Housing and Planning Bill

Written evidence submitted by the Country Land and Business Association Limited (CLA) (HPB 21)

The CLA

1. The CLA represents landowners, farmers and other rural businesses. We represent over 33,000 members who own and manage more than half the rural land in England and Wales. Our members play a vital role in delivering rural housing and own almost 40% of rural rented accommodation.

2. Landowners are instrumental in providing the land needed to increase the amount of housing stock available, especially social and affordable homes through housing associations, and land required for national infrastructure projects through compulsory purchase. They want to get on and build the homes we badly need and do so in a way that is of the right scale and design for our rural communities. Where land is compulsory purchased, they need the certainty to plan ahead, securing the future of their businesses and expect to be treated fairly.

Part 1 – Chapter 1 - Starter Homes

3. Rural communities do not all have the same housing need. This is why it is the responsibility of each Local Authority to assess and meet local housing need via its Local Plan . It is counter to the Localism agenda to compel Local Authorities to build Starter Homes as the affordable element if other tenures are needed to satisfy local need. Starter Homes have the potential to help first time buyers and we are supportive of them, but they are not a panacea and should be built based on local need.

4. The CLA is concerned that the current gap between earnings and house prices in rural areas, currently at a ratio of 1 to 8, will mean that many starter homes will still not be affordable (even at a discounted value and with Help to Buy) to the people that actually need them in the local community, a frequently cited reason why communities are opposed to development.

5. It is vital that the Government do not require councils to impose starter homes on rural exception sites through this legislation. Rural exception sites are typically built on land donated or sold at less than market rate by landowners, on the proviso that the affordable housing remains affordable in perpetuity, to benefit the community. Having a duty to include Starter Homes on rural exception sites will reduce the amount of land being offered or force landowners to restrict, by covenant, any future sale of properties. The Government had previously stated its intention to exclude Starter Homes from rural exception sites and we would ask that provision is made in the Bill to do so.

6. The Government must give clarity on what they consider a "residential development of a specified description". The CLA recognises the need for small rural housing sites to be built out and therefore any the affordable housing contribution must not harm the economic viability of the scheme, whilst at the same time satisfying local need.

Chapter 2 - Vacant High Value Local Authority Housing

7. The voluntary agreement with the National Housing Federation and the Government means that there will be no Parliamentary scrutiny of the precise terms of agreement or effective consultation with other affected parties.

8. While we appreciate that the extension of right to buy will impact most heavily on housing associations, it is not right that measures that could potentially wipe out the remaining affordable properties in rural areas should be introduced via regulations, rather than in primary legislation.

9. The CLA cannot see that the money raised from the receipt of sales to the open market will be used to replace social housing in that community. The length of time it would take to identify land, build and house people in need of affordable housing would create a time-lag of years where extremely limited or near non-existent provision of affordable housing that already exists.

10. Furthermore, at a time when local authorities and housing associations are under considerable housing pressure from urban areas and funding changes are making it increasingly difficult for housing associations to finance new developments, it is difficult to see how the delivery of new rural affordable housing will be made a priority.

11. At Second Reading of the Bill, the Secretary of State for Communities and Local Government, was asked directly by Steve Brine (Winchester, Con) and Dr Sarah Wollaston (Totnes, Con) about whether the current exemptions in respect of rural exception sites will continue in the extended right to buy. Although the initial Ministerial statement had said words to this effect, the Secretary of State would not confirm that this exemption would be applied to the extension of the Right to Buy Scheme to Housing Associations, saying "What we have agreed with the housing association sector, through its proposals, is that, while an association will be able to say that it is not possible to build a new home in certain areas, people will be entitled........to apply their discount to a new home that the housing association will build in the nearest area in which it is possible to build one."

12. The CLA has serious concerns that this is simply not viable. Firstly, it would require a property being available and/or built at a time when there are so few and building rates in rural areas are so low. It would require people to move away from their communities, families, schools, GP surgeries and, given the severe shortage of Housing Association stock in rural areas as it is, we believe it is extremely unlikely that any available property would be in the local area.

13. Furthermore, we call on the Committee to clarify whether the Government are proposing Housing Associations bring in a home swap scheme were those in a financial position to buy their Housing Association home can swap with tenants that cannot to be able to use their discount in areas where stock replacement is possible, similar to the Spare Room Subsidy.

Stock and Supply

14. The extension of right to buy to housing association properties will further limit the supply of affordable housing in rural areas. Since Right to Buy was introduced around 465,000 affordable properties have been sold and many properties have been stock transferred to Housing Associations, the result being 65% of rural local authorities no longer own any housing stock. This begs the question, where is the money going to come from to fund the discount, especially if revenue raised in London is retained by the GLA. The implications of this are that the discount will have to be reduced, or the policy will need to be rolled out region by region as funding determines. It is unhelpful that it is still not clear how the policy will be funded while it is being voted on.

15. Currently, only 12% of stock in rural areas is affordable, compared to 20% in urban areas. This difference is indicative of the difficulties associated with the delivery of housing in rural areas. Since 2004/5 the total number of affordable houses delivered has not been above 1.4 properties per 1,000 households in rural areas, while the right to buy will no doubt be welcomed by some tenants, it is clear from average delivery rates going back ten years that whatever the commitment is from Government, affordable housing delivery in rural areas is beset by a myriad of challenges, planning and funding are the most significant.

16. Local Planning Authorities often refuse to approve development in areas that are deemed ‘unsustainable’ due to a loss of local amenities such as shops or post-offices. The impact of right to buy would therefore be far more damaging in small rural areas as planning authorities will remain reluctant to give consent for any new properties. It does nothing for communities if the small quantity of affordable housing remaining in a village is lost only to be replaced on a larger development on the edge of a town five miles away.

17. The reality of Right to Buy in rural areas is that the funding is unlikely to be in place to fund such large discounts, there is a clear trend showing that affordable housing delivery rates in rural areas are extremely poor and the planning process actively prevents new housing being built in the community. These three points should make it clear that rural communities need to be treated differently and this should be addressed in the Bill, not in regulation. The Housing and Planning Bill should enshrine in legislation that local planning authorities should ensure any property replacing one sold under the Right to Buy is built in the same community.

Exemptions from Right to Buy

18. Not only are the rural exemptions outlined in section 17 of the Housing Act 1996 voluntary, they also only apply to 20% of parishes in England.

19. Furthermore, Local Authorities must apply to the Secretary of State to be added to the list of areas designated rural for the purposes of right to buy. Given that 65% of rural local authorities own no stock, we are not convinced that Local Authorities are best placed to apply for the exemptions.

20. The CLA requests that Section 17 of the Housing Act 1996 remains but is applied robustly with all applications being accepted automatically where the criteria are met.

Other mechanisms to deliver affordable housing

21. Local Authorities covering rural areas need to be far more proactive in their role to deliver affordable housing. Housing Associations will always play an important role, but local authorities must give credence to other forms of affordable housing delivery, whether this is by cross subsidy, or indeed private provision.

22. The nature, tenure and occupation of properties provided outside the housing association regime can be controlled through planning conditions and Section 106 agreements with local lettings policies can be agreed locally between the owner and the community. This way, for affordable housing provision, the landowner would retain a stake in the building and long term future of management of the development for the good of the community.

23. However whilst the NPPF and the NPPG provide for different models for delivery of housing in the rural area, rural planning authorities have not grasped this yet and a step change in their understanding is required in order to deliver such a change.

Part 6 - Planning In England

Clause 102   Permission in principle for development of land

24. This Clause introduces the concept of ‘permission in principle’, which will equal planning permission after ‘technical details consent’ is obtained.

25. The Government is proposing new powers to grant automatic planning consent on any land allocated in a neighbourhood plan, local plan or development plan document. The planning authority’s’ role will be confined to agreeing as yet undefined technical details. The Department for Environment, Food and Rural Affairs Productivity Plan, Towards a one nation economy: A 10-point plan for boosting productivity in rural areas, (August 2015) suggested that this permission in principle opportunity would be available for rural businesses, The government will introduce a fast-track planning certificate process for establishing the principle of development for minor development proposals.However, the Housing and Planning Bill 2015-16 explanatory notes are clear that the new concept will only be available for allocated land that is brownfield land and for developments of less than 10 homes.

26. Introducing a permission in principle for small scale sustainable development for rural businesses is vital to encourage growth, with obtaining planning permission being a significant barrier. CLA call on the Government to extend the permission in principle to rural businesses as part of the Bill.

Clause 104  Approval condition where development order grants permission for building

27. This clause allows all permitted development rights to require further approvals. The Housing and Planning Bill 2015-16 Explanatory Notes say " ...For example in relation to a change of use which might generate extra traffic or be noisier than an existing use the LPA may be given the opportunity to approve a transport strategy prepared by the developer and a plan to address noise impacts."

28. The CLA is concerned that this clause could be used to turn down much needed rural commercial development, especially where there is a change of use of a farm building to flexible commercial uses under permitted development rights.

Part 6 - Nationally Significant Infrastructure Projects

29. Clause 107 will make it possible as part of projects designated as Nationally Significant Infrastructure Projects (NSIPs) to compulsory purchase land for up to 500 homes that have no functional link to the project but are situated within one mile of any part of it. Since March 2010 there have been 65 NSIP applications, around one per month with another 40 currently in the pipeline (Planning Inspectorate Data). The Government has failed to explain why it believes these powers are necessary.

30. It is fundamentally wrong for this Bill to allow the compulsory acquisition of land for speculative housing development if there is no functional link to the NSIP. This would over-ride both the Local Plan and Neighbourhood process and remove all local accountability. Developers looking to construct housing should engage with landowners and Local Planning Authorities rather than hiding behind an NSIP project.

31. This clause should be removed from the Bill. It has the ability to have a devastating impact on rural businesses whilst allowing developers to purchase land for very large profitable housing developments cheaply with no consideration of its future worth.

32. In exceptional cases where the need for Compulsory Purchase is demonstrated to deliver "non functional" housing this should be dealt with separately from the NSIP process, and must demonstrate that such housing could not be delivered without compulsory purchase.

Part 7 - Compulsory Purchase

Advance Payments

33. Many farmers and other landowners who go through the compulsory purchase process find it difficult to secure funding to maintain the viability of their business or have their existing finance agreements reviewed. This increases the need for prompt and proper compensation which currently is often paid long after the acquiring authority has taken possession of the land.

34. This Bill is a chance to establish beyond doubt that compensation must be paid in advance of entry to allow for the purchase of replacement land or another business asset, for example, new buildings and equipment. The failure to provide compensation in advance runs contrary to all other commercial transactions and has a significant impact on the ability of a landowner to run their business effectively.

35. It should be made clear in the legislation via an amendment to Clause 131 that when no initial payment is made in advance of entry a landowner can refuse to grant access to the land until a payment is made. Where access is agreed but the advance payment remains outstanding, a penal rate of interest of 8% should be applied for each and every day the payment is overdue.

Interest Rates

36. Currently interest on compensation which is not paid at the time of entry is paid at 0.5% below the base rate so will always be far below commercial rates of lending provided on the high street. As part of their reform package the Government have proposed introducing a rate of 2% above base rate. This rate while welcome is still too low. Rural businesses that lose land to compulsory purchase and do not receive prompt compensation will need to borrow in order to reinvest in their business. A bank loan would be at a commercial rate of interest, currently at least 4.5% (CLA Policy Research).

37. In their response to the consultation on their reform package the Government said it agreed in principle with the idea of the interest rate reflecting commercial rates of lending but was concerned about the impact a higher interest rate would have on acquiring authorities. However, the principle remains that payment of compensation should not be late, acquiring authorities should be able to pay on time and a rate of interest linked to a commercial rate of lending reflects the realities landowners face when compensation is not paid on time.

38. Clause 132 should be amended to require a payment of 4% above the Bank of England base rate to be paid on late payments of compensation which are not paid at the time of entry.

Duty of Care

39. A statutory Duty of Care should be placed upon acquiring authorities would ensure that landowners and rural businesses are treated fairly and would introduce a clear set of guidelines by which acquiring authorities would have to adhere to and could be judged against. All too frequently landowners are treated unfairly and acquiring authorities pay little regard as to the impact the compulsory purchase is having on a rural business focusing instead on doing as little as is required under law.

40. The Duty of Care would require acquiring authorities to:

1) Act fairly and mitigate, where reasonable, the impact of the scheme on the claimant

2) Pay compensation promptly

3) Consult claimants and their immediate neighbours before and during acquisition

4)

5) Act transparently in negotiations over accommodation works

6) Maintain and provide up to date contact details for ongoing management issues

7) Ensure effective dispute resolution throughout the planning, construction and completion phases of the scheme

8) Indemnify claimants against all losses caused by acquirers, and their (sub) contractors

41. A new clause should be included requiring the Government to introduce, following consultation, a statutory Duty of Care.

November 2015

Prepared 10th November 2015