On its own, the National Planning Policy Framework (NPPF) will not be enough to stimulate commercial and domestic property growth in the short term.
Other issues need to be addressed if the Government is to be successful in its stated aim of making development one of the foundations of the UK's economic recovery.
Along with last year's Localism Bill, the NPPF was designed to be one of the key motors to drive the economy forward. The premise was very simple. Reduced planning controls equals increased development and increased growth.
To a certain extent, the premise has worked. Recent data indicates that there has been some increase in the volume of planning applications approved in the UK since the ratification of the NPPF. In the commercial sector, the approval rate for applications increased to 81 per cent from 75 per cent in the five months to 31 August when compared with the same five-month period in 2011.
The figures for the residential market were similar. In the five months to 31 August, some 85,501 residential planning applications were granted consent nationally. This represented 82 per cent of all applications received and compares favourably with the figure of 73 per cent in the preceding five months.
On the face of it, this would indicate that NPPF is working. Increases of six and nine per cent respectively are impressive.
Once you look behind the figures, however, things aren't quite so rosy. And that's primarily because despite the increase in approvals, the underlying financial reality hasn't changed. The UK economy recovery is at best erratic. Indeed only recently the Governor of the Bank of England Sir Mervyn King said: “The road to recovery will be long and winding."
In the commercial sector, several million square feet of approved development has yet to be started. In addition, there are some 400,000 residential units which have approval but are waiting to be built.
All this suggests that far from a reduction in planning legislation being the issue, it's the economy which is holding back growth. The commercial development pipeline might be at record levels, but that's of little use in a market generally characterised by weak demand, above-trend vacancy rates and falling property values.
In particular it is the lack of finance that is the problem. The arguments over how much banks are lending and if it is sufficient have been well documented, but without backing, developers can't build. Equally, if there is no money to buy or rent the development once it has been completed, they won't build.
And where there is still money available, such as the private equity market, there is increasing frustration with the time it is taking to obtain planning permission. While developers obviously appreciate the need to go through the right procedures, they do lose patience when councils or consultees such as Government agencies prevaricate.
So why the sudden desire by developers to push through lots of planning applications? Evidence from clients suggests that they are taking advantage of the situation to review their existing portfolios with a view to making the most of longer-term opportunities as and when they arise.
And, as always, it is advisable to get planning applications approved in the best climate possible. Should NPPF be changed or even scrapped in the future, permissions that are possible under the current regime might be more difficult to achieve.
It seems likely, then, that in the medium and long term, NPPF will be of real benefit to developers and the construction industry, and therefore to the economy as a whole.
In the short term, however, almost the only effect will be to fatten up land banks. Growth only comes from supply and demand and without an upturn in the UK's economic fortunes and better access to finance, supply can't be paid for and demand is likely to remain limited. The Government will have to look elsewhere for expansion.
About the author
Paul Clarke is a Partner in the Planning team at Bidwells. He has nearly 40 years experience in Town and Country Planning, of which 25 have been spent in Local Government. Paul is the Head of the Bidwells Regeneration Team and provides specialist town planning advice for public and private sector clients in all development areas of the country. He currently leads, assembles and manages multi-disciplinary teams to promote development and regeneration projects.
Paul is a golf and cruise addict.
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