PBR Part 3 - Quicker Planning?

Part of the help proposed by the Government to achieve greater housing development numbers is an idea to address the big issue of the time it can take to achieve planning permission.

Now for single plots, small sites and refurbishments these delays normally take the route of a refusal a the end of the magic 8 week target date for some minor (to the applicant’s eyes) reason that could have been solved through consultation and the submission of an amended plan to meet the concerns of the planning officer.

Then you have to get your plans altered, resubmitted and wait another 8 weeks and hope they don’t come up with any other last minute issues.

The Government has come up with the idea of producing a Design Code and if your application meets the requirements of this code then the planners should grant you a quicker consent.

Will things work this way in practice?

I doubt it, speaking from bitter experience.

The code will be open to interpretation and thus disagreement or merely confusion between you, your architect and the planning officer.

It will load on another layer of information you will need to submit with your application, since every application will need to be accompanied by an explanation as to how you have taken on board the requirements of the ‘Design Code’.

You will still have to wait 8 weeks to get your application determined and any perceived failure to meet the code will provide a reason for refusal.


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PBR Part 2 - Housing Density Again

Sorry about the delay, I am just in the process of finishing my latest development and it has reached the stage where I am putting in physical labour myself in decoration etc.

However back to the PBR and increased housing numbers. One part of the solution is going to be increasing the expected density of housing on any site that is to be granted planning permission. I touched on this in an earlier post and now the proposal from the Government is mush clearer.

John Prescot has issued a revised draft for PPS3 (Planning Policy Statement). In this local Planning Authorities will be expected to look for the following densities of housing in residential planning applications.

City Centre, Above 70 dwellings per hectare (28 per acre)
Urban, 40 – 75 dwellings per hectare (16 – 30 per acre)
Suburban, 30 – 55 dwellings per hectare (12 – 22 per acre)
Rural, 30 – 40 dwellings per hectare (12 – 16 per acre)

Bear in mind that the previous density requirement was 30 – 50 dwellings per hectare and that many planners looked for developers to reach the mid point in this range and you will see that John Prescot is looking for a lot of new flats to be built to join the large number already going up.

It again means that by building at these densities we are increasing town cramming and may be building the slum areas of the future should fashions and values change. When this happens these developments will become the areas of deprivation and crime to add to those we already have.

The Government will say that they are bringing in a design code to ensure that this does not take place. However just think back – once tower blocks of flats were the fashionable solution and now we have been demolishing them because of the problems they created.

Next time I will look at the design code and the way it is supposed to speed up the planning system!

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PBR Part 1 - Overall Housing Numbers

Normally a Pre-budget report is about as boring as you can get and contains little if anything of interest to property people. It is the occasion where Gordon Brown tries to hide the fact that his growth projection for the UK economy has halved to 1.75% when America and even some of our European competitors are achieving over 3%. Also his borrowing requirements have mushroomed to £37,000,000,000.

However this time he has also chosen to meddle in John Prescott’s area of responsibility – planning and housing.

In this post I shall concentrate of overall housing numbers.

We have for some time being building far fewer new houses than are required by the market. This includes conversions of existing properties into flats and bedsits. At the moment we are building about 150,000 new houses or flats each year. In some recent years this number has been even lower.

Market demand has been running at around 190,000 houses or flats each year.

The result of the shortfall has been a predictable rise in prices and an increasing problem with affordability.

The Government’s own review by Kate Barker recommended building between 70,000 to 120,000 new properties each year to make up some of the shortfall.

The Government is not going that far but they are proposing the increased figure of 190,000 per year.

I will look at some of their ideas for achieving this in the next post.

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Stamp Duty Shock

I am going to do a short series of posts on the potential implications of the Pre-budget report from Gordon Brown for those of us interested in houses, property and development but first I must alert you to the impact of a change of stance by the Revenue to the payment of Stamp Duty.

There has always been a general rule that ‘connected transactions’ that form a ‘single transaction’ can be charged tax as a ‘single transaction’ if the parts involved have been separated as a means to avoid or lower tax liability.

Apparently the finance Act 2004 included an item to stop landowners splitting up an area of development land into plots when selling to a developer in order to avoid a Stamp Duty liability arising.

This rule is now being imposed on investors who buy up blocks of houses for buy-to-let. Where previously Stamp Duty would be charged (if the individual prices came over the threshold) on each property separately; now the tax is going to be imposed on the overall purchase price.

E.g. if you bought 5 houses at £110,000 each you might think that since each one comes under £120,000 no tax would be payable. Wrong – now you could be charged on the overall price of £550,000, which of course comes in the 4% bracket and produces a liability of £22,000.

This of course can also hit those of us that assemble land or property for development. Individually each house or plot of land may give rise to no tax liability but together there may be a substantial charge.

If in any doubt raise the question with your accountant at an early stage before you commit to a purchase. After all if you take account of the full liability and there is still a good profit then great, push on and do the deals.

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£135m to Planning Departments - Good Value?

The Office of the Deputy Prime Minister has just announced that the government will be making £135,000,000 of our taxes available to Local Authorities if their Planning Departments meet key targets for delivery and performance.

What does this mean to the ordinary developer or homeowner trying to get planning permission for a scheme that they need to move forward?

The main target that Planning Departments have is to determine all applications within 8 weeks of the application being registered. There are bound to be a few complicated applications submitted to any planning department that cannot be dealt with in this timescale.

Therefore, they are very keen to ensure that all the small applications for new build, self-build, extensions, tree work and changes of use are kept within the magic 8 weeks.

The first way of doing this is to delay registration of your application until all the documents are correct (this can be quite reasonable – after all if you have not filled in the from correctly or have got the wrong number of plans why should they loose precious time?)

However, if can mean you being asked to provide a load of extra information that is not set out on the application form or any guidance notes!

The other way they get to keep to the timescale is to minimise any contact with you the applicant once the application is in.

So, if you want to consult and get any advice on your wonderful idea for new build or extensions, then you will need to do so before you formally submit the application.

All of which means that the whole process of course takes longer than 8 weeks - but the remainder of the period is hidden from central government records.

So since statistics can’t lie we have got a more efficient planning system haven't we?

Just one last thing to watch for is if your application is in any way unacceptable then expect to get a refusal and then have to submit a new application rather than being able to amend the existing one.

After all that will result in two applications dealt with inside 8 weeks instead of one that falls outside.

Of course it means the whole thing takes you 20 weeks instead of possible 10.


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Increasing Densities - Increasing Profit?

Recently the Urban Task Force set up by the Government has issued a report. On the amusing side it has slammed the flagship new developments being championed by the Government in the Thames Gateway as 'Poor'. There was criticism of the design, lack of sustainability and no integrated transport strategy.

This is of little interest to those of us looking to undertake small scale developments, but there was one issue that is of interest - Density.

Currently Government guidance states that new housing development should be within a density range of 30 - 40 dwellings per hectare (that’s 12 - 20 dwellings per acre for those of us who know what an acre looks like but struggle with the concept of a hectare).

The Urban Task Force is recommending that the minimum should be raised to 40 dwellings per hectare (16 dwellings per acre).

Now you can just build small detached houses at 12 per acre but to build two storey houses at 20 per acre you are talking about very high density terraced housing.

This means that if this minimum is adopted as policy by the Government it will be nearly impossible to build new detached houses on anything much bigger that a single infill plot and even then the planners may ask you to build more if it is a large plot. On anything else you will have to build terraced houses or flats.

Is this a good thing for developers?

Well increased density often means an increased land value and an increased overall Gross Development Value and if you get it right this should mean an increased profit.

So that’s good news then?

Well yes and possibly no. If every developer is forced into building high density housing and flats that market will become saturated and prices will stagnate or fall.

However as always there will be opportunities for those that look for ways to provide something that will become ever more scarce. That will be the quality new detached house in a good location or a quality refurbishment that meets the standards of a new build with the charm of retained period features.


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