The first section broadly sets out the government’s planning reforms, before explaining and discussing in more detail the inter-connected changes made to the Standard Method (SM) and the National Planning Policy Framework (NPPR or framework), including the presumption to sustainable development, affordable housing provision, and future housing development on Green Belt (GB) land.
Acting in combination they will bring more local planning authorities into the scope of that presumption and hence the ‘tilted balance’ in the short-term.
The second, after summarising the main reasons why the government’s overarching 1.5m delivery target will not be met, goes on to explain why planning reform is a necessary but far from sufficient condition to achieve a more realistic, yet still momentous, sustainable annual 300,000 delivery target in England, which will depend (uneasily) upon:
- The expected or perceived direction and state of the national economy;
- The drivers of the private speculative business plan model, largely predicated on maximizing profit margin rather than volume delivery;
- The availability of public funding to support new affordable housing provision, most of which under current arrangements comprise front-loaded grant, counting against public borrowing and debt making it subject to the new government’s new fiscal framework;
The third, and concluding section, identifies the core dilemma that the government faces: the operation of the current private and public delivery systems are largely inimical to the achievement of its target, but it also needs to harness the support of the private sector and to navigate its own fiscal rules.
The argument is made that although in the short- to medium-term, current housing market conditions may require the government to be pragmatic in its policy responses in response to that dilemma, its embryonic tilt towards a partial contracting model, represented by its introduction of ‘golden rules’, its treatment of benchmark land values (BLV) and viability (at least introduced in the July consulted NPPF version and now subject to review), and continuing changes to compulsory purchase compensation framework (also subject to consultation) should be sustained and developed, notwithstanding short-term pressures to abort them.
When progressed in parallel with demonstration Mayoral and other development corporation demonstration projects where they are both most needed and economically and socially productive, they would help to build the foundations of higher sustained levels of housing delivery conducive to higher growth and housing opportunity, even though that will take time with benefits primarily realised in the next, rather than this parliament, when at least they could begin to become tangible.
1 Labour’s planning reforms and the 2024 NPPF
Within a month of becoming the Housing and Communities Secretary, Angela Rayner, announced to parliament on 30 July 2024 the new government’s planning reforms, summarised in her letter that day to local authorities.
The following day the Ministry of Housing and Local Government (MHCLG) published a draft revised NPPF (July or consultedNPPF 2024), accompanied with a consultation, which closed on 24 September 2024.
Other supporting changes to the planning system were published in parallel, most notably a revised and new standard method (SM) methodology to assess local housing need.
On the 12 December, the government published its response (response or consultation response) to its July consultation alongside the December 2024 NPPF (December 2024 or new NPPF – see tracked changes to it and to previous government’s December 2023 iteration version for granular detail, while ASocialDemocraticFuture’s submission includes some policy commentary)
The new NPPF became operative immediately on 12 December 2024 for Local Planning Authority (LPA) decision-making and from 12 March 2025 for plan-making purposes.
It will, however, not apply to emerging local plans submitted for examination by the Planning Inspectorate (PI) or are subject to Regulation 18 or 19 consultation on or before 12th March 2025 (see sub-section on transitional arrangements below).
Associated revisions to extant planning guidance documents to make them consistent with the new NPPF were also made and published.
This timely turnaround was to allow changes “to be made as soon as possible” so to support the governemnt’s commitment to deliver 1.5m additional dwellings by the end of this parliament (housing delivery target or target).
In headline summary terms, the new NPPF, according to the planning update published by MHCLG on the 13 December:
- Makes housing targets mandatory and reverses, confirming the reversal of the December 2023 changes to the NPPF made by the previous government (see tracked changes version above);
- Implements a new standard method formula to ensure local plans are in line with the Government’s manifesto commitment of 1.5 million new homes in this Parliament;
- Confirms transitional arrangements for local plans in the existing system;
- Defines grey belt land within the Green Belt, to be brought forward for homes and other important development through both plan and decision-making;
- Defines new ‘golden rules’ for land released in the Green Belt to ensure release delivers in the public interest, as well as the policy considerations of affordable housing, design quality, and sustainable locations that are part of the presumption in favour of sustainable development;
- Makes wider changes to ensure that local planning authorities are able to prioritise the types of affordable homes their communities need, and that the planning system supports a more diverse housebuilding sector;
- Supports economic growth in key sectors, including laboratories, gigafactories, data centres, digital economies, and freight and logistics – given their importance to our economic future;
- Delivers community needs to support society and the creation of healthy places and adopting a ‘vision led’ approach to transport planning.
The update also announced the launch of clearing services to be provided by Homes England to match developers with housing associations with section 106 affordable home obligations (S106 or AHO) committed contractually by developers but without a purchasing partner. Details of unsold S106 dwellings will be circulated for registered providers and local authorities to search.
According to a January 2025 Homes England release this new scheme has already attracted much interest. Where effective and timely matching of AHOs prevent the loss of additional social housing and expedite the progression of projects, this should help to make inroads into the ballooning cost of temporary accommodation (TA) as well as contribute to the government’s delivery target. It, however, is a necessary palliative response to a symptom of system failure rather than a strategic change.
A Ministerial Statement (12 December statement) set out the other main strands of the government’s planning reform agenda that in the main were presaged in the Labour 2024 manifesto.
A Planning and Infrastructure Bill was announced to further speed up and streamline the planning process, as well as to “to build more homes of all tenures and to accelerate the delivery of major infrastructure projects”.
The government confirmed in January 2025 that it will be introduced in the spring and its business managers will expedite its passage through parliament.
It will include proposals, currently subject to MHCLG Planning Committee and Brownfield passport working papers, to “modernise and speed up” local decision making and to fast track brownfield development, as well as measures to accelerate the progress of Nationally Significant Infrastructure projects.
Other secondary legislation will also be introduced, subject to consultation, to implement powers that the previous government brought forward under the Levelling Up and Regeneration Act (LURB 2023) to require developers “to commit to a build out trajectory upfront and report on delivery against it”, and to empower LPAs to decline to determine applications from developers with a poor record of delivery.
Angela Rayner’s 30 July letter (see previous link) had earlier highlighted that housing need in England cannot be met “without planning for growth on a larger than local scale”.
It heralded the introduction of effective new mechanisms for cross-boundary strategic planning on a universal scale, taking account of “both the appropriate geographies to use to cover functional economic areas, and the right democratic mechanisms for securing agreement”.
Such mechanisms would encompass the development and agreement of mayoral Spatial Development Strategies (SDSs) possessing the formal status of development plans (akin to the statutory London Plan), as well as effective new mechanisms to further cross-boundary strategic planning to allow “all Combined and Mayoral Authorities strategically plan for housing growth across their areas”.
In support of that aim, paras 24 and 27 of the new NPPF confirms that effective strategic planning across local planning authority boundaries “will play a vital and increasing role in how sustainable growth is delivered by addressing key spatial issues including meeting housing needs, delivering strategic infrastructure and building economic and climate resilience.”
While LPAs and county councils (in two-tier areas) will continue to be under a duty to cooperate with each other, and with other prescribed bodies, strategic policymaking authorities on strategic matters that cross administrative boundaries are now more actively encouraged to align their plan policies as fully as possible with other authorities and relevant bodies to ensure a consistent approach is taken to planning the delivery of major infrastructure.
Unmet development needs from neighbouring areas are provided for in accordance with new NPPF para 11b: that is: “as a minimum, provide for objectively assessed needs for housing and other uses, as well as any needs that cannot be met within neighbouring areas, (according to footnote six) as “established through statements of common purpose”.
On the 16 December a Devolution White Paper was published proposing substantive and far-reaching institutional reform that, if realised and implemented, would replace the rather ‘add-on’ existing duty to co-operate with overarching arrangements, where, in effect, it would be embedded internally within the new strategic reformed authorities: the keystone of the reform.
A combined – or strategic – authority is a legal body that enables a group of two or more councils to collaborate and take collective decisions across council boundaries.
For example, Greater Manchester Combined Authority comprises its ten metropolitan districts joined by its directly elected mayor, Andy Burnham, as its chair and eleventh member. It is thus a Mayoral-led Combined Authority.
Cambridgeshire and Peterborough Combined Authority, established since 2017, is made up of a directly elected Mayor and seven constituent authorities, including Cambridgeshire County Council, Cambridge and Peterborough City Councils and district councils (referred to as the Constituent Councils) and the Business Board (Local Enterprise Partnership):
All future strategic authorities, according to the white paper, will belong to one of the following levels:
- Foundation Strategic Authorities: these include non-mayoral combined authorities and combined county authorities automatically, and any local authority designated as a Strategic Authority without a Mayor.
- Mayoral Strategic Authorities: the Greater London Authority, all Mayoral Combined Authorities and all Mayoral Combined County Authorities will automatically begin as Mayoral Strategic Authorities. Those who meet specified eligibility criteria may be designated as Established Mayoral Strategic Authorities, unlocking further devolution, most notably an Integrated Settlement (see below).
The government’s strong preference is for partnerships that bring more than one local authority together over a large geography. In exceptional circumstances the Secretary of State will have the power to designate an individual local authority as a Foundation Strategic Authority only.
The government ambition remains for all parts of England to ultimately have a Mayoral (and eventually Established Mayoral) Strategic Authority.
To that end, new statutory strategic authorities will be created, preferably Mayoral, serving a minimum population of 1.5m people, as part of a universal coverage of strategic authorities across England where “councils work together, covering areas that people recognise and work in”.
Existing Mayoral strategic authorities will be accorded greater provision and funding powers, possibly covering health services, as well as planning and housing, so building upon the incremental reforms that previous administrations had put in hand fitfully since 2014 to devolve powers to city regions led by directly elected Mayors.
On the 30 January 2025, Angela Rayner confirmed that Greater Manchester (receiving 630m) and the West Midlands Mayoral authorities (the previous pilots) will receive integrated settlements for the period covering the financial year 2025-2026, the while North East, Liverpool City Region, West Yorkshire and South Yorkshire Mayoral Combined Authorities will do so from the 26-27 onwards. The government meanwhile is also “exploring how the settlement policy could be applied for the Greater London Authority”.
Integrated settlements involve the central allocation of multi-year ‘unified pot’ funding allocations that the recipients can choose to switch between or to prioritise services and projects locally, freed of central Treasury and central government ‘micromanagement’ control.
Lower down the scale, proposals will also be invited from all the remaining two-tier council areas to reorganise into a unitary authority, as well as from those unitary councils “where there is evidence of failure or their size or boundaries may be hindering their ability to deliver sustainable and high-quality services to their residents”.
Such reorganised one-tier unitary authorities will be expected preferably to serve a population of around 500,000 and to align their public service boundaries with strategic authorities, leading, at least according to the white paper, “to fewer politicians and a more efficient state”, as well as to administrative cost savings.
A possible problem could be that some two-tier authorities could propose to form combined authorities preserving existing authorities although the new authorities may not correspond to a functional wider travel to work economic area nor involve much in the way of financial savings. Other consideration to be navigated, include maintaining democratic accountability and involvement at the local level.
All areas, with or without a strategic authority, to further the government’s will also be required to produce a Spatial Development Strategy (SDS) – once they have won support from a majority of their constituent members.
In that light and in the meantime, the government intends to work with existing Mayoral combined authorities to explore extending their existing powers to develop SDSs.
It will also identify priority groupings of other authorities where strategic planning – especially the sharing of housing need – can be more immediately progressed to maximise collaborative benefits, engaging directly with the authorities concerned to structure and support such cooperation, but will use powers of intervention, as and where necessary.
Some of this institutional reform agenda, of course, is hugely ambitious. Much could change as things come out of the wash during the consultative and implementative phases.
Although potentially transformative in planning, funding, and institutional terms, it will also be demanding and thus potentially disruptive in its legislative, policy and resource inputs at both national and local levels: a bit like the aborted Infrastructure Levy (IL), but much larger and deeper.
That said, unlike the IL, there does also seem some real appetite to embrace the change at the local level with many authorities responding to the MHCLG July 2024 invitation to join the devolution ‘fast track’, the results of which were announced in January 2025, covering Norfolk and Suffolk, Sussex, and Cumbria areas amongst others.
The changes will be legislated for in a forthcoming English Devolution Bill.
MHCLG also published on the 19 December proposals and a consultation to streamline and extend the coverage of Section 190 of LURB 2023.
It already allows the removal of the uplift of value associated with the prospect of planning permission (“hope value”) from the assessment of compulsory purchase compensation on sites where affordable housing or other social health and educational infrastructure is to be provided and a public interest justification exists.
The proposed focus is on brownfield land in built-up areas, and on other land suitable for housing delivery where no extant planning permission for residential development exists, where a “significant amount of suitable land available for housing which is currently lying vacant or underutilised and not coming forward for development or, where it is coming forward for development, the provision of affordable housing offered on those sites is below the minimum ask of the local authority”.
This consultation, which closes on 13 February 2025, invites views as whether a general power, rather than relying on case-by case ministerial directions as under LURB, should be further introduced to enable the Secretary of State in England or the Welsh Ministers in Wales to make a direction to remove hope value from the assessment of compensation “for a specific category(s) of sites where justified in the public interest”, with reference to the principle “those affected by compulsory purchase should be entitled to fair compensation for their interest rather than receiving elevated values for hope value where development is delivering benefits in the public interest”.
The density and breadth of these planning and related devolution reforms and the alacrity of their progression reflects the contribution that the government expects (and needs) them to make to its wider economic and housing delivery objectives.
That the December 2024 final NPPF included several changes to the July 2024 consulted version reflected both this policy activism and some related ‘learning on the job’, also suggests some uncertainty within government as to how best to operationalise such objectives (see section two).
This panoraks blog, written by an experienced leading planning lawyer provides a clear and informed headline summary of these changes and their implications, but to provide background reference to non-planning specialists and to provide policy context to sections two and three of this post, some of the key changes are now highlighted and discussed in more detail below.
Introduction of new Standard Method
The standard method (SM) is the methodology that since 2018 has identified a minimum annual local housing need (LHN) figure for each Local Planning Authority (LPA) that can then be aggregated into a national total or target.
According to the most recent relevant MHCLG practice note, it “ensures that plan-making is informed by an unconstrained assessment of the number of homes needed in an area”.
Each LPA is required to plan for the local housing need (LHN) figure that the SM generates for its area as well as for any needs that cannot be met with neighbouring areas.
In turn, the local housing requirement is the minimum number of homes that each LPA seeks to provide during its plan period, based on an assessment of local capacity to do so.
LPAs are only allowed to set a lower housing requirement than its SM figure where they can demonstrate that ‘hard’ local constraints on land and delivery exist, such as across existing National Park or Landscape Areas, protected habitats and flood risk areas, justified also by “other evidence on land availability, constraints on development and any other relevant matters”.
Such exceptions will need to be justified by LPAs, as now, through its Local Plan (LP) consultation and then the examination process.
Within that process they will then need to demonstrate that they have taken all possible steps to:
- optimise density;
- share need with neighbouring authorities; and to,
- review green belt boundaries.
The new SM that became operative with the December 2024 NPPF ended the previous reliance on decade-old population projections and removed the 35 percent ‘urban uplift’ imposed in December 2023.
Instead, to provide greater predictability the new SM now sets a baseline set at 0.8% of LPA existing stock, adjusted upwards, where applicable, by an affordability multiplier; further strengthened in the wake of the July consultation, according to the response, to focus “additional growth on those places facing the biggest affordability challenges”.
Other changes made to the July consulted NPPF SM version and made operative in the final December 2024 NPPF also involved some reapportionment of LHNs at the margin back towards London (whose target was increased to nearly 88,000 from the 80,700 set by the July consultation method, compared to c99,000 under the previous version) and away the southeast away from the midlands and the north.
Table 1 (SM) reports, by region, the updated LHN figures generated by the new SM relative to both the operative December 2023 and proposed July 2024 consultation versions.
It shows that the changes made (comparative to December 2023 NPPF) to the SM by the new government has increased the total or aggregated annual national dwelling target from around 305,000 to 370,000 dwellings – an increase of 21.4%.
All regions, save London, based on their LHN assessment under the new SM, face substantially increased annual housing targets based on their currently published annual LHNs, with the biggest percentage increases applying to the northern regions.
But the translation of LHNs – in effect, housing targets that provide the denominator for Housing Delivery Test purposes that can determine whether an LPA becomes subject to the presumption to development tilted balance (see dedicated sub-section below for explanation) – into actual supply delivery is uncertain and moot: although their increase is necessary and potentially significant, higher LHN figures by themselves unlikely to prove transformative on delivery outcomes (see further discussion on their design and impact in section two).
Transitional arrangements for plan-making
Changes include:
- The operative date for the new NPPF to take effect for plan-making is delayed to 12 March 2025, save where the exception circumstances set out in the transitional arrangements (see flow diagram in Savills link below)apply;
- where plans at regulation 19 stage offer a draft housing requirement less than 80% of the local housing need as assessed by the new SM, requiring them to be revised to reflect the requirements of the new NPPF, the deadline for the revised submission of such plans is extended to 12 June 2026 orto12 December 2026, if a refreshed reg. 18 consultation consequently becomes necessary;
- all earlier stage plans that are now required to progress under the new NPFF will be expected to be submitted for examination no later than 12 December 2026.
A Savills blog advises that the now extended transitional arrangements could mean that by the end of the current parliament, around 25% of LPAs have in place up-to-date plans that remain based on older versions than the new December 2024 SM – a figure that “could increase if LPAs try to rush through plans with lower targets over the next couple of months” (January and February 2025).
Such an outcome would cause aggregated local targets to undershoot 370,000 dwellings and, consequently, put into doubt, according to Savills, whether 300,000 annual delivery could be achieved on the back of the new SM by 2029 (leaving aside other considerations, discussed in section two: in short, even if LP housing targets did aggregate annually to 370,000 that fact alone would not necessarily translate into 300,000 annual new supply).
Some of the two thirds of LPAs currently without an up-to-date local plan (LP) may also remain resistant to ‘knuckling down’ to producing a new LP in line with new SM, even within the extended transitional timescale periods.
The presumption in favour of sustainable development (presumption), including the maintenance of a deliverable five-year housing land supply (5YHLS)
In truth, direct changes made by the new NPPF to the presumption were largely limited to reversing those made by the previous government under Michael Gove as made operative in the December 2023 NPPF.
Their future significance will likely rest on the combined effect of a slightly strengthened and more certain presumption with the new SM and other planning reforms, most notably the changed treatment of GB land, including the introduction of the concept of grey belt land (see later sub-section for dedicated discussion on that)
In that light, for plan-making purposes, para 11b states that “strategic policies should, as a minimum, provide for objectively assessed needs for housing and other uses, as well as any needs that cannot be met within neighbouring areas”, unless:
(i) the application of policies in this (NPPF) that protect areas or assets of particular importance (as defined in footnote seven, including National Parks and Landscape areas, Heritage Coast, other heritage assets, Green Belt and Local Green Space, as well as areas prone to flooding or coastal erosion) provides a strong reason for restricting the overall scale, type or distribution of development in the plan area; or,
(ii) the adverse impacts of the proposed development would “significantly and demonstrably” outweigh its benefits, when assessed against the policies of the NPPF “taken as a whole”.
The previous presumption set out in paragraph 11(d) of pre-2024 iterations of the NPPF already ‘tilted the balance’ (tilted balance) towards decision-making approval where either:
- an LPA with an adopted plan was either unable to demonstrate a 5YHLS (save under the December 2023 NPPF version a four-year supply was allowable in certain circumstances with other changes at the margin tending to chip away at the presumption); or,
- it underdelivered 75% of its housing requirement over the latest three-year period,- as measured by the Housing Delivery Test (HDT).
Outside those circumstances, although the new NPPF retains previous wording pertaining to the policies deemed most important for determining that balance – referring to the “location and design of development and securing affordable homes” – footnote nine (reproduced later) it now specifically cross-references them to chapter paragraph references across the document.
Para 78 requires LPAs to identify and update annually a supply of specific deliverable sites sufficient to provide a minimum of five years’ worth of housing against their housing requirement set out in their adopted strategic policies, or against their local housing need (LHN) figure where such strategic policies are more than five years old.
That 5YLHS requirement to “ensure choice and competition in the market for land” continues to be attached with an additional five per cent buffer (para 78a).
LPAs that have significantly under delivered housing over the previous three years will become subject to an enhanced 20% rather than 5% buffer requirement (para 78b, now shorn of the qualifications that the previous government’s December 2023 version introduced, most notably pertaining to LPAs with an up-to-date plan less than five years old (para 76 of December 2023 NPPF).
And, from 1 July 2026, for the purposes of decision-making only, the buffer requirement of 20% will apply to LPAs also with a local housing requirement examined and adopted in the last five years against a previous version of the NPPF.
It will apply where its annual average housing requirement is 80% or less of the most up to date local housing need figure calculated using the SM set out in national planning practice guidance prevailing at the time (para 78c).
Such LPAs to avoid the presumption and tilted balance applying to speculative applications, in effect, will then need to demonstrate a six-year housing land supply from 2026.
This a change that could well result in some LPs adopted under the transitional arrangements then becoming subject to the presumption and tilted balance, forcing them to start a fresh LP process under current NPPF rules.
On top of that, and in any case, para 232 of the new NPPF now states:
“However, existing policies should not be considered out-of-date simply because they were adopted or made prior to the publication of this (NPPF). Due weight should be given to them, according to their degree of consistency with this Framework (the closer the policies in the plan to the policies in the Framework, the greater the weight that may be given).
Where a local planning authority can demonstrate a five year supply of deliverable housing sites (with the appropriate buffer as set out in paragraph 78) and where the Housing Delivery Test indicates that the delivery of housing is more than 75% of the housing requirement over the previous three years, policies should not be regarded as out-of-date on the basis that the most up to date local housing need figure (calculated using the standard method set out in planning practice guidance) is greater than the housing requirement set out in adopted strategic policies, for a period of five years from the date of the plan’s adoption”.
The italicised and bolded (by the author) addition to that paragraph, seems toimply that LPApolicies could or should be deemed “out of date” five years from post adoption – so activating the “presumption” policy at para 11(d), even where there is no substantial provision shortfall as measured by the 75% HDT test, where its local plan requirement is lower than the SM generated local housing need figure then applicable (para 78 also applies).
Across LPAs generally, where 75% (or less) under-delivery of housing has occurred, again as measured against the latest HDT, the revised presumption (as set out in para 11(d) and footnote eight) will become operative, in addition to an action plan and the 20% buffer requirement.
The presumption will apply in such circumstances regardless of whether an LPA can demonstrate the existence of a rolling 5YLHS or not.
In summary, the revised ‘tilted balance’ now set out in para 11 now reads as follows in relation to decision-making (application determination):
(c) approving development proposals that accord with an up-to-date development plan without delay; or
(d) where there are no relevant development plan policies, or the policies which are most important for determining the application are out-of-date (reference to footnote eight), granting permission unless:
- the application of policies in this Framework that protect areas or assets of particular importance provides a strong (instead of the previous, “clear”) reason for refusing the development proposed; or
- any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole, having particular regard to key policies for directing development to sustainable locations, making effective use of land, securing well-designed places and providing affordable homes, individually or in combination (reference to footnote nine that provides cross reference to applicable chapter references).
For sake of completeness, footnote eight reads thus: This includes, for applications involving the provision of housing, situations where: the local planning authority cannot demonstrate a five year supply of deliverable housing sites (with the appropriate buffer as set out in paragraph 78); or where the Housing Delivery Test indicates that the delivery of housing was substantially below (less than 75% of) the housing requirement over the previous three years.
And footnote nine: The policies referred to are those in paragraphs 66 and 84 of chapter five; 91 of chapter seven; 110 and 115 of chapter 9; 129 of chapter 11; and 135 and 139 of chapter 12”.
The latest Housing Delivery Test (HDT) results, measuring delivery against local need (as measured by the old SM for three years to 2022-23) were published on the 12 December 2024 with the new NPPF.
Around seventy LPAs following its publication then became subject to the tilted balance because they delivered less than 75% of their assessed housing during the previous three years.
Interpretation of the ‘tilted balance’, beyond the circumstances discussed above, that render LPA policies automatically out of date, is likely, however, to remain subject to interpretive appeals to the planning inspectorate, as well as subsequent litigation concerning, for instance, whether existing LPA policies are ‘relevant’ to a decision determination or whether, indeed, they are ‘out-of-date’.
Decision-making uncertainty is likely to continue despite or even because of the changes concerning the coverage of the presumption discussed above, and could compound and become more prevalent, especially with respect to GB land, as discussed below.
Affordable housing provision
Para 63 of the new NPPF confirmed that planning policies should reflect the size, the type, and the tenure of housing needed for different groups in the community.
It also made new explicit reference to households needing Social Rent and looked after children, in addition to (but not limited to) existing categories:
- families with children;
- older people (including those who require retirement housing, housing-with-care and care homes);
- students;
- people with disabilities;
- service families;
- travelers;
- people who rent their homes; and,
- people wishing to commission or build their own homes.
Para 64 went on to confirm that where a need for affordable housing is identified, LPA planning policies should specify the type of affordable housing required (now revised, as above, to specifically include the minimum proportion of Social Rent homes required), noting that unrevised para 35 requires plans toset out the contributions expected from development, including the physical (transport and sewerage etc) and social infrastructure (educational and health facilities etc) and types of affordable housing required.
It clearly sets out clearly that such policies should not undermine the deliverability of the plan. Indeed, government practice notes or guidance expects the viability of plan affordable housing requirements (AHO) to be assessed at plan-making and not at an individual project level, even though market and other conditions may change over the plan period (see section three).
Para 66 replaces the previous 10% affordable home ownership requirement with a more general one for major developments involving the provision of housing, where the mix of affordable housing specified or required meets identified local needs across both affordable housing for rent and affordable home ownership tenures.
Para 71 further confirmed that mixed tenure sites providing a mixture of ownership and rental tenures, including Social Rent, other rented affordable housing and build to rent, as well as housing designed for specific groups such as older people’s housing and student accommodation, and plots sold for custom or self-build, should be supported by LPAs through their policies and decisions, because “they can provide a range of benefits, including creating diverse communities and supporting timely build out rates”.
It did, however, add a rider that this should not preclude schemes “that are mainly, or entirely, for Social Rent or other affordable housing tenures from being supported”.
Intervening paragraphs introduced substantive new ‘golden rules’ applicable to major developments on GB land. These may or may not prove enduring (as later sections discuss).
Para 67 concerning plan-makingformajor development(s) involving the provision of housing, either on land which is proposed to be released from the Green Belt or which may be permitted on land within the Green Belt”, now requires, “specific affordable housing requirement(s) to be set”.
These should:
a) be set at a higher level than that which would otherwise apply to land which is not within or proposed to be released from the Green Belt; and
b) require at least 50% of the housing to be affordable, unless this would make the development of these sites unviable (when tested in accordance with national planning practice guidance on viability).
Para 68 goes on to state such requirements may be set as a single rate or be set at differential rates, subject to the criteria above.
This change should be read and understood in tandem with new paras 156-157 within the dedicated new NPPF chapter on Green Belt land, to which we now turn.
Green and Grey Belt development
180 LPAs include Green Belt (GB) land, which, according to Lichfields, has grown in size by 56% since 1979, and now covers around 12.6% of England’s mass. It has been accorded significant protection from development.
The (unrevised) opening paragraph of new NPPF chapter 13 titled “Protecting the Green Belt” sets the scene clearly:
“The fundamental aim of Green Belt (GB) policy remains is to prevent urban sprawl by keeping land permanently open; the essential characteristics of Green Belts are their openness and their permanence (para 142)”.
The next paragraph (para143) goes on to define five established GB purposes:
- to check the unrestricted sprawl of large built-up areas;
- to prevent neighbouring towns merging into one another;
- to assist in safeguarding the countryside from encroachment;
- to preserve the setting and special character of historic towns; and,
- to assist in urban regeneration, by encouraging the recycling of derelict and other urban land.
Existing wording that only allows LPAs to alter their GB boundaries in “exceptional’ circumstances remains also unchanged.
However, the new NPPF then goes on to change much concerning the interpretation and application of precisely what is “exceptional”, what is “inappropriate development” and what are “very special circumstances”, with respect to both the future LPA review of GB boundaries (plan-making) and their determination of applications (decision-making), save for some differences noted below.
In relation to plan-making, para 146 now reads, as follows:
“Exceptional circumstances in this context include, but are not limited to, instances where an authority cannot meet its identified need for homes, commercial or other development through other means.
If that is the case (underlining in this para, added by post author), authorities should review Green Belt boundaries in accordance with the policies in this Framework and propose alterations to meet these needs in full, unless the review provides clear evidence that doing so would fundamentally undermine the purposes (taken together) of the remaining Green Belt, when considered across the area of the plan”
Para 148 goes on to advise that where, in accordance with above, it is necessary to release GB land for development, plans should give priority to previously developed land, then consider grey belt not previously developed, and then to other GB locations.
What is meant by ‘grey belt’ land? The glossary in the new NPFF defines it – both for the purposes of plan-making and decision-making – as:
“ land in the GB comprising previously developed land and/or any other land that, in either case, does not strongly contribute to any of the purposes (a), (b), or (d) set out in para 143, and is otherwise not subject to footnote seven covering National Parks, National Landscape areas and other heritage assets and some other limited categories of land”.
It follows that future LP GB reviews, when required, will need to cover the associated release of grey belt land (now under the new NPPF definition above, to all apparent intents and purposes GB land generally) that do not make a “strong” contribution (outside footnote seven areas) to any of the three below (of the five) defined green belt (GB) purposes:
- protecting against sprawl;
- preventing the merging of settlements, and,
- preserving the setting of historic towns (but no longer, safeguarding from encroachment on countryside).
Concerning the footnote seven areas, NPPF policy regarding those assets and areas will have to be applied to the proposal in question, according to a January 2025 Lichfields briefing note to determine whether a site is grey belt or not and then whether a proposed development satisfies such specific policies.
LPAs, when conducting these reviews, will need to adopt what the government response to the July consultation in December 2024 called a ‘sequential approach’ but as touched on above, now seems more blurred in the new NPPF,considering for release, first:
- brownfield land; then,
- grey belt land; and finally,
- higher performing GB land; but with regard throughout
- to the development sustainability – especially regarding the access to transport considerations that paras 110 and 115 set out – of any land proposed for release.
In that light, para 110 states that “significant development should be focused on locations which are or can be made sustainable, through limiting the need to travel and offering a genuine choice of transport modes”.
The overarching sustainability requirement, as explained the consultation response, at least, will mean that “more sustainable sites on higher performing Green Belt land (for example around train stations) can be brought forward without all Previously Developed Land (PDL) and grey belt opportunities having to be exhausted first”.
All in all, an ambiguous formulation, which further government guidance on the review process and the identification of grey belt land, which was expected in January 2025, may shed more light and clarity on when released.
With respect to decision-making, unrevised NPPF paras 149 and 150 continue to state that:
“Inappropriate development is, by definition, harmful to the Green Belt and should not be approved except in very special circumstances, but (these) will not exist unless the potential harm to the Green Belt by reason of inappropriateness, and any other harm resulting from the proposal, is clearly outweighed by other considerations”.
New para 155 then, however, goes to state that:
“housing, commercial and other development in the Green Belt should not be regarded as inappropriate where:
a. The development would utilise grey belt land and would not fundamentally undermine the purposes (taken together) of the remaining Green Belt across the area of the plan;
b. There is a demonstrable unmet need for the type of development proposed, (which footnote 59, echoing footnote eight, defines in the case of applications involving the provisionof housingas the: lack of a five year supply of deliverable housing sites, including the relevant buffer where applicable, or where the Housing Delivery Tests was below 75% of the housing requirement over the previous three years);
c. The development would be in a sustainable location, with particular reference to paragraphs 110 and 115 of this Framework (access to transport).
d. Where applicable the development proposed meets the ‘Golden Rules’ requirements set out in paragraphs 156-157 below.
A Lichfields flow chart provides a useful diagrammatic summary. In short, the tilted balance of the presumption to development will come into play with respect to speculative applications made by developers concerning the development of grey belt land on GB land located within LPAs whose plans are out of date according to para 155(b) reproduced above.
That is a big and potentially transformative change that could cover most LPAs with GB land, at least in the short term.
However, any such speculative applications will need to conform with the ‘golden rules’ that the July 2024 NPPF introduced, as modified by new NPPF para 156, which states:
“Where major development involving the provision of housing is proposed on land released from the Green Belt through plan preparation or review, or on sites in the Green Belt subject to a planning application, the following contributions (‘Golden Rules’) should be made:
a. affordable housing which reflects either: (i) development plan policies produced in accordance with paragraphs 67-68 of this Framework; or (ii) until such policies are in place, the policy set out in paragraph 157 below;
b. necessary improvements to local or national infrastructure; and,
c. the provision of new, or improvements to existing, green spaces that are accessible to the public. New residents should be able to access good quality green spaces within a short walk of their home, whether through onsite provision or through access to offsite spaces.
New para 157, concerning decision-making, morphs the July 50% affordable housing target into a more flexible “policy plus” one, which, according to the response, should better reflect regional and other site locational variations, so helping “to balance ambitious affordable housing targets with viability challenges”.
It is now set at 15% above that of the relevant existing local affordable housing target, subject to a cap of 50%; where no pre-existing target exists, that cap will apply by default.
This revised para 157 also links GB development site-specific viability reviews to “e subject to the approach set out in national planning practice guidance on viability., which in February 2025 remained subject to a MHCLG review (see Section three for the background to this involving the setting of benchmark land values (BLVs) and its possible significance).
The new NPPF in next para 158 then goes on to give more power to the golden rules decision-making elbow:
“A proposed development which complies with the Golden Rules should be given significant weight in favour of the grant of permission”.
This is regardless of whether it is sited on grey or higher quality green belt land, especially relevant if subject to application approval and covered by the ‘tilted balance’ presumption widened as above for GB land.
Taken together, these changes could potentially lead to a significant increase in housebuilding on GB land.
They represent probably the most significant, along with the new SM (perhaps, more so, depending on future outcomes) of the December 2024-related changes.
Early estimates of the additional housing that as a result could be provided, range from a pessimistic 50,000 (including sceptical volume housebuilders alleging that the ‘golden rules’ will render their private speculative-led developments unviable) to an eye watering and frankly unrealistic four million suggested by land agents gearing up to offer their services to developers wishing to utilise the changes. Somewhere in the 000’s seems a more likely ballpark, but time will tell.
That is because the operative word, of course, is potential.
Plan-making will stretch well into the future beyond the lifetime of this parliament. GB land release is likely to be both contentious and contestable, subject to conflicting interpretations that can be expected to translate into planning appeals and litigation. It is also likely to prove highly political at both local and central levels.
All these uncertainties was played out in real time in the January 2025 PI Examination of the London Borough of Enfield’s LP.
This which proposed developments on local GB land that had been previously opposed by the Mayor of London because the council had not yet exhausted existing local brownfield development opportunities.
But, as explained here and here, his representative at the Examination, speaking with the delegated authority of the Mayor, conceded that to meet London’s housing requirement as uplifted by the new SM, that some GB development would be necessary because brownfield development would be insufficient.
A sting in the tail followed: the GLA submitted further indicative evidence that alternative local GB sites closer and better integrated with existing transport nodes and networks (basically Cockfosters and Oakwood underground stations) could potentially provide more housing and prove more sustainable, in accord both with London Plan and new NPPF requirements,“on the basis of building sustainable, liveable neighbourhoods with access to public and active transport options, making the best use of land”.
That change in tack was to the apparent chagrin of developers, including Berkeley, involved with Enfield’s current proposals, which, apparently have been doing the rounds for years, as well as those opposed to the principle of local GB development, full stop.
A lot remains to play out and sort out, then, especially as Sir Sadiq Khan seems a reluctant convert and soldier to GB land release, who could well still drag his feet, although his point that such development should maximise benefit and “bang for their bucks” is salient.
Something to monitor in policy and political terms, rather than watch spades being put in the ground for some time yet.
Speculative applications on GB land subject to the golden rules set out above could also conflict with the intrinsic drivers of the current private speculative housing model to dribble out new supply to maintain required price and profit levels.
Certainly, any prospect of any step change in supply delivery propelled by completed private-led developments on newly released GB land, as well as elsewhere, during this parliament at least, is uncertain.
That said, this little drama does show that planning reform in general and the new NPPF in particular, notwithstanding the claims of some nay-sayers, can or could potentially make a real difference to, and act as a real driver of, supply but as the next section explains, incompletely and partially at best without wider changes.
2 Planning reform, necessary but not sufficient
The first post of this series delving into government 1.5m housing delivery target, its definition and measurement, its phasing and prospects of achievement, and its relationship to existing public and private delivery systems, showed why this ambition, target, commitment, or whatever – even if it could be measured precisely and accurately by the end of 2029 – will almost certainly not be met barring unforeseen and fortuitous changes in the economic, institutional, and policy environment.
In short, to compensate the substantial sub-300,000 annual delivery backlog that undoubtedly will have accumulated by April 2027, little or no reason exists at present to suppose that a 370,000 annual new dwelling supply can be sustained during the remaining 2027-29 years of this current parliament.
Planning reform by itself will not deliver it or, indeed, any sustained step-change in housing supply. Leaving aside the issues that section one discussed concerning the impact of the new NPPF’s LP transitional arrangements on delivery, the revised and uplifted LHN figures (broadly speaking, their LP plan targets) produced by the new SM aggregate to around 370,000 dwellings per annum.
Planning targets based on bureaucratically assessed housing needs, however, will not translate directly nor necessarily into an increased volume of planning permissions that are then converted into subsequent and commensurate start and completion levels.
Only a proportion of planning permissions (note the word, permissions) are delivered as completions. And then only after an uncertain time lag, which on larger sites can extend into a decade or more.
Private speculative newly built housing provided (pre-planning, land acquired, assembled, serviced, and built with the necessary permissions) for profit without a known buyer or certain end price for sale, accounts generally for between 65% and 75% total annual new build completions in England.
Historically, the last time annual private speculative market supply touched 180,000 dwellings was at the peak of the late Thatcherite ‘Lawson boom’ in 1988 fleetingly, before it imploded into bust. Around 170,000 new build private dwellings were completed during the latest 2019-20 peak year.
The future volume of planning applications, and even more so their translation and delivery into homes, largely depend upon three factors or parameters that operate outside the planning system:
- The expected or perceived direction and state of the national economy;
- The drivers of the private speculative business plan model, largely predicated on maximizing profit margin rather than volume delivery;
- The availability of public funding to support new affordable housing provision, most of which under current arrangements comprise front-loaded grant, counting against public borrowing and debt, and subject to the new government’s new fiscal framework.
With respect to (1), peering into the future, even if the macro-economy performs in accordance with October 2024 Office of Budget Responsibility (OBR) forecasts – a prospect that at the time of writing appears optimistic (Bank of England on 6th February downgraded its 2025 growth forecast to 0.75% – private completions will struggle within existing private speculative model constraints to reach or exceed such past peak levels.
With respect to (2), in a nutshell, reliance on the existing private speculative model will not do anything in the absence of other systemic changes, to encourage, induce, or force developers to build both more and quicker in contrast to dribbling out supply in accordance with their business plan imperatives. For larger schemes that could mean over decades, rather than across the short- or even medium-term, with supply delivery composition tilted towards higher value homes.
With respect to (3), for annual supply by the end of this parliament to have any chance of reaching even a more feasible, yet still momentous and still very challenging 300,000 dwellings, between 100,000-140,000-plus public-enabled or funded affordable dwellings would have to be provided annually by 2027-29.
Its achievement would require higher levels of public grant unlikely to be consistent with the new government’s fiscal rule framework, which, while allowing borrowing for investment, also requires debt as a proportion of gdp (gross domestic product) to be falling by the end of a five-year rolling forecast period (to be shortened to three), as verified by the Office of Budget Responsibility (OBR).
Although we await the 2025 Comprehensive Spending Review (CSR that will set spending limits for 2026-29, the prospect of it funding such a future programme seems unpromising to say the least, especially one if most of the dwellings funded are of SR sub tenure, which across the high cost need areas – where they are most needed – are most expensive in unit grant amounts. Such a programme could claim an annual programme funding uplift of up to 16bn.
In any case, local authorities and housing associations currently lack the capacity to scale up delivery to that level, and any increased funding would have to be scaled up and backloaded to later years.
Due to development time lags, completions would not occur, in the main, until after 2029 – at least if they were new builds; although funding in the short-term could be tilted towards acquisition as part of an emergency more immediate response to the homelessness crisis.
A new generation of New Towns is unlikely to come on stream substantively until the next decade.
Otherwise, and notwithstanding or despite the devolution agenda (which could prove disruptive and distracting), development gestation and time lags requires the government within the next two years to work together systematically with Mayoral, combined authorities and newly created bespoke urban or other development corporations, for other new large plans/projects to have any chance of them producing spades in the ground by mid-2029.
A sustained future 300,000 dwelling annual delivery, therefore, requires measures, initiatives and changes, supplemental to planning reform, to both public and private delivery systems and their interaction (as the section three outlines).
Strengthened presumption of development v primacy of plan making, including on GB land
As section one explained, LHNs or local housing targets assessed by the new SM will provide the denominator against which local delivery is measured against for HDT purposes.
Consequently, more LPAs will be pushed into the presumption and tilted balance, while the new NPPF will also extend its coverage and application, especially on GB land.
A paradox thus emerges: a government aiming to accelerate and bring to fruition a plan-led system, when currently only a third of LPAs have one, is having to use the prod of an extended presumption to development that, in turn, will encourage speculative applications outside such a system.
Although that – given the recent history and the tendency for Nimbyism to derail planning reforms or changes geared to increasing housing supply – is something that may well both be inevitable and necessary, it will mean, across the short term, at least, and quite likely for much, if not the entire lifetime of this parliament, that the government will have to heavily rely on speculative non-LP compliant applications translating into starts and completions quickly enough to provide most of the new supply delivery target.
A consequent tension is thus discernible between using the presumption to secure increased supply within the timescales required by the government’s delivery target and the purposes and paramountcy of a plan-led system.
Another example: In its response to the July NPPF consultation, the government set out its position on how grey belt policy relates to the development plan: “We fully support a plan-led system. However, we believe that it is necessary to allow development on suitable grey belt land through decision making (in line with relevant triggers), in order to address the housing crisis and ensure other development needs are met”.
Other changes are afoot to that system. MHCLG’s Brownfield passport working paper suggests that the government wants to shift towards a centrally mandated zonal permissive system and away from a locally discretionary one, not unlike what the 2020 Planning White Paper proposed (see here for further detail and discussion on that) – for the time being, in the first instance, in relation to the brownfield land.
Proposing options ‘brownfield passports’, which would make “the default answer to suitable proposals being a straightforward “yes”…which would mean being explicit that development on brownfield land within urban settlements is acceptable unless specified exclusions apply”, the paper also suggested setting national policy setting minimum expectations for certain types of location where a particular scale of development may be appropriate, for example, development should be of at least four storeys fronting principal streets in settlements with a high level of accessibility, and/or set acceptable density ranges amenable to suitable forms of intensification or ‘upzoning’.
Alternatively, local planning could be amended to encourage such parameters to be set through local development plans articulated through design codes for appropriate locations – whether across whole urban areas or at a more local scale.
In a 26 January newsrelease, the chancellor, herself, seemed to confirm that the government will ensure that when developers submit an application for acceptable types of schemes in key areas – such as in high potential locations near commuter transport hubs – that the default answer to development is ‘yes’ to “unlock more housing at a greater density in areas central to local communities, boosting the government’s number one mission to grow the economy”.
Such media releases, however, as ever, should put into actual policy and delivery context, para 125(c) (unrevised by new NPPF) continues to state:
“Planning policies and decisions should […] give substantial weight to the value of using suitable brownfield land within settlements for homes and other identified needs, proposals for which should be approved unless substantial harm would be caused”.
It is not precisely clear what such passports would entail over and above that requirement, nor what competing weights, such that, for instance, should be accorded to applicant adherence to local affordable and other planning requirements.
Limitations of the SM
Although the latest shift to a stock-based SM combined with a stronger affordability multiplier, might produce needed higher LP housing targets, the previous section explained why it and they will not, by themselves, translate into higher starts and completions any time soon.
The SM methodology, even as revised, also possesses wider design limitations. It, like previous versions, is a mechanistic exercise that produces LHN figures, not necessarily related to the type, tenure, and affordability of dwellings locally needed.
As Table One indicated it could skew future planning-led activity away from the areas with the highest need demand pressures. Areas with high historic stock levels (noting the new SM is calibrated to existing stock levels) can also have a surplus of poor-quality housing, rather than a shortage of housing, per se.
Although an increased housing supply across such lower need areas could still offer better choice and opportunity at a local level and thus contribute to ‘levelling-up objectives’, the economic benefit of additional housing in such locations may well be less than could be generated across higher need and demand areas, where these add most to economic value added per capita.
Accordingly, a competing case exists for concentrating housing supply across areas where the most agglomerative and other external economic benefits can be reaped, such as the Oxford and Cambridge growth corridor. The SM affordability multiplier remains a very blunt and imperfect mechanism for that purpose.
The posited advantage of greater predictability accorded to the new SM seems to be belied by its short-term results, at least in Greater London.
Table 2 reports significant swings, even gyrations, in the LHN figure it generates compared to the previous method. East London boroughs, Tower Hamlets, Barking and Dagenham, and Newham now have annual targets around 50% less than under the old method, while outer borough, Bromley faces a target that has increased by over 100%.
True, the SM is not designed to reflect local capacity and deliverability considerations, which could be and usefully given more weight in the setting of future local plan housing requirements, but that is a long term process, rendered more uncertain by the priority accorded by the new government nationally to spatial planning on a larger geographical scale – arrangements that will take the lifetime of this parliament to bed-in.
A similar point would seem to apply to the incorporation of the duty to co-operate into future local plan housing requirements.
According to the Devolution White Paper (Box A), strategic authorities will be required to apportion the SM-determined cumulative LHNs of the constituent members between them.
The apportioned figure set for each constituent member comprising the SDS (again on the model of the London Plan – which acts as the SDS for the capital) will then become each member’s minimum housing requirement for the purposes of their next Local Plan.
Agreement on the precise distribution of housing need/local housing requirements will thus be agreed through the SDS development process.
Future arrangements for agreeing a SDS in areas without a Strategic Authority are expected to follow the same principles as Foundation Strategic Authorities (see section one).
All well and good, but the fundamental fact remains that in the crucial case of London, which as noted above has had an SDS for some time, delivery has continued to substantially undershoot the total of still prevailing SDS-set local plan requirements.
These themselves were lower than the total of constituent member LHNs; although London’s total target SM target at c87,000 is now lower than the previous c98,000, annual supply delivery will still need to rise nearly threefold by 2029 for the aggregate London-wide LHN target to be reached.
Although that seems moonshine, if London under performs, it cannot be reasonably expected, as above, that other regions will compensate by over-supply, especially given across the board target increases. Something will have to give (see section three)
A timeworn cynic might, unhelpfully, add then it will probably be time to change the method again.
Policy certainty v needed flexibility in relation to affordable housing obligations (AHOs)
As section two recorded, the December 2024 NPPF adjusted the 50% AHO golden rule, introduced in the July consulted version for decision making purposes, to a 15% premium on top of existing affordable housing requirements, up to a maximum of 50%.
That change, according to the consultation response, was driven by expressed concerns that a nationally set uniform requirement at 50% would fail to reflect regional variations in viability, hence hindering delivery.
The issue possesses wider resonance: in London some public as well as private stakeholders have cautioned that requiring over onerous AHOs in current market conditions, marked by interest rate uncertainty and heightened post-Grenfell building costs, risks getting ‘a percentage of nowt rather than a percentage of something’.
Back in 2023, this website highlighted in The new Infrastructure Levy: Going round the Mulberry Bush, (see its Table 2) a wider bedevilling problem: while, on one hand, a national policy requirement that offers universal certainty and clarity can speed housing provision by giving all actors greater certainty about what is required and what will achieve planning permission; on the other, differing site and regional/area circumstances are not amenable to such a one size fits all approach.
Para 28 of the July NPPF consultation had itself recognised that the developer contributions that can be secured from development will vary between areas, and between individual sites: some areas have lower house prices; some sites will have abnormal costs; and that Community Infrastructure Levy (CIL) rates vary between those local planning authorities which charge it, while some sites may have a higher value in their existing use.
Besides, a standard x% AHO requirement can encompass different permutations of affordable housing, ranging from 100% Social rent (SR) to 100% intermediate and in-between: all involving different cost and value permutations to developers and LPAs.
The government has continued to reiterate that LPAs are best placed to assess and decide that tenure mix at a local level, along with the manifesto pledge to “deliver the biggest increase in social and affordable housebuilding in a generation”.
The local need for SR and other affordable sub tenures varies with region and area. It is, therefore, right that the provision mix should be subject to local discretion with central oversight.
The danger in reducing national policy certainty – at least regarding speculative applications relating to non-plan allocated GB land – is that the purpose and application the NPPF ‘golden rules’ will be undermined.
Development on released GB and other land could consequently swing towards to developer profit maximising and phasing imperatives, not national and local needs.
Another possible issue is a programme dominated by Social Rent (SR), providing 90,000 or so of an overall affordable programme of 120,000 to 140,000-plus dwellings, is not necessarily consistent with tenure diversity and choice, nor mixed communities.
Such a predominance could risk a return to new mono-tenure estates, notwithstanding their documented past problems in some locations and contexts.
It would also require higher public grant subsidy input compared to a more balanced programme during a period of fiscal pressure.
Strong arguments have been made, for example, here, that the distribution of SR has over recent decades has been skewed away from urban areas with the highest concentrated need for such accommodation.
Certainly, in London, Manchester, and other high need areas – SR undoubtedly has been under-provided for decades, culminating in the recent manifestation of peaks in family homelessness, resulting in councils having to resort to costly TA accommodation, which only partially centrally subsidised, has led to budget shortfalls that threaten reportedly to bankrupt some of them.
However, threading back to the public funding issue, such areas also tend to be high-cost areas that are grant-intensive: unit SR grant levels in London can exceed 200K, with 130-150K or more common, considered further below.
3. Tilting towards a partial public contracting system will take time
The government is on the horns of a dilemma. To achieve its housing delivery target (or as this post shows, even to approach it) it must rely on the current private speculative housing system and the large volume housebuilders, but that model includes intrinsic features that historically have, and will continue to result in endemic supply under-provision, relative to both national economic and social needs, with any peak supply periods characterised by escalating real house prices, worsening current and future affordability.
Reforming that system will take time, requiring a step-change increase in public investment support of both enabling infrastructure and affordable housing provision within a fiscal environment that is unlikely – given current fiscal rules and institutional arrangements – to provide the resources required.
But escaping the other horn requires us to build more now – a time of economic uncertainty marked by continuing high interest rates, sluggish, if not stagnant, economic and household income growth mired in international political uncertainties, the effects of which have coalesced with a perfect storm of domestic housing supply-side factors, including heightened post-Grenfell regulatory costs and associated delays.
To take one current manifestation of the dilemma: the new NPPF seems to expect AHOs to do the heavy lifting to ensure that new developments provide more affordable homes, with a particular reference to SR.
But relying on a strengthened planning obligations system alongside the introduction of ‘golden rules’ on released green and grey belt land is likely to rub against these model constraints, at least during this parliament.
On the other hand, reducing or lifting AHOs more generally in London or elsewhere by itself is unlikely to bring forward developments that have stalled for a variety of reasons, as outlined above.
Less AHO supported units mean a corresponding greater need for directly funded units to replace them at a consequent higher total public expenditure cost, during a period of fiscal stress: lifting the ‘burden’ of AHOs from the private sector at any given level of public grant availability will tend to decrease rather than increase SR supply.
Moreover, relaxing AHOs now could prove – as it did in the wake of the GFC – a thin end of the wedge, where developers later reap the benefit of improving macro-economic and housing market conditions, earning excess profits, encouraging them to bid up land prices and costs again, so further intensifying and entrenching the inherent failures of what Theresa May called Britain’s ‘broken’ system.
Short-term constraints and possible ameliorative fix responses can therefore undermine the realisation of future sustainable long-term reform.
That is true, not only with housing supply, but across the economic and social policy generally.
Tackling hospital waiting lists through targets and short-term measures that do little by themselves to tackle their root causes, including inadequate social care, can also delay and distract from long-term solutions (see recent Treasury NHS financial sustainability Committee report).
The government must also work in partnership with the private sector, influencing and encouraging, as well as modifying while setting the groove of future reform.
Short-term policy carrots in the form of, say, approvals of schemes made conditional on adherence to required design and affordability requirements within a defined timescales could be fast tracked accompanied with an undertakings to undertake a late viability review if required, as per the approach of the December 2024 Accelerating Housing Delivery GLA practice note could be offered.
The 35% campaign in a February 2025 blog on Phase Two of the London Borough of Southwark Aylesbury Estate regeneration, however, raised some evidenced doubts on whether increasing SR grant funding in apparent efforts to improve scheme viability at apparently eye-watering marginal grant cost provides the best way to achieve vfm in terms of overall SR provision
It made the parallel point, in effect, that some profit is better than nowt profit, inthe processrather putting the spotlight on the asymmetrical assumption/practice that when conditions treats development profit margins are sacrosanct change but not AHO and other planning obligations.
Also in the short term, making a dent in family homelessness and TA costs is a necessity, making it an apparent no-brainer that has begun to be taken on by government at central and local that available resources should be targeted to such areas for innovative schemes to provide cost effective and more socially suitable alternatives to TA quickly through acquisition, where possible.
Looking ahead longer term and strategically, the second post in the series sketched out a route map to mainstream affordable housing provision across both public and private sectors to maximise supply, quality, and affordability outcomes.
That and Making the Most of the Budget postsbothmade the point that it would have been better for the new Chancellor in her October 2024 budget (budget) to make the case for additional public investment clearly, directly and transparently, according to its economic and thus fiscal sustainability merits, rather than tweaking fiscal second order rules, which, when political push comes to shove, inevitably tend to be gamed or changed, arguing that the government’s delivery target as well as its wider growth mission, presuppose and requires:
- fiscal institutional reform to make public investment planning, selection and delivery more efficient and effective;
- a shift of public and private housing delivery systems towards a partial public contracting-led partnership model to reduce the current reliance on the existing predominant private speculative provision model – one that is better designed to deliver a sustainable steady state 300,000-plus annual housing supply.
With regard to the former and as way of historical context, Conservative governments in the early nineties tended to rely upon second order objectives, such as the exchange rate, to bear down on inflation, rather than making low and stable inflation an overriding first order objective supported by reformed institutional architecture consistent with its achievement, as New Labour then did to notable success in 1997.
Although the budget did announce some relevant but limited ‘guardrails’ to that end and that, more substantively, the National Infrastructure and Service Transformation Authority (NISTA) – combining the functions of both the existing National Infrastructure Commission and the Infrastructure and Projects Authority – would become operational by spring 2025, when it will become responsible for implementing the government’s infrastructure strategy, validating business cases, prior to HM Treasury funding approval.
It also formally confirmed the establishment of the Office for Value for Money (OVM) with the appointment of an independent Chair, who as a first step, will advise the Chancellor and Chief Secretary to the Treasury on decisions relating to the multi-year spring 2025 comprehensive spending review (2025 CSR).
Although these measures represent potential steps forward, the creation and development of both new bodies should have been and should now and in the future be made central and integral to the government’s overarching growth mission and commitment to economic and fiscal sustainability – not a subsidiary budget add-on – especially as the future effectiveness of both new organisations will depend on their own independent institutional clout and resourcing – a point that the Treasury Committee chair, Meg Hillier, picked up on in January 2025.
Such concerns were only reinforced by the chancellor’s 26 January news release (see previous link) that rather presented the ticking off fast tracked approval of 150 projects, as if such approvals were the key outcome required, rather than achieving their best selection and phasing to maximise their economic and social contribution: another possible example, it seems, of short term gestures trumping sustainable and embedded long term and lasting reform.
The objective and evidence-led assessment of the net economic and social benefit of Social Rent (SR) and other intermediate sub tenure expanded to a level consistent with the future achievement of a sustainable new supply at an annual 300,000 or above dwelling level – compared to doing nothing or to alternative housing system changes – provides a clear case and immediately pressing example of where both NISTA and the OVM could and should play pivotal and instrumental roles.
A point underscored by the apparently ‘unanswerable’ case advanced by many in the housing world for funding such a sustained and enlarged programme on the strong ground that it would save money over the long term, is likely to cut across Treasury and fiscal rule resistance to its front-loading short term impact on public borrowing and debt.
In that light, it is unfortunate that neither NISTA nor OVM are likely to be operative in time to comprehensively contribute within the 2025 CSR, even though a stab in that direction potentially could usefully be made.
Otherwise, the prevailing MHCLG policy direction of travel appears possibly consistent with a shift to a partial contracting system, at least across the three inter-linked areas.
First, the introduction of ‘golden rules’ applicable to development on GB land as the new NPPF (paras 68 and 155 and 156) set out (see section one).
Second, setting low benchmark land values (BLVs) for viability purposes – broadly defined as the value that a willing landowner would be prepared to sell their land for a proposed development purpose – to keep land acquisition costs closer to their existing use value (EUV).
Para 157 of the July consulted NPPF version had had offered additional guidance on viability considerations for development in the Green Belt, attaching a cross reference to an Annex 4, which sought to establish, a BLV based on EUV plus a “reasonable and proportionate premium”.
Consultee responders were invited to specify such a value for national policy purposes, with a nudge that it should be closer to three times EUV compared to current industry expectations.
Both that para and Annex four, however, was omitted in the new operative December 2024 version.
Instead, site-specific viability negotiation on GB land was prohibited in a December 2024 update to MHCLG viability guidance, pending “strengthened national planning practice guidance on viability (which apparently) will consider the case for permitting viability negotiations on previously developed land and larger strategic sites, likely to carry greater infrastructure costs”, which, in February 2025 was awaited.
Third, continuing reform of compulsory purchase order (CPO) rules consistent with the use of CPO as a backup default stick to encourage voluntary exchanges at a defined premium close to existing use values on and beyond GB land, including greenfield, urban extensions, and the next generation of New Towns.
It seems clear to this website that all three are both inter-linked and will be dependent on each other to be effective long-term and should underpin the future development of a partial contracting model.
Certainly, laying the foundations of such a shift will require not only unwavering political commitment, perseverance, and focus but also time and patience, when Its fruits are unlikely to be enjoyed fully until the next decade.
It would both presuppose and assist the next generation of multi-tenure new towns and strategic settlements to come on stream substantively and expeditiously, as well to promote and foster partnership planning between public and private sectors through the mainstreaming of affordable housing across both sectors.
The danger is however, that the three inter-linked measures are blown off-course by short term industry pressures to push up supply from its current cyclical low amid claims that the ‘golden rules’ will render GB development unviable.
Certainly, as section two noted, mayoral and other development corporations will need to mobilised and enabled, sooner rather than later, to grasp the opportunities accorded by planning reform.
In that light, this report made the timely the case for a new town in London to lead the way, building upon its natural infrastructural and economic advantages and harnessing existing GLA powers to create mayoral development corporations to further its SDS. As Table 2 highlighted, a massive step change in housing supply is required within the capital for both that and the government’s delivery target to be approached.
For such a project to be progressed, however, the active and sustained backing of both central government and the Mayor of London would be required – perhaps providing a litmus test for the entire planning reform agenda.
Similar possible demonstration or trailblazer projects customised to local conditions and needs could be developed within the Oxford and Cambridge arc and the existing most established directly elected Mayoral authorities, where they are most needed economically and socially both nationally and regionally, and could and must be developed with minimum delay, if the delivery target is not to be reduced to a forlorn aspiration marked by hubris rather active pragmatism.
Certainly, ramping up and facilitating such development corporations to master plan and manage large scale developments offering a range of property types and tenure at different affordability levels on a Letwin-plus model is necessary to bring on stream a transformational step change delivery within ten years.