What should we make of the UK government’s planning system overhaul?

The UK government under Boris Johnson has a habit of rolling out headline grabbing ideas but very often these are not followed through. However, there is real hope that the UK government’s announcement today on the future of planning applications could herald a sea change for property investment in the UK. Obviously, there are pros and cons, people for and against, but there seems to be a genuine acceptance that reducing red tape is the way forward.

Zoning land

Under the proposed planning system all land will be designated for growth, renewal or protection. At the moment only 50% of local areas in the UK have a plan to build more homes but under new plans every local area will have a plan in place. We also know that the current Section 106 Agreement and the Community Infrastructure Levy would be replaced by a new Infrastructure Levy. This new charge will be based on the value of each development above an agreed threshold. The idea is simple, by not penalising relatively small developments and reducing the overall cost of planning and developing in the UK, this will help local authorities and developers deliver affordable housing.

First Homes ownership scheme

We should also hear more about the government’s First Homes ownership scheme which will see first-time buyers, key workers and local people able to secure a 30% discount on the market value of new developments. This would obviously provide the much sought-after stepping stone from rental property to homeownership – a gap which for many years has seemed out of control. However, there appears to be some uncertainty regarding the quality of new developments if the planning application process is made much simpler. Time will tell….

Is there a hidden problem for the UK property market?

The UK government is also going to introduce rules with regards to planning applications so there is more transparency. Much time, money and effort is spent on planning application appeals but the idea is that the rules-based system will significantly reduce the scope for appeal. However, some experts are pointing to the fact that many developers apply for planning applications for new builds but fail to follow through – a form of land-banking.

There is no doubt that many property developers do apply for planning applications which are often held back for a number of reasons. This may include the financial status of the company, local demand or the wider economic outlook. At this moment in time, with the coronavirus having a huge impact on economic activity, and unemployment set to increase in January 2021, it is fair to say the next couple of years will be challenging. That said it is a valid argument that property developers are applying for planning permission but not always using it.

More changes to come?

Today’s raft of announcements from the UK comment certainly makes for interesting reading but we need to see the substance behind the headlines. In reality, the whole industry has welcomed the changes but many will be cautiously critical until we see the small print and the additional funding required. Boris Johnson has made many bold promises over recent months and the lack of affordable housing in the UK has certainly been a bugbear of his for some time. Are we actually seeing a fundamental change in the UK property planning application process?

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