Budget 2018: Build Out Rates, CIL and PD Rights or Consultation, Consultation, Consultation.
Yesterday afternoon, the Chancellor unveiled this year's budget, albeit with a huge Brexit shaped question mark over whether it is actually implemented. Assuming that we do not end up with a 'no deal' emergency budget, then what does this budget mean for the wonderful world of Planning?*
Well, in the short term, it means a lot of consultation and the release of a little extra money. As we have an awful lot to get through, there is very little analysis in this post. Instead, I have focussed on summarising what is being proposed.
Dealing with the cash first, the Government has promised:
- to launch a £675 million Future High Streets Fund to support local areas in England to develop and fund plans to make their high streets and town centres fit for the future. This will include a £55 million specific fund for the regeneration of historic high streets.
- to provide £5 million to support up to 10 new University Enterprise Zones. These are intended to promote collaboration between universities and businesses, support start-ups and scale-ups, and disseminate management skills.
- £420 million for local roads maintenance including potholes.
- £200 million to pilot innovative approaches to deploying full fibre internet in rural locations; and
- £150 million for small road improvement projects
The money for road improvements and revitalising high streets will be extremely welcome, however most of the meatier proposals are being saved for future consultation.
In addition to the consultation on changes to the Revised NPPF and Housing Need, which was published on 26 October**, we now also have:
- A consultation on 'Planning Reform: Supporting the high street and increasing the delivery of new homes' in England which is open until 14 January 2019*!;
- The Government's response to its consultation on Developer's Contributions, which promises a further consultation on revisions to the CIL Regulations later in the year *!!; and
- The publication of the Letwin Review and a promise that the Government will respond to it in February 2019 *^.
Taking these in turn:
Planning Reform Consultation
The Government is consulting on new permitted development rights to:
- allow existing buildings in typical high street uses to change to a wider range of uses. This would allow more leisure and community uses such as gyms, libraries, health care and office uses, to open up on the high street, as well as potentially allowing new homes to be provided.
- allow certain building types in particular uses to extend upwards to create additional new homes.
- remove the existing right that allows the installation of, and advertising on, new public call boxes.
- increase size limits for off-street electric vehicle charging points.
- make permanent permitted development rights for changes from storage and distribution to residential use, and larger single storey rear extensions to houses, which are currently due to expire in 2019; and
- consider whether to create a new permitted development right allowing for commercial buildings to be demolished and redeveloped as new build residential properties.
The consultation also proposes:
- changes to the Use Classes Order, and in particular to Class A, in order to make it easier for high street premises to respond to changes in circumstances.
- changing rules to make it easier for local authorities and public sector bodies to dispose of public sector land at an undervalue.
- creating a new listed building consent order for the Canal and River Trust, so that they do not need to obtain a new listed building consent for each proposal; and
- creating new guidance on compulsory purchase powers of new town development corporations.
Government's response the consultation on Developer's Contributions
We finally have a response to the consultation on Developer's Contributions, which closed in the summer. The Government is now proposing:
- update its CIL Guidance in order to support local authorities to adopt and revise Community Infrastructure Levy charging schedules. In developing guidance, the Government will consider issues raised, to ensure that Levy data requirements do not create unnecessary delays to plan making.
- take forward a modified proposal to ensure that regulations continue to require charging authorities to consult on draft charging schedules, whilst removing the current statutory requirement for two separate rounds of consultation in every circumstance. This will ensure that Charging Authorities can decide the most proportionate approach to consultation, speeding up the time taken to introduce and amend charging schedules. It will also ensure stakeholders have clarity over how they can respond to proposals.
- take forward a modified proposal and intends to lift the pooling restriction in all areas. So that the Community Infrastructure Levy remains an effective mechanism for collecting contributions towards addressing the cumulative impact of development, the Government will ensure measures are in place to incentivise uptake and continued use of the Levy.
- take forward a modified proposal to keep all of the current exemptions, whilst making changes to the penalties associated with the failure to submit a Commencement Notice prior to development being started. This will ensure that any penalty is set at a proportionate level and will not result in the whole liability becoming payable immediately.
- consider how new guidance could be used to manage the effects of CIL on viability by encouraging authorities to take account of these issues when setting Levy rates and choosing how they use existing powers for discretionary social housing relief.
- committing to bring forward legislation to exempt Starter Homes from the Community Infrastructure Levy.
- extending abatement provisions and changing the indexation measures for CIL to ensure that it is fair and reflects the intentions of the Government.
- thankfully, the Government has dropped its proposal to allow rates to be set with reference to the existing use of the property being developed; and instead will amend guidance to allow charging authorities to set differential rates more effectively.
- amending the indexes for CIL so that residential rates are tied to the House Prices Index and non-residential rates to the Consumer Prices Index.
- taking forward proposals to require reporting of developer contributions from the Community Infrastructure Levy and section 106 planning obligations through the Infrastructure Funding Statement on a statutory basis.
- removing the restrictions governing regulation 123 lists, and instead addressing concerns over double dipping through reporting and the use of Infrastructure Funding Statements.
- take forward proposals to make clear that local authorities can seek a fee from applicants towards monitoring planning obligations.
- take forward a modified proposal, to enable Combined Authorities with strategic planning powers to take forward a Strategic Infrastructure Tariff, and to encourage groups of charging authorities to use existing powers to more effectively support the delivery of strategic infrastructure through the pooling of their local Community Infrastructure Levy receipts. They will not, for the moment, however allow joint planning committees to charge a SIT.
- amend guidance to encourage other groups of charging authorities to use the Levy more effectively to support the delivery of cross boundary strategic infrastructure that benefits multiple authorities through pooling their local CIL; and
- publish a consultation on the text of the draft CIL amendment regulations before the end of the year.
Letwin Review
Whilst we now have the final report of the Letwin Review, we do not as yet have the Government's response to it. Instead, a response has been promised by February 2019. The good news is that the report found no evidence that speculative land banking is part of the business model for major house builders, nor that this is a driver of slow build out rates.
Instead the report concludes that greater differentiation in the types and tenures of housing delivered on large sites would increase the market absorption rates of new homes – the binding constraint on build out rates on large sites – and set out recommendations to achieve this aim.
The recommendations in the report are as follows:
- introduce a new set of planning rules for all large sites (over 1,500 units) in areas of high housing demand, requiring those developing such sites to provide a diversity of tenures and housing types;
- establish a National Expert Committee to advise local authorities on the interpretation of diversity requirements for large sites and to arbitrate where the diversity requirements result in an appeal or disagreement;
- provide incentives to diversify existing sites of over 1,500 units in areas of high housing demand, by making any future government funding for house builders or potential purchasers on such sites conditional upon the builder accepting a Section 106 agreement which conforms with the new planning policy for such sites;
- consider allocating a small amount of funding to a large sites viability fund to prevent any interruption of development on existing large sites that could otherwise become non-viable for the existing builder as a result of accepting the new diversity provisions;
- introduce a power for local planning authorities in places with high housing demand to designate particular areas within their local plans as land which can be developed only as single large sites, and to create master plans and design codes for these sites which will ensure both a high degree of diversity and good design to promote rapid market absorption and rapid build out rates;
- give local authorities clear statutory powers to purchase the land designated for such large sites compulsorily at prices which reflect the value of those sites once they have planning permission and a master plan that reflect the new diversity requirements;
- give local authorities clear statutory powers to control the development of such designated large sites through either a Local Development Company (LDC) or a Local Authority Master Planner (LAMP) to develop a master plan and full design code for the site, and then enable a privately financed Infrastructure Development Company (IDC) to purchase the land from the local authority, develop the infrastructure of the site, and promote the same variety of housing as in the LDC model.
In order to minimise uncertainty, however, the budget did confirm that Help to Buy Equity Loan funding will not be made contingent on large sites with existing outline permission being developed in conformity with any new planning policy on differentiation. The government will honour any funding commitments made to sites with existing outline planning permission, regardless of any new planning policy on differentiation.
In short, we can expect an Autumn of Consultations ahead - I hope you all have plenty of time to cogitate and plan your responses!
* That sounded a lot more sarcastic that I intended it to...
** https://www.gov.uk/government/consultations/changes-to-planning-policy-and-guidance-including-the-standard-method-for-assessing-local-housing-need
*!https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/752222/Planning_reform_-_supporting_the_high_street_and_increasing_the_delivery_of_new_homes.pdf
*!!https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/752183/Developer_Contributions_Government_Response.pdf
Detail of outcome
The government response to the consultation on supporting housing delivery through developer contributions.
It provides a summary of consultation responses and the government’s view on the way forward.”
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