What Is The Current State Of House Building Planning Permissions In The Uk?

By Author: Bradley Weiss
Total Articles: 272
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The statistics on change of use designations present a mixed picture. The process is beginning to show signs of speeding up, which helps.

In the national drive to increase the stock of housing in the UK, among the leading indicators of new-build activity might be planning permissions granted by local planning authorities (LPAs) to convert underused UK land to homes. This is of course of interest to the approximately 1 million households that are waiting for affordable and well-located homes ¬– near their place of work – and to property fund managers as well. They are the investors who most often make a change of use request.

District planning authorities have, as of the end of June 2014, granted changes to 170 applicants out of 200 decisions made (with 42 applications still pending, as of November 1 2014), according to statistics supplied by the Department for Communities and Local Government (DCLG). This relatively high proportion of approvals, ...
... 88 per cent, might indicate a relaxed approach to authorities’ review and scrutiny of such applications. But this proportion of applications-to-approvals has remained relatively constant since before the financial crisis of 2008. Such approvals range between 81 per cent (Q1 2008) to 89 per cent (Q2 2013).

The numbers of applications – indicating effort on the part of real estate developers and their financiers – have varied a bit more. The highest number of applications made per year since 2004 was 689, in 2004/2005, dropping notably by 2009/2010 to 466 applications and to 454 applications by 2012/2013. In the 2013/2014 fiscal year, that number is up only slightly to 472.

These middling numbers since 2008 suggest several things. One is that the economic recovery has been slow, and that perhaps all efforts toward localism in the shift of authority to LPAs (versus regional and national planning) have not changed the landscape all that much. The Government schemes to make home buying more affordable have had a noticeable effect on the number of home sales, but this may be expressed more frequently in the purchase of existing homes that require no planning authority involvement.

The statistics get a bit more interesting and perhaps meaningful when broken down by the sheer numbers of dwellings and change of use. Some highlights from DCLG reports include:

• Most dwellings – Planning authorities have ruled on hundreds of homes in several standout locations include Cornwall (1,615 dwellings), Wandsworth (1,087 dwellings), Kensington and Chelsea (897 dwellings), and Cheshire East (503 dwellings).

• Most change of use – All told, the LPAs granted 23,884 use designation changes in 2013/2014. But this number includes changes to residential as well as to retail, offices, light industry, general industry, storage, distribution and a handful of Traveller caravan pitches. The largest numbers of change of use applications granted were Leeds (379 applications), Birmingham (275 applications), Liverpool (239 applications), and Leicester (207 applications). What should be noted is that the City of London granted only 67 such changes of use, which perhaps illustrates how the heavily built environments simply have less land to convert to an alternative use.

• Time required to grant a change – Much has been made of speeding up the application process, which may have been accomplished in the 2013/2014 year. Of 472 applications received in this time frame, 71 major applications were decided upon in 13 weeks or less, up a bit (from 57 and 58 in the preceding two years). Developers and their investors, many working through such instruments as real asset portfolio investing, prefer an expedited process such that they can get a faster return on their investment.

While none of this indicates an incontrovertibly robust move forward to building – sorely needed by Britain – it does suggest a trending in the right direction. More people are able to buy more homes than in the preceding five years, to which homebuilders are beginning to respond. Planning permission changes generally indicate where populations are shifting, often drawn by new employment from growing companies. Investors recognise that homes absolutely need to be built, so getting past the bottleneck often inherent in the planning approval process is one more piece leading to increasing the housing stock.

The possibility of a land use change is clearly part of the due diligence of any investor in real assets such as land and development. Individual investors need to consider this information under the guidance of an independent financial advisor.