24 July 2023
If you are covering Michael Gove’s plans to relax planning rules in England to stimulate house building, please find below a comment from Oli Creasey, property research analyst at Quilter Cheviot:
“The government has today announced further changes to the planning system in an effort to boost house building and conversions, specifically aimed at urban regeneration. Unfortunately, like much of the housing policy that has come before, it is somewhat of a damp squib.
“In principle, it’s a sensible policy. The issue with the longstanding target to build 300,000 homes a year is that it is too blunt – in theory it’s relatively straightforward to build thousands of homes on an out-of-the-way brownfield site – far more difficult is developing the surrounding infrastructure (schools, jobs, shops, etc) that make people want to live there. Prioritising construction within existing urban centres alleviates this issue – the infrastructure is already there.
“However, urban construction isn’t easy either. Easing planning restrictions will help, but the land is more expensive, building costs are higher, and rezoning former retail sites (for example) as residential developments could tip the balance of homes vs amenities in the other direction. Part of current planning constraints does come from so-called “NIMBYism”, but it also reflects the desire of local councils to not hollow out their town centres with new apartments. Furthermore, planning departments are generally under-funded and struggling to work through existing backlogs. Michael Gove’s plan includes funds and personnel to tackle this backlog, but the size (£24m) is somewhat underwhelming.
“We will await further details on the proposals, but our initial view is that this is unlikely to have a significant impact on the number of planning approvals, or the number of homes built. And while this policy isn’t designed to line the pockets of the housebuilders, they do have an interest in these proposals and as such it is important to watch how their share prices reacted to the news. The fact that these share prices have been largely unchanged this morning tells you all you need to know – nothing will really change and the chronic shortfall of housing in the UK will continue.”
