Housing and Planning Bill

Explanatory Notes

Policy background

Home ownership

4 In England most of the available data shows that the aspiration to buy and own a home remains strong for the majority of households. Three fifths (61%) of private renters and around a quarter (25%) of social renters in the U.K. think they will eventually buy their own home. This desire to achieve homeownership is also reflected in the latest British Social Attitudes survey which reported that 86% of people want to own their own home (https://www.gov.uk/government/statistics/english-housing-survey-2013-to-2014-household-report).

5 Around two thirds of social renters (68%) and three fifths (60%) of private renters stated, as their main or only reason for why they don’t expect to buy their own home in the U.K., that they would be unable to afford it.

6 The proportion of English households that owned their own home, either outright or with the help of a mortgage peaked in 2003 (71%) and has been falling ever since then (https://www.gov.uk/government/statistics/english-housing-survey-2013-to-2014-household-report. By 2013-14 only 63% of households owned their own home.

7 Within this trend, the change in the chances of becoming a homeowner has disproportionately affected younger households. Of those households that do own their home 75% are over the age of 45 and nearly half (48%) of households in the 25-34 age group live in the private rented sector (only 21% were renting privately in 2003-04). In the last twenty years, the proportion of under-40 year-olds who own their own homes has fallen from 62% to 41% (https://www.gov.uk/government/statistics/english-housing-survey-2013-to-2014-headline-report), and, in 2014, the Office for National Statistics (ONS) reported that 3.3 million people between the ages of 20 and 34 were still living with their parents (accounting for 26% of the age group).

8 The number of first-time buyers since the financial crash of 2007-08, as measured by the number of mortgages issued to first-time buyers, has fallen significantly. Throughout the 1980s and 1990s the number of mortgages to this group averaged over 400,000 per year (https://www.cml.org.uk/news/723/) but between 2008 and 2014 the average annual number of loans has been fewer than 300,000.

9 In its manifesto the Government committed to "build more homes that people can afford, including 200,000 starter homes exclusively for first-time buyers under 40". The Bill will require local planning authorities to actively promote the development of starter homes for first-time buyers under 40. Starter homes will be sold at 20% below the market price to provide the opportunity for more young, first-time buyers to get onto the housing ladder.

10 The Government also announced its intention to extend the Right to Buy to the tenants of housing associations in its manifesto. Working with the National Housing Federation, the Government has secured an agreement with housing associations to give their tenants the opportunity to buy their home with an equivalent discount to the Right to Buy.

11 Homes sold to tenants under this agreement will be replaced on a one for one basis nationally using the proceeds from the sale of the property. This seeks to support an increase to the overall supply of new housing.

12 The Government will compensate the housing association for the discount offered to the tenant, and housing associations will retain the sales receipt to enable them to reinvest in the delivery of new homes.

Housing supply and the speed of delivery

13 Following the financial crisis, housebuilding in England fell to its lowest point in the post-war era. Since 2010-11, where completions totalled 108,000, the number of new homes built in England has been on the rise, reaching 125,000 completions in the financial year 2014-15 (https://www.gov.uk/government/collections/house-building-statistics). But this number is far short of the number estimated that is required to keep up with the existing demand, with the figure in some cases ranging from 200,000 to 300,000 per year.

14 The difference in the supply of new homes and the demand for new homes has implications for cost. At present, one of the main obstacles to home ownership in England is affordability. As of July 2015, according to the ONS average mix-adjusted house prices in England stood at £295,000, up 5.6% on the previous year. London also continued to be the English region with the highest average house price at £525,000.

15 This Bill intends to put in place various measures to ensure that housebuilders and decision-makers in local authorities have the tools necessary to support and promote an increase in housing supply and at a quicker pace. It will also put forward a number of reforms that are aimed at streamlining the planning system to help speed up the delivery of housing.

New tools for housebuilders and decision-makers

16 The Government made a commitment to get planning permission in place on 90% of brownfield land suitable for housing by 2020. The Bill aims to support the development of brownfield land by requiring local authorities to prepare, maintain and publish local registers of specified land.

17 The Bill seeks to enable permission in principle to be granted for housing-led development on sites chosen and allocated by local authorities, parish and neighbourhood groups within Development Plan Documents, Neighbourhood plans and the brownfield register. It seeks to allow development on suitable sites to proceed quicker by ensuring that in principle matters are agreed upfront.

18 In line with Government's commitment to devolution, this Bill will devolve further planning powers to the Mayor of London. This is intended to ensure that London's housing supply is fully considered, particularly in those areas where it would have the most impact.

19 To ensure that the public are aware of the potential financial benefits of planning applications, the Bill will require that prescribed financial benefits, which might accrue to the local area as a result of granting planning permission, are recorded in reports to planning committees and the authority itself. It also seeks to simplify the process for making any changes to planning application fees that affect some authorities but not others, while retaining a robust system of Parliamentary oversight.

20 In March 2015 Parliament passed the Self-build and Custom Housebuilding Act 2015.  The Act, which has not yet been brought into force, will require local planning authorities to compile a register of persons seeking to acquire land to build or commission their own home and to have regard to that register when carrying out their planning, housing, land disposal and regeneration functions.  These requirements are expected to come into force in Spring 2016, once the necessary secondary legislation has been passed.  The Housing and Planning Bill will go further and require local planning authorities to ensure that there are sufficient serviced permissioned plots consistent with the local demand on their custom build registers.  This intends to make it much easier for people to find land to build or commission their own home, diversifying housing supply and revitalising smaller builders who have not experienced the same level of recovery as the large housebuilders since the financial crisis.

21 Since 2012, developers putting forward applications for major development have been able to submit these applications to the Planning Inspectorate for decision should the local planning authority not make a decision on time. This has seen the number of major applications decided on time increase to 79% in July to September 2015, compared with 57% in July to September 2012, when the designation approach was first introduced. This Bill will allow planning applications for non-major development to be submitted to and decided by the Planning Inspectorate where the local planning authority has a track record of very poor performance in the speed or quality of its decision-making.

22 This Bill will also take forward the Government's commitment to require local authorities to manage their housing assets more efficiently. Local authorities will be required to make a payment to the Secretary of State based on the value of their vacant high-value housing. These payments would be used to help support people into home ownership, including funding discounts for housing association tenants' Right to Buy. The value of this housing will also be used to fund the building of new homes to meet housing need.

23 At present planning authorities may be delayed while an Urban Development Corporation is established. This is in part due to the uncertainty of the timescales associated with the Parliamentary process. This Bill will therefore change the procedure to allow Urban Development Corporations and Areas to be established through negative resolutions. The Government also intends to ensure through the Bill that people with an interest locally are properly consulted at an early stage before any Urban Development Corporation is established.

24 Local Plans are the primary basis for identifying what development is needed in an area. Where there is no Local Plan, there is less certainty of where development will take place. Whilst the Secretary of State can intervene, he is required to take over plan-making in its entirety with decisions made in Whitehall. The Government will therefore allow more targeted and proportionate intervention, allowing the majority of local decisions to remain at the lowest appropriate level whilst ensuring a local plan is in place.

Streamlining the planning system

25 Effective regeneration of areas, which could comprise of considerable amounts of new housing, often requires the compulsory purchase of land or property. The existing process remains too convoluted and complex. This Bill will therefore streamline the process, make powers of entry for survey fairer and more consistent, widen the remedies available to the Courts to allow faster reconsideration in some cases, ensure possession of acquired land is made easier, improve how compensation is paid, and harmonise procedures for settling disputes about material detriment.

26 The Secretary of State cannot currently grant approval for housing as part of an application for a nationally significant infrastructure project, submitted under the Planning Act 2008. This means either temporary accommodation for workers must be demolished once construction is completed, or a separate planning application has to be made. This Bill changes the approval system to allow developers to include an element of housing as part of their application for consent for an infrastructure project deemed of national significance.

27 On average, the neighbourhood planning process takes two years to complete. This Bill is intended to reduce this by introducing powers to allow automatic decisions on the designation of whole parish areas (or other types of area after a set time period), introducing time periods for making key decisions by the local planning authority, and allowing the Secretary of State to intervene on the decision to send a plan to referendum. The Bill will also allow neighbourhood forums to request notification of planning applications in their area, with the intention of enabling them to participate more effectively in local planning and promote appropriate new development.

28 Currently, local authorities can only consider approval of matters related to the siting and design of buildings where permission is granted under permitted development rights for the erection, extension, or alteration of any buildings. This Bill will widen the range of matters which a development order may allow local authorities to consider in a prior approval for building operations. Any permitted development rights to allow for building operations would be expected to reduce planning application costs.

29 Planning obligations can help mitigate the impact of development to make it acceptable in planning terms. The negotiation of such obligations can become protracted. The Bill provides for the Secretary of State to appoint a person to help resolve outstanding issues about planning obligations, and requires that person to produce a report to set timeframes setting out steps taken to resolve those issues and, where issues have not been resolved, recommendations. This is intended to help speed up the negotiation of such obligations. This Bill also allows the Secretary of State, through regulations, to place restrictions or conditions on the enforceability of obligations relating to affordable housing.

30 Implementing alternative delivery models, such as outsourcing and shared services, are common for some local authority services but less so for planning services. Choice for the user also has an important part to play in the provision of effective public services. The Bill will allow the introduction of pilot schemes to test the benefits of introducing competition in the processing (but not determination) of applications for planning permission.

Housing management

31 This Bill also intends to improve the housing system and the way it is managed. The Bill intends to ensure that social homes support those most in need. Protections for private tenants will be introduced so that they know that rogue landlords will be tackled and forced to improve or leave the sector, stopping them profiting from dangerous or badly managed properties. Local authorities will be equipped with greater tools to know and meet the housing need in their area.

32 Social housing is let at low rents on a secure basis to those in housing need. However, there are approximately 350,000 social rented tenants (across the local authority and housing association sectors) with household incomes over £30,000 per annum, including over 40,000 with incomes in excess of £50,000 per year. The Bill aims to more closely link social housing rents to the income of social tenants.

33 Since 2012, local authorities have been able to grant flexible tenancies but they are not taking advantage of this flexibility.  Instead, the majority of council tenancies continue to be granted on a ‘lifetime’ basis meaning that tenants have the right to live in their social home for the rest of their life (provided they keep to the conditions of their tenancy), regardless of how the household’s circumstances change in the future. The Bill ensures that local authorities can generally only grant new social tenancies of between 2 and 5 years and must carry out a review of the household’s circumstances at the end of the fixed term. It also ensures that family members who succeed to a lifetime tenancies may only be granted a 5 year tenancy.

34 There are a small number of rogue or criminal landlords who knowingly rent out unsafe or substandard accommodation. The Bill introduces a number of measures to give local authorities tools to ban rogue landlords or property agents, preventing them from exploiting more tenants.

35 Local authorities have a duty to review housing conditions so they can take action to improve them. However, they frequently have a limited picture of the size and scale of the private rented sector in their area. Through this Bill the Government intends to allow them access to data relating to nearly 3 million tenancy deposits, which is estimated to cover over 70 per cent of private rented sector properties.

36 Section 8 of the Housing Act 1985 requires every local housing authority to review the housing conditions and the needs of their district. Currently, the Housing Act 2004 identifies ‘gypsies and travellers’ as requiring specific assessment for their accommodation needs when carrying out reviews of housing needs.  As part of this Bill the Government seeks to amend the Housing Act 2004 governing the assessment of accommodation needs to include all people residing in or resorting to the district in caravans or houseboats.

37 Rentcharges are an annual sum paid by the owner of freehold land to another person who has no other legal interest in the land. The means by which payments are calculated can no longer be used. The Government will therefore replace the redeemed Gilt used in the formula.

38 The current Lead Enforcement Authority for the Estate Agents Act 1979 is named in primary legislation as Powys County Council. Should it fail to secure a further contract, the Lead Enforcement Authority would be unable to exercise its powers. The Bill enables the Secretary of State to appoint an authority of his choice.

39 This Bill intends to reduce the regulatory controls for private registered providers of social housing to increase the freedoms of registered providers to manage their housing stock while maintaining protections for tenants and the viability of the sector. The Bill also introduces a Special Administration Regime for private registered providers of social housing that have become insolvent.

Land management

40 Government has committed to release public land with capacity for at least 160,000 homes and raise at least £5 billion from land and property disposals over this Parliament. Government is demonstrating its commitment to engaging with local authorities by introducing a new duty to engage.

41 To incentivise public authorities to release surplus land in a timely manner, this Bill introduces a new duty to report on surplus land is being introduced. This is a transparency measure, ensuring that when bodies retain surplus land for a specified period that they publish details, including their reasons for retaining that land.

42 The Bill will build on existing powers contained in the Local Government, Planning and Land Act 1980 for the Secretary of State to direct a body to dispose of land under certain circumstances. The Bill makes provision for this power to be exercised under a broader set of circumstances.

43 The Climate Change Act 2008 requires the Minister for Cabinet Office to publish an annual report on the efficiency and sustainability of the central civil estate. The Bill applies similar requirements in respect of local government buildings and military estate buildings. Such reports will set out the progress made by the reporting body on reducing the size of its estate, and its performance on sustainability of its buildings.

 

Prepared 13th January 2016