no fan of Reg 122, and it is spawning much litigation on an area which was previously quiet, but does not the other reasoning in this decision and Derwent Holdings v. Trafford BC [2011]EWCA Civ 832 undermine Reg 122, whose intent appears to be to outlaw all planning obligations which do not meet the policy tests?

Use it or lose it – the Lyons Housing Review spells out the proposal

Lyons Housing ReviewIn mid- October, The Lyons Housing Review published its report. Sir Michael Lyons, a former chief executive of three local authorities, was asked by the Labour Party to look into the causes of the shortage of new houses and suggest action to address the problem. One of the suggested solutions is “Use it or lose it”, actually a concept suggested by Ed Miliband, leader of the Labour Party at the time he set up the Lyons Review – see http://thedavidbrockblog.com/?p=697 .

The Lyons report explains that the market is dominated by volume housebuilders – “During the 1980s there were on average 10,000 active SME builders (those delivering 500 units or less) delivering around 57% of all output; last year there were only around 2,800 active small builders producing 27% of all new homes .” The report speaks of the “Big Six” housebuilders. It also records that mergers in the housebuilding industry actually reduced the number of houses built – see table 2 on page 104. Because it is easier to sell 100 homes from four sites than 100 homes from one site, mergers make it easier for housebuilders to achieve their targets. But in the introduction to the Use it or lose it proposal the report also adopts the observation of the Office of Fair Trading 2008 report on “Homebuilding in the UK” that “ Homebuilders deliver new homes as fast as they can sell them, not as fast as they can build them”. Anyone who has watched the release of houses on a large site will recognise this. Housebuilders will try to manage the sales so as not to put too many houses on the market at once, meaning that only a few houses are available at any moment in time.

Looking at numbers of houses with planning permission but unbuilt Lyons states that:
50,000 homes are on stalled sites
26,000 are on sites yet to start
54,000 are on sites that have started but have yet to finish

There are thus 130,000 unbuilt homes with planning permission. Some of these, it recognises, are on large developments which will take time to build out.  They state that in addition they identify “270,000 homes on sites that have been in the planning system since before 2010 or which have not yet progressed to planning permission”.

Largely on the basis of that analysis, the Review suggests how Use or lose it would operate. “In response to the concerns about the slow build out of sites discussed above the review was asked to look at how a “use it or lose it” power would operate to ensure sites are built out in a reasonable timeframe.” They make four interlinked proposals :
1 Shorten the lifetime of a permission to two years
2 Require more substantial progress to preserve a planning permission than the current material operations
3 Where a site is allocated in a plan, or has planning permission, but development has not been begun within five years, the local authority should be able to charge the owners with council tax, annually, for the number of dwellings proposed
4 There should be streamlined CPO powers in extreme cases allowing purchase by councils either themselves or with another party who wishes to build out the land.

Items 3 and 4 are clearly the heart of Use it or Lose it.

The report says that item 3 will not deter landowners from putting land forward because they stand to gain from its allocation for housing. But on the other hand it would “incentivise them to deal with an agent or developer who is likely to ensure that the scheme is progressed promptly.” It is worth pausing to consider this. Firstly, it should be remembered that anyone can make a planning application over someone else’s land, and that it is not necessary to be a landowner, or even a developer or option holder, to put forward a site for the local plan. In fact, the local planning authority has the ability to include a site in a plan on its own initiative. Planning applications for large sites commonly include land not yet controlled by the applicant. I remember one such site where one landowner was implacably opposed to the development and refused to sell. The development as actually built simply surrounded his land. It would not be right to require a person who hasn’t actually promoted their site to pay this penalty council tax. There was a similar problem with Community Infrastructure Levy, now addressed somewhat unsatisfactorily by Reg 69A of the CIL regulations. Lyons suggests that the power should only apply where the landowner has volunteered the site. That will be an important principle and the detail of its implementation will need to be scrutinised carefully.

But is it right to assert that use it or lose it will incentivise landowners to deal with developers? That assumes that there are developers who want to deal. Perhaps that will not be a common problem. But the penalty council tax will put pressure on landowners and weaken their negotiating position. There will be an imperative to sell, because otherwise, the landowner will end up paying council tax on unbuilt houses. Small landowners in particular will be vulnerable; they are unlikely to appreciate the need the proposal creates to have a contract to sell before supporting the developer’s case for allocation of the land. And the contract will constrain the landowner’s power to deal with his land. Well-advised, the landowner might find a put option is desirable.

Should we not go back to those figures about unbuilt houses and the number of housebuilders? Do they really support “Use it or lose it”? First, the number of houses with permission but unbuilt is only 130,000. The target is to build 200,000 each year, so that is only 65% of one year’s supply. Of course, Lyons concludes that in addition there are “270,000 homes on sites that have been in the planning system since before 2010 or which have not yet progressed to planning permission”. But that figure needs to be interrogated; if the permissions predate 2010 and have not been implemented, then unless the normal commencement condition was amended, they will have expired. And houses “which have not yet progressed to planning permission” are just that; they do not have permission. So why are they being counted?

However it is the observations about the number of builders which seem to me to hold more interest and possibly the solution. The market is dominated by the “Big Six” volume house builders, who, we are told, release houses not at the rate they can be built but at the rate they can be sold. I suggest that is at the rate at which they can be sold consistent with achieving the return the housebuilders desire. That is simply commercial common sense, and is backed up by the sales behaviour on large sites. This suggests that the market lacks competitiveness. More housebuilders getting their houses to the market will provide better consumer choice, bring more houses to the market and keep prices in check. But if housebuilders are able to control the rate of release, the number of houses coming to the market will remain low and house prices will stay high. But there would be less tendency for that to happen if there were more players in the market and therefore more competition. Which suggests that we need more housebuilders. Having a large number of builders is rightly identified by Lyons as an important ingredient for a healthy housing market, and the report suggests various helps for SME builders in Chapter 7. But actually this all suggests that the time has come to look again at breaking up the large volume housebuilders, especially when we remember that housing starts go down the bigger they become. Isn’t that a better step than Use it or lose it?