Housebuilders could see up to £1bn sliced off their costs next year on the back of a radical shake-up of the planning permission system announced yesterday by the Government to boost house numbers.
Potential changes to the law that could speed up housebuilding, trim developers’ costs associated with the planning permission procedure and provide stock to an undersupplied market, were at the heart of a blueprint called “Fixing the Foundations”. The proposals helped lift shares in builders, with Barratt Developments and Berkeley both up more than 1.7 per cent, and Taylor Wimpey up 4.3p to 189.2p.
The plans were unveiled as the Office for National Statistics announced an unexpected fall in construction in May, down 1.3 per cent from April, which was largely owing to a drop in housebuilding.
Just 118,760 homes were built in England in 2014, less than half the 245,000 experts predict is needed every year, according to the National Housing Federation.
While a number of experts are not convinced the new measures will achieve this, the reforms will give some housebuilders a financial boost.
Adam Pyrke, director of planning at Colliers International, told The Independent: “The zonal planning system for brownfield land will remove uncertainty and shorten the timescale for construction completions leading to significant savings in the cost per dwelling.”
He added: “Coupled with the other deregulation proposed, a simple saving of £5,000 per unit [home] would strip more than £1bn from development costs for the expected completions next year.”
The plans unveiled by George Osborne and the Business Secretary Sajid Javid include a “zonal” system that gives automatic planning permission on all suitable brownfield sites, which typically comprise industrial sites that can be large and are underused or abandoned.
Other proposals would give the Government greater compulsory-purchase power and more authority to intervene with the planning decisions of local councils, as well as more support for small- and medium-sized housebuilders to get their applications heard on time, not just major developers.
It could benefit smaller property firms such as Pocket Living, which creates one-bedroom flats for singles or couples.
The Government wants to penalise local authorities that make fewer than 50 per cent of planning decisions on time, and in London it would like to remove the need for planning permission for upwards extensions up to the height of the adjoining building.
Melanie Leech, chief executive of the British Property Federation, thinks the increased simplification for brownfield land would “help get many more schemes off the ground”.
However, Mr Pyrke warned that developing brownfield land is complex.
But Justin Gaze, Knight Frank’s joint head of residential development, cautioned: “Policymakers still fail to address the fundamental issue of development capacity across the industry and the ever-increasing cost of materials.
“From bricklayers to site managers, the lack of skilled construction workers and professionals in Britain is one of the largest factors that continues to constrain the supply of new homes. Until this is addressed, it is unlikely we will see a marked change to development volumes.”