The Housing Forum cautions that the Government’s proposals on build-out rates could backfire

The Housing Forum has cautioned that the Government’s proposals to try to speed up new housing development could backfire, and actually slow down the pace of new housebuilding.

The Government is proposing to introduce a new statutory build out reporting framework requiring developers to state upfront the speed at which new housing will be delivered when they apply for planning permission. If build-out is slow without good reason, developers could be fined.

The Housing Forum shares the Government’s ambition to increase housing supply, and appreciates efforts to help accelerate delivery in sites that are already in the pipeline. We also understand the frustrations that local authorities feel when they are held responsible for housing delivery, which is so often outside of their control.

Slow-build out rates of sites is not usually the fault of councils, but this does not mean that it is something that developers do for their own gain. The CMA report was clear that developers do not hold land-banks for their own financial gain above that which they need to ensure a smooth pipeline of developable sites. We would ask the government to review the policy because adding a complex new legal framework into planning would be counter-productive to its ambition to streamline planning and reduce red tape.

The Housing Forum’s Director of Policy and Public Affairs, Anna Clarke, said:

Having consulted with our members from across the housing sector – including councils, housing associations, developers and legal firms who advise the sector – we believe that attempting to impose financial penalties on housebuilders for slow buildout rates would be counter productive to the intended policy ambition of speeding up housebuilding.

Rather than encouraging collaborative solution-finding to the complex issues around build-out rates and stalled sites, the proposed measures would pit councils and developers against each other in costly and slow legal battles, with councils expressing fears that this could “turn into a mud-slinging match between councils and developers over who is to blame”.

It may be politically attractive to blame developers for slow buildout rates, but when digging down into individual causes (as the Taskforce has recently done), it is usually the case that different factors interact, or that more than one factor is holding development up simultaneously. Third parties – such as the Highways Agency, or Building Safety Regulator – are often responsible for delays.

The likely negative impact would be:

• Slow build-out rate (which already causes financial losses via borrowing costs) having increased risk attached to it. This would deter lenders to the sector, and increase the price of credit. This in turn would increase costs, and reduce the viability of much-needed Affordable Housing.
• A significant financial hit on housing associations who own sites that are currently stalled because of the viability of construction costs.
• Increased difficulties in delivering higher-risk complex brownfield sites. Councils already feel that developers “cherry pick” the easier sites, and this would likely be exacerbated by these measures.
• An overly cautious approach from housebuilders around what they build, to ensure that build-out rates are achieved. This may include being under-ambitious in terms of density, design or use of more innovative or environmentally friendly construction methods, including MMC.
• Increased legal costs for both councils and developers who need to spend time arguing over who is responsible for slow build-out rates.

The new Government has done a great deal to support housebuilding since coming to power less than a year ago – with reforms to planning, new funding for Affordable Housing and the newly announced National Housing Bank to help leverage in private finance and get new homes built on complex brownfield sites. There is a risk that these new reforms undermine some of this positive work.

Read our consultation response here: The Housing Forum responds to the Government’s consultation on improving build-out rates : The Housing Forum