When researching the pertinent topics of the day to talk about in our blogs, one alarming factor regarding the unfolding planning situation is that the same issues have been in the headlines every year since 2019, with the only real nuance being the severity of the problems ever increasing. This week's blog will unpack the reasoning behind significant holdups in the planning system that is beginning to affect both our industry and the nation's homebuilding commitments.
Only this week, Barratt Homes warned the Yorkshire Post that the 13-week target for planning decisions is now sitting at 18 months, and the delays have finally reached a point where housing developments may be mothballed altogether to free up resources to develop elsewhere. The worrying issue here is what hurts the major players in the development industry will take a more significant toll further down the line with more moderate-sized businesses. Market participants reliant on raising funds once upon a time could conterminously run that process whilst planning consent was granted; these existing timescales make that tried and tested method defunct, piling further woes onto our nation's smaller homebuilders.
This perhaps accounts for the slump in activity around planning applications, with the Guardian Newspaper reporting that planning applications in England have fallen to their lowest level in 16 years, according to figures published by the levelling up department, indicating England's homebuilding levels are almost back to where they were in the immediate aftermath of WW2. The statistic that stands out is the reduction in the number of applications, down 14% from 2022, which poses an interesting question, why? If the local authorities were underwater with applications, you could understand the backlogs, but the number of applications is decreasing, and the backlog is increasing. Is there a give-up trade taking place in housing? Are small developers to use the popular slang expression' rage quitting' the industry? There isn't really any evidence of this; the numbers of businesses in this sector have significantly declined but have held steady even throughout the turbulent pandemic years. So what's happening?
The Architects Journal recently posted a story about a crisis in recruitment within local planning authorities, which may have created this situation; fewer people want to work in these departments, many staff took early retirement or moved on to different careers during covid, and the remuneration on offer isn't enough to entice skilled workers in. These circumstances may be the root cause of the unusual imbalance, fewer applications, yet slower times. The article points out that 'Devolution of planning powers to regions or mayoral authorities would enable strategic decisions to drive economic growth across regions while considering local communities' needs and aspirations, reinforcing the narrative that planning reform is urgently needed.
These findings are positive because one could argue that reforming the planning system is the lesser of two evils if the other conclusion is that there is a significant problem with the mechanics of homebuilding. It's something achievable on a parliamentary level if some consensus can be found in Westminster.
A dramatic planning reform could streamline the bureaucratic processes involved in homebuilding. Simplifying regulations and reducing red tape can lead to faster approval times, allowing construction projects to commence sooner. This helps meet the growing demand for housing, especially in areas facing housing shortages.
Secondly, planning reform can promote sustainable and efficient land use. Encouraging compact and mixed-use developments makes it possible to utilize land more effectively and reduce urban sprawl. In addition, this approach promotes walkability, reduces commuting distances, and minimises environmental impact.
Thirdly, planning reform can foster affordable housing options. By encouraging the inclusion of affordable housing within new developments or implementing incentives for developers, housing available for low-income individuals and families can be increased, thus addressing housing affordability issues and reducing socioeconomic disparities.
Additionally, planning reform can enhance community engagement and participation. By involving residents, stakeholders, and local communities in the planning process, their input can shape the design and character of neighbourhoods, creating a sense of ownership and belonging.
Lastly, planning reform can stimulate economic growth and job creation. By streamlining processes, attracting investment, and supporting the construction sector, planning reform can generate employment opportunities and contribute to the overall economic development of an area.
As always, Invest&Fund supports its clients and partners in this space with adaptable and flexible funding options, offering proactive solutions in challenging times.
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