Housing and Planning Bill

Written evidence submitted by the Federation of Master Builders (FMB) (HPB 86)

Housing and Planning Bill

Introduction

1. The Federation of Master Builders (FMB) is the largest trade association in the UK construction industry, and with over 8,000 members, it is the recognised voice of small and medium-sized (SME) construction firms. Established in 1941 to protect the interests of construction SMEs, the FMB is independent and non-profit-making, lobbying continuously for members’ interests at both the national and local level. The FMB is a source of knowledge, professional advice and support for its members across the UK. The FMB also offers advice and support to the general public on choosing and working with the right builder.

Summary

2. According to the FMB’s 2015 Membership Tracking Study, 45% of FMB members are involved in building new homes. As such, the FMB’s interest in the Housing and Planning Bill is restricted to Parts 1 and 6, which have clear implications for these members. We are supportive of the broad intentions of these sections of the Bill, namely to widen home ownership and to streamline the planning system. We are particularly keen to support the idea of a ‘permission in principle’ route for smaller applications, which we believe will reduce the barriers to bringing forward small scale housing developments. We also strongly support the intention to grow the custom build and self build housing sector, but we have some concerns that the provisions in the Bill designed to do this are not as strong as they need to be.

Starter Homes

3. The FMB welcomes the importance being placed on improving options and affordability for first time buyers, and the Starter Homes product is one which FMB members are interested in delivering. In response to the FMB’s 2015 House Builders’ Survey, 56% of SME house builders stated that the ‘Starter Homes’ product was one which they thought it could make business sense for them to build and sell. However, members also express concerns that there remain some serious uncertainties around the valuation of Starter Homes and their impact on localised housing markets.

4. There is sense in the idea that it would be appropriate for the Regulations to contain a lower site size threshold for a requirement to deliver Starter Homes on all sites, because of the more variable costs and challenges which can be incurred in developing small sites. However, we do have some concerns that a lower threshold for the requirement to deliver Starter Homes could result in much greater pressures on these sites to deliver affordable homes for rent and infrastructure contributions lost in the delivery of Starter Homes. As such, we would strongly urge that the Regulations allow the greatest degree of flexibility on very small sites, and allow house builders building these sites the option of delivering Starter Homes where it makes sense to do so.

Custom Build

5. The FMB strongly supports the intention to increase the delivery of self build and custom build (the broader term, taken here to encompass self build) homes. In a survey of FMB house builder members in 2014, 89% said that they saw potential for growth in this market and believed this growth would be good for their business. The FMB believes that significant growth in the custom build market will expand the opportunities available to small developers and contractors, and in doing so, could play an important role in driving up output, and encouraging new entrants into, the SME house building sector.

6. The custom build provisions in the Bill are very welcome in the sense that they are intended to support the expansion of the custom build market. However, we have concerns that the relevant clauses in the Bill are not as strong as they would need to be to drive real growth in this area.

7. Clause 9 will bring into effect a duty on local planning authorities to ensure that there are enough planning permissions in place to provide serviced plots sufficient to meet the demand on the Register of those seeking to have a home built for them – to be put in place under the Self-build and Custom Housebuilding Act. However, this differs from the original conception of the ‘Right to Build’ idea, under which there would be a duty to allocate or offer serviced plots to those on the Register. The primary problem with the formulation in Clause 9 is that there appears to be no link between being on the Register and the provision of serviced plots., As such there seems to be very little incentive for being on the Register. If this is the case, then the Register itself will fail to provide a true assessment of demand and the effectiveness of the policy framework will be severely reduced.

8. We also have a concern about the wording of 9 (6) (c), within which the word ‘could’ appears to weaken the definition of ‘’suitable development permissions" in a way which may have the effect of further reducing provision for custom build.

9. With regard to Clause 10, we urge that the Regulations ensure that any exemption is drawn as tightly as possible and can only come into effect once local planning authorities have shown that they cannot meet their duty to provide opportunities for custom build in other ways. These other means could include partnering with nearby local authorities or providing customised dwellings from existing buildings (for instance, through office-to-residential conversions).

10. With regard to Clause 8, it is important that the definition of custom build and self build housing achieves the right balance of preventing gaming (i.e. does not allow minor alterations to standardised designs to be counted as custom build), but equally does not exclude the many innovative delivery models which have generally been viewed as falling under custom build up until now. It should for instance have scope sufficient to include the customisation of a waterproof shell, and a developer with land who engages with the customer at pre-design stage. Our understanding is that the current definition is intended to include these models, but we have slight concerns that the use of the word ‘mainly’ in 8 (1) (A2) could at a later date be interpreted more broadly than was intended.

Permission in principle

11. We strongly support the new ‘permission in principle’ route for minor applications provided for in Clause 102, which we believe will help reduce the barriers to bringing forward small scale housing developments. One of the biggest obstacles small house builders face is the disproportionate cost, complexity and delay in bringing forward applications for small sites. Even obtaining an outline planning permission can involve the submission of large amounts of information and detailed pre-application discussions. In the FMB’s recent 2015 House Builders Survey, one third of small house builders reported that £4,000 per unit was the average cost of obtaining planning permission. For a small firm, this can represent a very considerable, and often personal, investment.

12. Small sites are unlikely to be allocated within a local plan and there are unlikely to be any clear, written policies within the local plan on how applications for small, non-allocated sites are likely to be treated. As such, these applications tend to be inherently more risky, to an extent which can be prohibitive for many small firms given the upfront investment often required. What we need is a much simpler route to establishing ‘the principle of development’ at the minimal upfront cost, so that once this is granted the rest of the process is de-risked, allowing the small builder the certainty they need to invest in the detailed application. The permission in principle should be able to fulfil this function. It comes close to the so-called ‘redline’ application route for outline permission for minor applications that the FMB has been calling for in recent years, and which has been endorsed by, among others, the Lyons Review into house building delivery.

13. We also strongly support the automatic granting of ‘permission in principle’ status to sites allocated for housing within local plans or neighbourhood plans. Permission in principle’ exists simply to establish the principle of development itself. The allocation of a site within local or neighbourhood plans can only be interpreted as agreement with the principle of development. As such, granting of permission in principle status to these sites seems only reasonable and logical.

14. We do not believe that it is accurate to describe this as granting ‘automatic planning permission’ because the new ‘technical details consent’ will need to follow permission in principle. While the "technical details consent" will be the subject of further consultation, we see no reason to suppose this will be, or need be, less rigorous in examining the details of proposed schemes than current routes to consent.

Brownfield Register

15. The idea of a Brownfield Register is very welcome. Smaller brownfield sites tend to be the ‘bread and butter’ of small house builders. Yet, in the FMB 2015 House Builders’ Survey, a lack of available and viable land was the most commonly-cited barrier (cited by 68%) to increasing the supply of new homes. The Brownfield Register will be extremely helpful in providing an up-to-date list of brownfield sites, and in clearly identifying those which local planning authorities have assessed as suitable for housing. The granting of permission in principle to sites on the Register suitable for housing is also very welcome, because it has the effect of de-risking the process, as set out above.

Planning Performance on small sites

16. We strongly support the extension of the planning performance regime to minor applications. In doing so, we are not suggesting that all planning officers and planning departments perform poorly; some perform very well and exemplify good practice. However, one of the frustrations which FMB members regularly express is what they see as a lack of accountability for poor performance and poor decision-making within local authority planning departments.

17. There is a strong sense that smaller sites and minor applications often tend to be viewed as less important, and smaller, locally-based house builders are less likely to want to upset relationships with officers and members who they will have to deal with on an ongoing basis. In addition, planning performance agreements (PPAs) which serve to structure and professionalise the end-to-end application process for large scale developments will not be appropriate for smaller sites. The idea that performance on minor applications did not lead to designation, as is currently the case, contributes to the idea that these developments and applications matter less.

Publication of financial benefits of development

18. We welcome this provision. It is important that the many financial benefits which accrue to communities from new housing developments are explicitly recognised at the decision-making stage. When drafting the Regulations which will implement this, the Government should consider whether the wider economic benefits of new housing can also be included. We also believe that the New Homes Bonus is starting to influence the way in which some local authorities are viewing development. In the interests of maximising this effect, it is important that the increase in revenue from the New Homes Bonus is recognised and understood at the decision-making stage.

November 2015

Prepared 26th November 2015