Archaic planning system has long been a barrier for SME housebuilders
Planning reform is not a straightforward tick box exercise, it is a complex yet urgent transformation that requires politicians to grasp the nettle and balance the often conflicting demands and interests of groups alongside the policies and strategic plans in their area.
David Alcock (pictured), managing director at Blend, said small and medium sized housebuilders, historically at a disadvantage when trying to develop small sites, must take centre stage.
Archaic planning system
“An archaic planning system and lack of funding have historically been the two most significant barriers SME housebuilders have faced when it comes to building more homes and tackling the housing crisis,” said Alcock.
Out of those two challenges, he said, ironically, the second appears to be the one with an easier solution.
“I have previously discussed how specialist development finance lenders have seen their popularity rise lately and how these regulated non-bank lenders are channelling credit into our housebuilding market,” he added.
Alcock believes that well-capitalised, agile, and flexible specialist development finance lenders are in a strong position, keen and ready to support small and medium sized housebuilders who need financing to continue building the houses the country requires.
However, he said, the thorny issue of planning has remained at the top of the list for many small housebuilders and continues to undermine their ability to deliver housing.
The pandemic brought in new challenges, such as supply chain issues and materials shortages, and Alcock said exacerbated existing ones, with local authority budgets stretched causing further delays to planning applications.
However, he believes at the heart of the challenges faced by SME housebuilders are the constant difficulties caused by the planning process.
“Clearly, the government recognises that without course correction, things are trending in the wrong direction and that it needs to do something,” Alcock added.
Therefore, he said, the government has proposed a raft of new planning reforms that are expected to streamline the planning process, making it easier to release more land for housing and to obtain planning permission.
“But by doing so, the government has forgot rule number one of getting anything done; concentrating on a few things and doing them well is so much more important than trying to advance on a broad front,” he added.
So, while Alcock welcomes these new measures, he suggested it would be better starting by focusing on SME housebuilders, the lifeblood of the economy, and getting that right first.
Challenges faced by SMEs
Alcock said that SMEs have historically faced significant disadvantages when trying to develop small sites.
“This has resulted in a sustained decline in housing delivery on small sites over many decades with SME builders accounting for just one in 10 new homes in the UK, compared to a peak of nearly half in the early 1980s,” Alcock added.
He said that in London, there was a 50% decrease in small housing developments between 2006 and 2016.
At the heart of this issue, he believes, is that developers of small sites must meet the same policy requirements as developers of large sites while struggling with smaller site areas, limited design flexibility and tighter margins due to their size.
“Consequently, the determination of small planning applications is taking well in excess of the statutory period,” Alcock said.
According to Lichfields, 98% of small planning applications take longer than 13 weeks from validation to planning committee, with the median time being 33 weeks.
“Importantly, Section 106 negotiations small developments are taking a disproportionately long time; a median of 23 weeks from committee to permission, and a median of 60 weeks, 14 months, from validation to issuing the planning permission following signing of the S106 agreement,” he said.
Small sites provision
Alcock said the acknowledgement that small sites are vital both for the custom and self-build sector, and also for the SME housebuilders that deliver on these homes, makes him particularly excited about the National Planning Policy Framework Consultation launched earlier this year.
“Questions 24 and 25 refer to small sites and the possibility of strengthening the current NPPF’s provision for 10% of housing requirement to be on small sites,” Alcock said.
He believes that this would help reverse the historic disadvantage which SME housebuilders have faced.
Difficulties in reforming planning system
Alcock added that recent local and cabinet political changes have shown that reforming the planning system is not straight forward.
“Each group of stakeholders have their own bespoke needs which must be addressed, so, I believe a staged approach to planning reform will help us,” he added.
However, Alcock believes one thing is clear, the government must tackle planning reform soon if it wants to meet its target to build more homes.
What more do you believe the government should be doing to help SME housebuilders? Let us know in the comments below.