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OPINION

Planning still a worry

Planning still a worry
June 29, 2018
Planning still a worry

The appalling weather in the first quarter of this year will certainly have had some effect, but only on shovels going into the ground and not applications going through the letterbox. Brexit is certainly playing its part. Commercial building on a speculative basis, that is developments without a pre-let or pre-sold agreement, is largely off the menu at the moment, apart from in more active sectors such as urban logistics. Even so, applications for commercial developments fell 11 per cent in the first quarter of 2018 from a year earlier.

But it’s less easy to explain why the number of residential applications in the first quarter were down 4 per cent from a year earlier, at a time when all political parties are calling for an increase in output. This figure, taken on its own, can be misleading because it counts the number of planning applications submitted to local planning authorities, and not the number of units included in each application.

However, after collecting data from contractors, it appears that permission was granted for 347,000 homes in the rolling year to March 2018, down from 354,000 in the rolling year to December, although still up 11 per cent from a year earlier. The big worry here is with the planning departments themselves. They have the unenviable task of throwing out plans to build new homes. In the first quarter, 16,100 decisions were made on applications for residential developments of which 11,900 were granted, which means that one in four applications were thrown out. What’s even more worrying is that, compared with a year earlier, the number of decisions made fell by 4 per cent and the number of applications granted permission was down by 4 per cent as well.

As we’ve pointed out, applications can vary in content, but there were provisionally 470,000 applications in the year to March 2018, barely different from the year to March 2010 and down markedly from the 649,000 applications made in the year before the financial crash.

Permitted development rights covers larger householder extensions, agricultural and office to residential changes. The interesting one here is office to residential applications, which fell by 16 per cent. It should be said that the attractions of turning a tired office building into flats to rent may have decreased as the shortage of office space has pushed rents higher in some areas of the country.

Overall, while 88 per cent of major applications were decided within 13 weeks, or the agreed time (please note that means processed, not granted) this was unchanged from a year earlier. From this, what seems clear is that the urgency transmitted all the way down the chain for more residential development doesn’t appear to have reached local authority planning departments. But is there another reason for the fall in applications?

Nearly half of those decisions granted, or 49,100, were for residential developments. Of these, 6,500 comprised major developments, where the number of dwellings is 10 or more, and 42,700 were for minors or for development of one to nine dwellings and not exceeding one hectare. The one thing that they have in common is that decisions granted were both down by 2 per cent. This brings us all the way back to the quoted housebuilders, where the annual increase in units sold is clearly levelling off. This might reflect an element of prudence on their part, and a desire to avoid any repetition of what happened in the financial crash, where high levels of debt and an absence of buyers caused distress all round.

However, it’s fair to say that the major builders remain highly profitable, and if the government wants to address the shortfall in housing that first-time buyers can afford, it needs to address the supply issue and bankroll more local authority housing construction. As for commercial developments, we might have to wait until Brexit is out of the way, and that could be years.