Implications of tough new housing targets

  • How to address the shortage of housing in the UK is an issue that has dominated the political agenda for years
  • The government has now threatened to strip local authorities of their right to rule on planning applications if they don’t approve enough housing
  • We consider the implications of this announcement for local authorities and registered providers of social housing

The stark warning from Housing Secretary, Sajid Javid, that local authorities could lose the right to rule on planning applications if they fail to meet house-building targets, could have wide-reaching implications.

A new planning policy framework will introduce rules to determine how many homes councils must build – with bigger targets for areas where the cost of housing is particularly high relative to average earnings.

If local authorities fail to meet these targets, their right to rule on planning applications locally could be passed over to planning inspectors. Developers could also be denied planning permission if they take too long to build.

Here, Rod Penman, Head of Public Services, Zurich Municipal, and Allison Whittington, Head of Housing, Zurich Municipal, discuss some of the possible ramifications.

Could quality of construction be affected?

One concern is whether the quality of housing could be compromised in the rush to build homes more quickly.

Allison says: “While initiatives that encourages more house-building should be welcomed, we must make sure that we’re building high-quality homes. Local authorities need to ensure that house builders don’t consider building regulations as the standard to aim for, but as the bare minimum.”

Rod adds: “Another potential concern is if developers were to see pre-fab properties as a solution to the challenge of building more quickly. Pre-fabs tend to have short shelf-lives and are more likely to be affected by damp, which can cause health problems.”

We have previously discussed how health issues linked to damp can lead to costly public liability claims.

Another concern is whether local authorities will feel under pressure to approve developments in areas of higher flood risk. It is vital, says Allison, that where there is increased risk of flooding, councils insist on appropriate mitigation measures, such as sustainable drainage systems.

How will long-term housing needs be managed?

Local authorities will also need to plan carefully to ensure the housing mix in their area matches local demand.

“Councils are going to be under pressure to approve more housing, but the risk is that they could be creating problems for themselves further down the line if they don’t get the housing mix right,” says Rod.

“For example, if you approve lots of starter homes to give young, first-time buyers a step onto the housing ladder, you then have to consider whether you’ve got enough larger properties for them to move into when they start having families. You also have to think about the knock-on effect on local infrastructure. Will you have enough school places? Will your roads be able to cope with all the extra cars?

“It is important councils have a clear idea of the housing mix in their area and how demand for housing could evolve over time.”

Who will build all these new homes?

While house builders will be under pressure to move forward with developments quickly once planning permission has been granted, there is a danger that this could simply lead to them becoming more selective in the sites they choose to target for development, and the type of housing they offer.

From a social housing perspective, there is also the question of how many registered providers have the capacity to build on a larger scale.

One way the sector might look to respond to this challenge is with an increase in merger activity. L&Q, for example, is planning to deliver 100,000 new homes on the back of its merger with the East Thames Housing Group and subsequent acquisition of Gallagher Estates.

Rod believes local authorities may also become more directly involved in housebuilding, and cites the example of Brighton and Hove Council, which has just announced a £120m joint venture with Hyde Homes to deliver 1,000 affordable homes locally.

“Local authorities might see getting involved in building as the only solution, if they are going to deliver houses in sufficient numbers, and with the right housing mix,” he says.

A shortage of labour, however, is a problem which might be trickier to overcome, and one that could be exacerbated by Brexit. Some reports estimate that as many as 200,000 construction workers could be lost when Britain leaves the single market.

Next steps for local authorities and registered providers

While there are no easy answers to the challenges outlined above, it is important local authorities and registered providers of social housing understand the significance of the new planning framework, and how it could impact upon their organisation, as the government has said it could be implemented as early as this summer.