Do bureaucratic planning processes deter large amount of house building?

Question

The UK Conservative government is bringing forward plans to "streamline" the planning processes for new house building, by essentially creating large areas of the country where planning permission will be automatically granted without review. These plans have been opposed by a large number of groups and organisations who point out that

Hugh Ellis, director of policy at TCPA, criticised the reforms overall, saying: “This kind of disruptive reform doesn’t suit anybody, neither landowners nor developers. They’re turning the system on its head at a time when it’s working very well for the volume house builders – 90% of planning applications are approved and there are about a million unbuilt permissions.”

A government spokesperson has countered this assertion with;

A government source said it was misleading to suggest planning rules were not an obstacle to building. “The [90%] approval statistic masks the numbers of people who are put off applying altogether because of how bureaucratic and difficult this is,” the source said.

Is there any evidence, statistics or surveys that show there are a significant number of developers/developments that are put off applying due to the nature of the process?

Answer 1

In the press release on the launch of this consultation, the government mentions two reports which contain some evidence to this effect.

Firstly, on the more anecdotal side of things, they link to a 2017 report entitled Reversing the decline of small housebuilders by the Home Builders Federation, the representative body for home builders in England and Wales. This report, in particular, identifies the bureaucratic nature of the planning process as a significant barrier to market entry for SMEs (small and medium-sized enterprises). The extract from the foreword below provides a taste of the general thrust of the report.

This report provides an in-depth study into the reasons behind the decline of the small and medium sized home builders. This decline is the principle cause of the housing crisis and can be traced back to the ‘Genie out of the bottle’ 1990 Planning Acts; combined with the financial crisis of the late 2000s. Obtaining planning permission today is a bureaucratic nightmare and beyond the resources of many SME builders; it is a real barrier to entry – even if they can obtain finance.

- Steve Morgan CBE, Chairman, Redrow plc

In addition, page 24 of the report examines particular problems for SMEs within the planning process in particular. On the topic of being put off applying in particular, the following quote by an unnamed Housebuilder interviewee is presented:

There are council district areas that a number of the PLCs just won’t touch because they’re such a pain to deal with. And being small, you’ve got to try and work with the people who are, in effect, controlling your major supply line.

Secondly, they link to a report on a 2017 survey of 468 companies carried out by the National House Building Council entitled Small house builders and developers: Current challenges to growth. Section 7 of the report looks at the effects of the planning process in depth, but to present a few of their key findings:

• The planning process and associated costs – 38% of the companies surveyed ranked this as their most serious business challenge and 31% ranked it as their second main challenge. This presents a more pessimistic view of the situation than in 2014.
• Many respondents expressed a preference for avoiding the planning appeals process due to the time, resources and costs involved.

This second point appears to be based on focus group interviews rather than survey responses, however.

The focus group conversations demonstrated participants’ awareness of the planning appeals process and its use in cases of non-determination, refusals of permission and outcomes that were considered unacceptable due to the imposition of conditions. However, the length of time, potential costs and uncertainty of the appeal process drew negative responses, largely being described as a route that was not viable for most small developments and businesses with limited resources.

I think, perhaps, that rather than the government spokesperson's quote being interpreted as there being a significant number of developers who are so disillusioned by the planning process that they don't apply at all, it makes more sense to interpret it as the planning process being such a significant barrier that fewer SMEs are able to successfully enter the market in the first place, leading to a reduction in applications. This perhaps rather charitable interpretation of the quote is more readily supported by the evidence presented by the government.