- Opposition to planning reform blamed for by-election defeat
- Blocks to rule changes would likely slow, rather than impede, sector profits
In the autopsy that followed the Conservatives’ crushing recent by-election defeat, proposed planning reforms were repeatedly cited as a reason for the big swing to the Liberal Democrats.
This analysis wasn’t confined to the commentariat. Even the party’s co-chair acknowledged that the loss of the normally safe seat of Chesham and Amersham was a “warning shot” from rural voters worried about the government’s mooted changes to land use rules.
“The concerns about planning and HS2 were loud and clear,” said Amanda Milling in a piece for the Daily Telegraph. “Over the coming weeks and months, we will take stock of what happened in Chesham and Amersham and look at how we can regain the trust of voters there.”
Of particular issue for those voters, already frustrated by the impact of the London-to-Birmingham rail project, is the prospect of new housing developments.
The Campaign to Protect Rural England says up to 10,000 plots of greenfield land are marked for development in Buckinghamshire, where the constituency sits. At the end of the London Underground’s Metropolitan line and minutes from the bucolic Chiltern Hills, the area is a prime destination for prospective homeowners – and therefore housebuilders – wanting to capture the benefits of both city and countryside.
A relaxation of building rules, which the government had hoped to push through parliament this year, are designed to help developers build new houses in “growth zones”. Robert Jenrick, the housing secretary, has said proposed reforms will help the government meet its targets for new green homes and get more young people on the housing ladder.
The by-election rebuke throws a big question mark over the pace and scale of those reforms and their acceptability to the Tory heartlands. For housebuilders such as Crest Nicholson (CRST) – whose chief executive Peter Truscott described the proposed changes as “transformational” in interim results this week – the result might therefore be seen as a blow.
The FTSE 250 group counts two developments within 13 miles of the constituency and hopes to expand its geographic focus beyond the south and the West Midlands to East Anglia, Yorkshire and the East Midlands.
But developers such as Crest know that political pressure to remedy the undersupply of housing stock, together with an inherent incumbency advantage for the sector’s largest players, means profits are likely to stay high whatever the outcome.
“Let me just say I’ve got very low expectations of the planning system in the UK,” chief executive Peter Truscott told us this week. “If the new planning system starts to produce more land that will allow us to grow even more rapidly, but we are able to navigate the existing system at the margins we need.”
Truscott pointed out that housebuilders’ returns on investment had remained above 20 per cent for a generation despite “a doubling” in the time it takes for developments to complete. Above-inflation house price rises – which propped up Crest’s earnings in the six months to April – mean that picture remains intact.
“Sadly it is about the whole regulatory process, not just planning,” he added. “It is incredibly difficult for a new developer to grow rapidly… [compared with] incumbents that have a larger land bank, portfolio and people with the skills to manage the process.”
