The latest Housing Pipeline Report from the Home Builders Federation (HBF) and Glenigan finds that the number of planning approvals continues to fall as the Government’s anti-development policies start to bite.
The report shows:
- The number of housing projects granted a planning permission in Q4 fell below 3,000 for the first time since the data set was started in 2006, with the number of projects in the whole of 2022 falling well below the 21,000 project permissioned in 2017 to under 12,500; and.
- The north has been particularly hard hit with a 22% year-on-year drop (across North East and North West combined), undermining any attempts to use housebuilding, a known economic driver, to support the Government’s levelling up agenda
In its January report, ‘Planning for Economic Failure’, HBF warned that the Government’s increasingly anti-development policy regime – planning, nutrients levels in rivers) and mortgage availability following the closure of the Help to Buy scheme later this month - could see housing supply fall to the lowest levels on record.
This report covers planning permissions granted in Q4 of last year and so before the impact of the Government’s latest capitulation to the NIMBY wing of the Conservative party even started to kick in.
Those proposals, recently consulted on by DLUHC following a deal with anti-development backbenchers, will see sweeping changes to the National Planning Policy Framework (NPPF), the planning system that was introduced in 2012 and has ensured Local Authorities abide by their responsibilities to build the homes their communities need. Of the 58 proposed changes to the NPPF that have been tabled, only three could in any way be construed as being positive towards new development.
As was predicted, the implications of the Government’s anti-development approach and its watering down of the requirements placed on Local Authorities, have already seen a growing number of them temper their approach to planning and housing supply. So far, 55 Local Authorities have withdrawn or paused their housing delivery plans, including 17 since Michael Gove’s proposals were unveiled at the end of last year. Amongst them the one covering his own Surrey Heath constituency, a trend that will undoubtedly continue. This is expected to have a significant impact on planning permissions – and so housing supply – moving forward.
Those 55 authorities are only those Local Planning Authorities with a public position. Many others are simply biding their time, and not progressing with their plans. For the first time since the introduction of a plan-led system of housing delivery in the early 1990s the NPPF saw councils adequately incentivised to prepare and maintain local plans. Government’s proposals weaken these incentives means fewer planning authorities are seeking to abide by their responsibilities to plan for the number of new homes communities need.
Four years after first emerging as a constraint on house building following an EU Court of Justice ruling, the ongoing issue of nitrate and phosphate pollution in rivers and streams is holding up the construction of 120,000 homes across more than a quarter of the country’s local authority areas. This is despite housebuilding being in no way responsible for the pollution generated by agricultural practices and failure by water companies to adequately treat wastewater produced by businesses, homes and other sources.
Research has shown that the ongoing annual impact will be up to 41,000 fewer homes being delivered each year is another major contributor to the drop. In addition, a range of other constraints on the supply side, such as air and water neutrality requirements being imposed by the Government quango Natural England, are causing further blockages.
Autumn 2022 also saw the Government close its Help to Buy scheme that has helped more than 375,000 households purchase a new build home and has underpinned demand and industry confidence to invest in new sites. It is the first time in decades there has been no first-time buyer support scheme in place for new build homes.
Planning permissions granted have been on a steady decline since the start of 2020, so while completions have remained high for the last couple of years, the effects of this decline are yet to be felt but it is likely that the impact on housing supply will be much more clearly seen in the coming months.
Stewart Baseley, Executive Chairman of HBF said; “The collapse in planning permissions is a direct result of the Government’s increasingly anti-development policies and an overall negative stance on home building. We fear this may just be the start. Since the Government capitulated to the NIMBY wing of the conservative party 55 local authorities have withdrawn their housing plans.
“This short-term thinking might be clever politics but its social and economic consequences will be felt for decades. The impact will be immediate and acute with even fewer young people being able to access decent, affordable and energy efficient housing, hundreds of thousands of jobs will go and local economies up and down the country will lose billions.”
What is causing the collapse in supply?
- Proposed changes to the NPPF – 77,000 homes a year
- Nutrient neutrality requirements – 37,000 to 41,000 homes a year
- Water neutrality – 1,500 to 1,900 homes a year
- Recreational Impact Zones – 1,200 to 2,100 homes a year
Implications of drop in supply[ST1] [RF2] [LM3] [RF4] [5] [LM6] , based on 122,000 homes not being built:
- 378,000 fewer jobs being supported, including over 4,000 graduate and apprenticeship positions
- Over £20 billion less economic activity being generated
- Over £3 billion less investment in affordable housing
