A new Labour government: what next for residential development?
A new consultation draft version of the National Planning Policy Framework (NPPF) is expected to be published, which will reverse many of the changes introduced at the end of 2023. This might also be accompanied by a Written Ministerial Statement. For effective reform, the new government needs to be able to establish a clear direction of travel quickly, as we have seen over the past four years how disruptive protected policy changes can be to the local plan process. In 2010, it took an average of 1.2 years to advance from a Regulation 19 plan to formal adoption. By 2023, that had risen to a high of 3.9 years.
The changes are expected to include making the standard method for calculating housing need mandatory rather than an “advisory starting point”. Currently, 94 LPAs have an adopted local plan with an annual housing target lower than the need identified under the standard method, and 20 LPAs with emerging plans have published lower draft annual targets. The consultation draft NPPF is expected to make clear any onward transition period whereby housing targets apply to new local plans, though it might be immediately for the purposes of deciding planning applications. It is not yet known whether Labour would seek to amend the Standard Method, which presently amounts to less than 300,000 dwellings per annum.
A new version of the NPPF would also likely remove the changes to the 5 year land supply requirements, which have made it easier for LPAs to pass. Since the December 2023 changes, 39% of LPAs are now either exempt from having to demonstrate a 5 year housing land supply requirement, as they have an up-to-date local plan, and or only have to demonstrate 4 years’ worth of land supply as they have made sufficient progress towards adopting a new plan. We estimate that around 90 LPAs, mainly in the West Midlands and the South East, would fail to be able to demonstrate a sufficient housing land supply if these relaxed requirements are reversed.
The new secretary of state is also expected, within the next couple of weeks, to instruct local authorities to regularly review their Green Belt boundaries. 58% of LPAs have some Green Belt within their boundaries, and the size of the Green Belt increased by over 24,000 hectares between 2021-22. Over 60% of local authorities without a post-NPPF plan in place contain Green Belt; clear policies on how it should be reviewed could help improve local plan progress and the identification of enough land to meet housing requirements in these areas. The consultation draft NPPF might also update national Green Belt policy, introducing a new definition of Grey Belt – which would apply immediately for planning decisions. It also remains to be seen whether Labour will consult on National Development Management policies later this year.
Beyond planning policy, there are several areas which will have implications for residential development of all tenures, although they are unlikely to be delivered as quickly as the promised planning changes. Reform and regulation of the private rental sector is expected to be included in the King’s Speech as one of the priorities for the next parliamentary session. There is potential for this to move quickly if the new government chooses to continue with the form of the Renters (Reform) Bill which had reached its second reading in the House of Lords.
For delivery of affordable housing, indications of policy will likely come in the first fiscal event, expected to be no earlier than mid-September. Key issues to be resolved include levels of grant funding available through the Affordable Homes Programme post-2026, and the settlement for social and affordable rents after 2026. Both of these issues will be key to restoring financial capacity for housing providers to deliver their own development or to buy Section 106 stock.
Finally, there are high aspirations to boost development through a new wave of new towns. Angela Rayner pledged at UKREiiF in May that the government would announce a list of new projects within their first 12 months. However, we expect this to be the area where progress to be slowest. While legislation is already in place to create development corporations to deliver these schemes, Labour’s ambitions to reform CPO to limit hope value would require further legislative change, and could be challenged for compliance with the European Convention on Human Rights. Any quick wins to increase house building will come from elsewhere.