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Pushing the planning boundaries - what can we learn from our European partners?By: John McNally

The UK's planning system is responsible for the current housing crisisThe route that the government is convinced will lead us to the earliest possible recovery from the economic downturn is by encouraging new property development and allowing development to be built more quickly.

This strategy appears to have been given credence by repeated comments made by the chief executive of Legal & General, Nigel Wilson. At the recent Conservative Party conference, Wilson hit out at planning delays and said the UK is "a particularly difficult place to get planning".

Speaking at the Conference, Wilson told a fringe event held by the Social Market Foundation think-tank: "The over-ruling power should come in more often. We need a lot more imagination from politicians to help facilitate all this."

And he’s not the only one to think so. Speaking earlier at a Liberal Democrat conference fringe event on social housing, Alex Morton from the Policy Exchange think tank, said that the planning system was responsible for the country’s wider housing crisis.

Similarly the chairman and founder of Redrow, Steve Morgan, was reported in The Times as saying the residential market’s biggest problems are "sheer bureaucracy" in the planning system and "nimbyism, which is alive, well and thriving".

Nevertheless, Wilson still perceives some cause for optimism. In August he told Radio 4’s Today programme: "It is changing. We have been encouraged by the government, the Treasury and various other local authorities to put forward more ideas.”

These changes have been plentiful and, in some cases, quite radical. The National Planning Policy Framework (NPPF), for example, has replaced more than 1,000 pages of planning policy guidance with a condensed policy document of around 50 pages, which holds a “presumption in favour of sustainable development” as its golden theme.

Significant changes have also been made to the permitted development rights enjoyed by both residential and commercial properties; the most controversial of which has seen the introduction of a permitted change from offices to residential accommodation without the need for planning permission, in some instances.

Labour leader Ed Miliband has set his sights on building 200,000 homes a year if his party wins the next election.

But will these changes go far enough and how do they compare with neighbouring European countries?

Economic growth and sustainable development are challenges that have been faced throughout Europe and not just in the UK. French planning rules are reportedly as important and often as controversial as those in the UK, and these rules and procedures have also been simplified, most recently by further changes implemented in January and March 2012.

A key part of these changes has been to simplify the calculation of habitable space. This is now calculated using the Gross Internal Area rather than the Gross External Area, creating benefits for new developments such as reducing the taxable surface area for the purposes of the development tax, improving the energy efficiency of buildings by allowing thicker walls to be constructed, which subsequently allows density to be increased on sites as the external walls are no longer taken into consideration in density calculations.

New planning tax rules also came into force on March 1, 2012, with the aim of simplifying the system by reducing the number of different planning taxes down to just two: a ‘development tax’ and a ‘low density tax’.

The new rules are endeavouring to promote the economic use of land and slow down urban sprawl while inciting the building of new homes and saving public money by reducing administration costs.

This all sounds familiar. Yet while the new rules might echo the introduction of the Community Infrastructure Levy in England and Wales, on the surface at least they also appear to embrace a more principled approach to sustainable development than simply financing local infrastructure.

In Germany, meanwhile, the speed of decision-making on major infrastructure projects has been questioned in recent years. In 2012, the Port of Hamburg’s Business Association called for an overhaul of planning laws to allow for quicker decisions on key infrastructure projects deemed essential for the competitiveness of the economy. This followed a ruling from a Federal Administrative Court, which further delayed moves to dredge the navigation channel of the River Elbe, with the court agreeing to listen to a case against the project presented by two environmental groups. The Association warned that current legal procedures in Germany would also make it impossible to realise the “essential” expansion of renewable energy infrastructure, including wind farms.

In the UK too, steps have already been taken to accelerate the speed of decision-making on major infrastructure projects. Following the costs and delays afflicted on the Heathrow Terminal 5 planning application, it was widely accepted that decision-making on this type of infrastructure proposal urgently needed to be streamlined.

As a result, the Planning Act 2008 introduced a new process for decision-making on Nationally Significant Infrastructure Projects (NSIPs) for energy, transport, water and waste. It introduced a new body, the Infrastructure Planning Commission, to have responsibility for making decisions on planning applications for NSIPs.

The subsequent Localism Act 2011 abolished the Infrastructure Planning Commission, but it still retained most of the procedures for how the decisions will be consulted on and made. The main difference is that now the Major Infrastructure Planning Unit, which sits within the Planning Inspectorate, will administer applications before advising the relevant government minister. The minister will then make the final decision on whether the project should go ahead or not.

On that particular issue, it appears that the UK is a step ahead of its European partner. However, where the UK’s performance still appears to be lagging behind is in the construction of new housing.

This is despite fresh figures revealing a sharp pick-up in planning applications, as government schemes to boost mortgage approvals raised confidence in the housing market.

The Home Builders’ Federation said the number of planning approvals for new homes surged 49 per cent between April and June 2013 compared with the same period last year. In the first six months of the year, 77,686 permissions were granted, a 26 per cent year-on-year increase.

But that is still not enough to meet demand and with fears of a housing crisis growing on an almost daily basis, the UK’s lack of good-quality, affordable homes is reportedly adding an extra £7 billion to the nation's annual bills from the extra burden placed on social services, the NHS and the education system.

The housing and homelessness charity, Shelter, contends that approximately 1.7 million households are currently waiting for social housing while the number of households continues to increase faster than new builds. The Homes and Communities Agency has also announced that the number of "affordable housing starts" for 2011-2012 was just 15,698 – a 68 per cent fall on the previous year.

The contrast with Germany is stark. Figures released by Germany’s Federal Statistics Office show that in 2012, German authorities granted planning permission for 239,500 new apartments alone – a rise of 4.8 percent or 11,100 more apartments than in the previous year. This continues the trend established in 2010 of an increase in permits granted, although not nearly as strong as the 21.7 percent increase seen in 2011.

By comparison, estimated figures for the UK provided by the Local Government Association (LGA) in 2012 show that, in the period 2011/12, 2,536 schemes obtained planning permission, totaling 135,179 potential homes. This adds to an estimated 399,816 unbuilt homes with planning permission as of December 31, 2011.

The statistics suggest that the UK is clearly off the house-building pace. In fact, a recent survey by property adviser CBRE of 362 institutional investors showed that 35 per cent of investors are now considering Germany the most attractive property market in Europe, followed by the UK at 24 per cent.

Yet the chairman of the LGA, Sir Merrick Cockell, remains steadfast that the UK’s planning system is not to blame. He stated in 2012: "These figures conclusively prove that local authorities are overwhelmingly saying ‘yes' to new development and should finally lay to rest the myth that the lack of new homes being built is the fault of the planning system. Even if planning departments did not receive another new home application for the next three years, there are sufficient approved developments ready to go to last until 2016 at the current rate of construction.”

That position, however, is countered by a 2009 Review of European Planning Systems by De Montfort University on behalf of the National Housing and Planning Advice Unit (NHPAU). It found that the UK stands out as a country with very high rates of growth of house prices and low rates of house-building.

It also found that the flexibility and discretionary nature of English land use planning contrasts with the certainty provided through legally binding land use plans in other countries. It acknowledged that the potential for negotiation late in the planning process, as in England, can provide the benefit of flexibility; but it can also increase the uncertainty faced by developers as well as the length of time it takes for development proposals to go through the planning process.

The study suggested too that a more relaxed planning system on its own does not necessarily deliver higher levels of house building. Rather the planning system, together with a variety of processes including those determining land supply and housing demand, are all determining factors which influence the volume and type of housing constructed.

For example, it was found that planning systems in some other countries tend to have more significant development promotion functions; the proactive, policy-driven land assembly and land supply processes evident in the Netherlands, Germany and France contrast starkly with a more passive and reactive approach in England.

There would clearly need to be a huge sea-change to reverse this trend, with local authority house-building having become practically non-existent in some areas in the UK over the past two decades. Furthermore, the demand for more housing on such a scale brings with it other pressures on demands on land.

Nigel Wilson, of Legal & General again, states that building on part of the Green Belt would help to solve the housing crisis. This is already being considered, with Green Belt reviews being undertaken in some parts of the country to find extra land for housing development. This is often a controversial move and can be met with significant resistance by councils and local amenity groups alike.

So, while there are clearly some lessons that can be learned, it seems that the government in this country is attuned to the need for new development to come forward, particularly with regard to housing need. However, the stark reality is that there will always be those who oppose new development in certain locations, particularly against the scale at which new residential development needs to come forward.

Successive governments have clearly failed to deal with the housing shortage dilemma and the current government, faced with the competing and mutually exclusive desires of the house-building and localism agendas, might also be staring at defeat.

Perhaps we need to be looking in more detail at our European partners’ planning systems. But if there are more lessons to be learned, they need to be learned fast.

About the author

John McNally, senior property planner, Vail WilliamsJohn McNally is a Senior Planner at Vail Williams LLP with over 14 years’ experience in both the private and public sector. He has advised a diverse range of clients on a variety of major planning applications. 

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