Planning reform will take housebuilding in the UK to a “40-year high”, the Chancellor announced in today’s Spring Statement as she promised to unclog the building process.
Reiterating plans announced earlier this week and the Labour pledge to “get Britain building”, Chancellor Rachel Reeves said £2 billion in grant funding would deliver up to 18,000 new homes in England and go some way to “fixing the housing crisis”.
The Chancellor told Parliament that her previously announced planning reforms, including reintroducing mandatory housing targets and developing grey belt land “will permanently increase the level of real GDP by 0.2 per cent in 29/30, an additional £6.8 billion for our economy.”
She said: “The planning system that we inherited was far too slow. The OBR have concluded that our reforms will lead to housebuilding reaching a 40-year high.”
“Changes to the National Planning Policy Framework alone will help build 1.3 million homes in the UK over the next five years,” said Ms Reeves today. “Taking us within touching distance of delivering our manifesto promise to build 1.5 million homes in England in this Parliament.”
The Planning and Infrastructure Bill is currently working its way through Parliament, passing its first Commons test on Monday evening. Deputy Prime Minister Angela Rayner said the Bill would speed up the planning system, help achieve the Government’s target to build 1.5 million homes by 2029, allow for an expansion of Britain’s energy network and give greater environmental protections.
Rather than employing quick fixes to boost demand in the property market the Chancellor hopes root and branch planning reform will stimulate supply via the Planning and Infrastructure Bill which is working its way through parliament.
There are measures in the bill that empower planning officers to make decisions quickly, but after years of under-resourcing this niche part of the public sector, investment and training is essential.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Our first wish was granted – the Chancellor didn’t do much, if anything, to deter existing activity in the housing market.
"The first way of dealing with a problem is to recognise it and the Government seems to have realised that there is a housing crisis. It has been widely accepted that affordable housing in particular is insufficient and improving planning is a significant contributor to that aim. Rachel Reeves said herself that it is too slow so the extra funding announced yesterday in the social and affordable homes programme is good news, although we still need more detail of where, when and how those spades are going to be in the ground.
“We are disappointed there wasn’t more direct assistance for the private sector, particularly SMEs who cumulatively can make such a big difference to the overall problem. Builders won’t build unless it is profitable for them to do so and there is reasonable prospect of adequate demand for the product envisaged.”
Paul Rickard, chief executive of London affordable housebuilder Pocket Living, said: “Major reform of the planning system remains a vital priority but cannot be achieved without significant additional resource. Ahead of the Spending Review as an SME housebuilder we are more susceptible to any reductions in planning and place-making capacity within local authorities.
“To mitigate any negative impact of spending constraints on either planning reform, or support to the SME housebuilding sector, we are exploring with the Government a number of initiatives, and would hope to establish a dedicated planning reform and SME market access strategy transformation fund, within the Government’s wider proposed transformation fund, to help both councils and the industry maximise the opportunities from planning change and help deliver housing growth at a local and regional level.”
Richard Donnell, Executive Director at Zoopla said: “The housing market needs a strong and growing economy to support housing supply. It’s promising to see the Government focusing on longer-term impact by boosting funding for new homes and avoiding short-term measures like stamp duty holidays that don’t really help with the fundamental challenges in the housing market.
“The top priority should be an easing of mortgage regulations, which will support first-time buyers, an important buyer group for homebuilders and the broader market.
“This would also help the rental sector, where there are still 12 people chasing every home for rent, with those on low incomes bearing the brunt. Increased funding for social housing is essential in the upcoming Spending Review to help support housing delivery and boost the stock of social rented homes, which has been static for 30 years.”
