The Budget and Afterwards
||22 March 2011
Given that recent residential planning permission statistics identify that residential permissions in the third quarter of 2010 are significantly below the same quarter in 2009, it would seem reasonable to conclude that housing completions will remain at an all time low for some time as, under the guise of utilising ‘land value capture’ to fund socially desirable objectives, the State has arrived at a planning system which deters development and regulates participants with the deliberate intent of minimising the commercial incentive to speculate. Unless this situation is reversed the current historically low levels of house building activity will not be improved upon.
Whilst the Coalition is promoting initiatives to both financially incentivise local authorities to increase house building levels and give affordable housing providers greater financial discretion, it is all within the context of the existing planning framework whereby the State is empowered to sequestrate private land and direct who benefits from the development of these assets. This model is failing to provide the number of houses needed by an expanding population, and the regulatory framework should be amended in recognition of the simple premise that in a competitive market it is the profit motive which encourages landowners to bring sites forward and attracts speculative funding to progress developments.
The ideology of ‘land value capture’ has been proved unable to withstand harsh recessionary pressures and maintain the level of house building activity that is needed; it now stands as testament to the belief, actively promoted by the previous administration, that private sector initiative in the development industry is only to be encouraged if the primary intent is to subsidise public sector consumption. That interventionist mind-set has led to a broken economy and a development industry stalled by an inability to fund excessive State demands.
Such impediments must be removed from the planning system and the new framework being contemplated should encourage innovation by incentivising speculation and allowing the development industry to build our way out of recession, providing the new houses the country needs.
In that regard Pioneer has prepared a brief paper which outlines the fundamental problem, makes 10 policy suggestions which could be implemented at nil-cost to the Treasury, and gives examples of stalled schemes and how the current planning system curtails house building activity. This paper has been submitted to the Treasury and the individual members of the Communities and Local Government Select Committee for their contemplation and you can read it here.
Pioneer is the leading independent specialist consultancy on development and housing matters and we would be delighted to offer advice on the opportunities for scheme maximisation arising from the new housing landscape.