Written statement to Parliament

Housebuilding

Eric Pickles' written statement to Parliament about housebuilding.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Sir Eric Pickles

I would like to update hon. Members on the actions that the coalition government have put in place on housing and planning, as part of our long-term economic plan. We have implemented a range of measures to get Britain building again, to fix the broken housing market and to help hard-working people get the home they want.

Key achievements

[Political content removed]

  • planning permission was granted for 216,000 new homes in England in 2013 to 2014 (source: DCLG analysis of Glenigan data)

  • new orders in residential construction have risen to their highest level since 2007 (source:Office for National Statistics)

  • housing starts in England are at their highest since 2007 and we have already delivered over 445,000 new homes since April 2010 (source: DCLG)

  • the number of first-time buyers is at its highest since 2007 (source: Halifax)

  • repossessions are at their lowest since 2007 (source: Council for Mortgage Lenders) the number of new mortgage arrears is at the lowest since the Bank of England’s data series began in 2007

  • new home registrations rose by 30% in 2013 in England, the highest since 2007; and are up 60% in London, the highest for over 2 decades [political content removed] (source: NHBC)

  • more council housing was started in London last year [political content removed] (source: DCLG)

  • the number of empty homes in England have fallen to a 10-year low, and the number of long-term vacant properties has fallen by around a third since 2009 (source: DCLG);

A locally-led planning system

The coalition government has reformed planning so it can deliver the homes and infrastructure people want and need, by working with, not against, local communities. Our planning reforms and the locally-led planning process are delivering real results and speeding up the system.

We have abolished [political content removed] regional strategies. Instead, the duty to co-operate introduced by the Localism Act requires local authorities and other public bodies to work together constructively, actively and on an on-going basis when they are planning for strategic cross-boundary matters in their local plans.

We have safeguarded national Green Belt protection and other important environmental designations, and given councils new powers to protect assets of community value, prevent unwanted garden grabbing and safeguard valuable green open spaces. The level of Green Belt development (land changing to residential use in the Green Belt) is at its lowest rate since modern records began in 1989.

Neighbourhood planning was introduced through the Localism Act, devolving down planning power to local people and helping them play a much stronger role in shaping their areas. Neighbourhood planning is proving very popular and over 1,000 communities have now applied for a neighbourhood area to be designated and 17 neighbourhood plans have passed referendum (with an average turn-out of 32% and an average ‘yes’ vote of 87%). Eleven of these plans are now fully in force, forming part of the statutory local plan, and giving communities real power to shape planning decisions.

The coalition government introduced the New Homes Bonus, which rewards housing growth through grants based on the Council Tax raised from additional homes and long-term empty homes brought into use. To date, over £2.2 billion of New Homes Bonus has been given to local councils. This has ensured that growing areas have had resources to meet the needs of new and existing communities. Local neighbourhoods with a neighbourhood plan will also benefit directly from the Community Infrastructure Levy.

The local plan making process was overhauled through the Localism Act. These reforms simplified plan-making, giving local authorities more choice in how they developed their local plans, and ensured that plan-making is more transparent. They also made clear that a Planning Inspector may only propose modifications to a local plan where requested to do so by the local authority, underscoring this government’s commitment to localism in practice.

Some 77% of local planning authorities have now published a draft local plan compared to only 32% of authorities in May 2010.

Streamlining the planning system and removing unnecessary burdens

The National Planning Policy Framework replaced over 1,000 pages of national policy to around 50, written simply and clearly. The planning guidance review streamlined planning guidance and reduced it from over 7,000 pages to a simple accessible online guide. This has made the planning system more accessible to local residents, local firms and local councillors, rather than it being the preserve of lawyers, NGOs and town hall officials.

To help deliver the new homes that families want, we have abolished Whitehall minimum density requirements and maximum parking standards, and stopped gardens being classified as brownfield land. This will ensure that the market can build more homes with the gardens and parking spaces that people want to buy.

The Localism Act abolished the Infrastructure Planning Commission and returned decision making for the biggest developments back to accountable Ministers. At the same time, we expanded the scope of the nationally significant infrastructure regime to allow the developers of certain business and commercial projects to take advantage of a fixed timetable and obtain many of the necessary non-planning consents at the same time.

We have reduced the number of applications that must be accompanied by a design and access statement and simplified their content. Changes to the Civil Procedure Rules have reduced the time period for submission of judicial review applications against planning decisions to 6 weeks. A new Planning Court is speeding up the handling of such cases.

The Growth and Infrastructure Act introduced legislation to designate poor performing local planning authorities. This power has intentionally been rarely used: 2 councils have now been designated in this way and 1 application has now been made directly to the Planning Inspectorate. This has significantly improved performance with latest figures showing that 74% of applications for major development were processed on time.

In this session of Parliament, we will augment these successful reforms to look at practical ways of removing excessive red tape, whilst ensuring environmental safeguards and continuing our locally-led approach.

The Infrastructure Bill will speed up the way that planning conditions are handled, so homes granted planning permission can start on site more quickly. We will seek to improve the engagement and performance of statutory consultees; and we will tackle the gold-plating of EU Directives.

Building more affordable housing

Over 170,000 affordable homes have been delivered in England since April 2010. Our Affordable Homes Programme will deliver 170,000 homes over the current spending review period (2011 to 2015), levering in £19.5 billion of public and private funding.

We have announced a new “Affordable Rent to Buy” scheme which will deliver affordable homes through a recoverable fund. The new Affordable Homes Programme for the next spending period will lever in up to £23 billion in public and private funding to deliver 165,000 homes from 2015 to 2018. This will be the fastest rate of affordable housebuilding for 20 years.

The Affordable Housing Guarantee Scheme is worth up to £3.5 billion (with further lending capacity held in reserve according to demand) and supported by up to £450 million grant funding in England. Up to 30,000 additional affordable homes will be under way by December 2017.

The first 8 housing associations to be approved to borrow through the scheme were announced in January 2014, with a further 8 announced on 30 May, which together will raise over £630 million of debt to facilitate the delivery of over 5,900 new affordable homes.

We also announced a European Investment Bank loan facility worth £500 million. On 30 May 2014, the first bond of the Affordable Housing Guarantees Scheme was issued by our delivery partner, Affordable Housing Finance, backed by a full faith guarantee from DCLG. The bond is worth £208 million and has achieved the lowest priced for debt in the affordable housing sector’s history.

The Right to Buy scheme, allowing eligible social tenants to buy their homes at a discount, has achieved almost 27,000 sales since April 2010. Since the discounts were increased in April 2012, Right to Buy sales have risen from 2,638 in 2011 to 2012 and 11,238 in 2013 to 2014.

The reinvigorated Right to Buy ensures, for the first time, that the receipts from the additional sales, that is those over what was forecast prior to the change, are reinvested in helping to fund new homes for affordable rent. This has generated £420 million in receipts for new additional housing.

A new generation of council housing

In 2012, the coalition government reformed the council house finance system, introducing self-financing for those local authorities that still own and manage their own housing. This system of self-financing has given local authorities greater freedoms and flexibilities to manage their housing and many are now starting to use those freedoms to build new council housing.

To further increase the supply of housing locally, we have also made available £300 million of additional Housing Revenue Account borrowing as part of the Local Growth Fund to help those authorities that need additional borrowing and want to deliver new affordable homes quickly. We are looking to local authorities, who need additional borrowing, to bid for that increase by 16 June 2014 and for schemes that would help to deliver 10,000 new affordable homes.

We have also commissioned an independent review to examine the scope for further reforms and changes to help promote local house building.

Supporting home ownership

The Help to Buy programmes have been actively supporting home ownership and new house building across all parts of the country, especially outside London.

Since April 2013, the Help to Buy: equity loan scheme has offered buyers a 20% equity loan that can be used towards the cost of buying a new build home, allowing people to buy with a 5% deposit. There were over 33,000 reservations and 20,548 completed sales across England by the end of April 2014, with funding for up to 74,000 sales by March 2016. To assist hon. Members, I have today published on my department’s website and placed in the Library a breakdown of Help to Buy: equity loan sales by postcode.

Alongside this, the Help to Buy: NewBuy scheme, launched in March 2012 has also supported a further 5,173 households to purchase new build homes by the end of March 2014. The Help to Buy: equity loan scheme was extended through the 2014 Budget announcement to 2020 to help 120,000 more households purchase a new build home.

The FirstBuy scheme was announced in the Budget 2011 to help support 10,000 first-time buyers on the property ladder. The scheme was replaced in April 2013 with Help to Buy. There were 11,590 FirstBuy sales to the end of March 2014; moving forward, this is now effectively part of Help to Buy.

Since the end of last year, the Help to Buy: mortgage guarantee scheme is providing up to £12 billion of government guarantees to support people to buy with a 5% deposit. Over 7,300 homes have (by the end of March 2014) been bought through this route. The 3 Help to Buy schemes complement each other, and their success can be taken together.

To help reduce costs for buying a home, the coalition government scrapped [political content removed] Home Information Packs which duplicated costs and were not trusted by buyers.

Building more homes to rent

The £1 billion Build to Rent Fund provides development phase finance to large-scale private rented sector developments. The fund is supporting new high-quality development purpose built for private rent and is on track to create up to 10,000 new homes.

The Fund received £1.4 billion of bids under Round One - this bidding round is currently expected to support up to 15 developments, providing around 2,550 homes across England in locations that presently include Durham, Liverpool, Manchester and London.

Five projects to the combined value of over £74.5 million are already in contract, delivering over 1,000 new homes for private rent; and construction has already started in Southampton (Centenary Quay) and Manchester (Three Towers). More contracts will follow.

Bidding for Round Two of the Build to Rent Fund was significantly oversubscribed receiving 126 bids to the value of around £3 billion. Thirty-five projects on the shortlist from Round Two are now undergoing a competitive due diligence process, with successful bids receiving funding to deliver thousands of new homes. A list of all shortlisted bids has been placed in the Library.

16 projects, with a combined value of circa £625 million, are already in detailed due diligence. Due diligence is a competitive process and the Homes and Communities Agency will continue to negotiate with projects until exchange of contracts in order to ensure value for money for the taxpayers.

In addition to direct funding, the coalition government’s Private Rented Sector Taskforce is continuing to build the private rented sector as an investment market and has helped to generate aspirations to invest over £10 billion of domestic and foreign investment in the private rented sector.

The private rented sector housing debt guarantee scheme will provide a government guarantee for up to £3.5 billion debt (plus an additional amount held in reserve) for borrowers investing in new build private rented sector homes across the UK. Specifically, the guarantees use the UK government’s hard earned fiscal credibility to reduce the cost of borrowing and incentivise investment in the sector. My department is open for business to issue direct private rented sector housing debt guarantees and continues to progress discussions with a number of borrowers looking to invest in large scale developments.

Following extensive pre-market engagement, on 18 March 2014 the department also launched a procurement exercise for a delivery partner for the private rented sector housing debt guarantees scheme, with the aim of increasing access for smaller borrowers and maximising take up of the guarantees. My department is currently evaluating bids to perform the role and expect the delivery partner to be in place in autumn 2014, approving its first borrowers in early 2015.

We are taking a range of action to tackle the small minority of rogue practices in the private rented sector, whilst avoiding the disproportionate regulation that would increase rents, reduce choice and supply for tenants, and choke off the increase in institutional investment.

Providing infrastructure and development finance

The £500 million Get Britain Building investment fund is providing finance to unlock smaller stalled sites. So far, it has helped kick-start nearly 12,000 new homes on stalled sites.

The Growing Places Fund is providing £770 million to deliver the infrastructure needed to unlock stalled schemes that will promoted economic growth, create jobs and build homes. The fund has been fully allocated to Local Enterprise Partnerships and the devolved administrations to fund local projects. Progress updates in June 2013 reported that £652 million of capital funding had been allocated to 305 projects across England. Local Enterprise Partnerships expect these projects to create 4,900 businesses, 94,000 jobs and 27,000 houses. A further update will be published in due course.

The Growth and Infrastructure Act also introduced legislation unblocking stalled sites for development and reconsideration of unrealistic section 106 agreements: such unviable requirements mean no housing, no regeneration and no community benefits.

The £474 million Local Infrastructure Fund is helping to unlock large-scale housing developments. To date we have helped find bespoke solutions bringing forward around 80,000 new homes. We are currently working to unlock further stalled schemes capable of delivering up to another 35,000 new homes. In addition to the capital investment, we have made available £13 million of capacity funding to support local authorities in fulfilling their local housing ambitions.

We have also published:

  • Builders Finance Fund prospectus: this £525 million fund will provide development finance for smaller sites to support the construction of up to 15,000 new homes; the prospectus has also recently been published

  • Large sites infrastructure programme prospectus: this £1 billion fund provides a programme of support over a 6-year period designed to address these barriers and help accelerate and unlock housing developments of at least 1,500 housing units that have slowed down or stalled completely

  • Local Growth Fund (Housing Infrastructure) prospectus: this sets out the detail on how to access the £50 million part of the Local Growth Fund in 2015 to 2016. It is designed to help speed up and restart housing developments between 250 and 1,499 units that have slowed down or stalled

  • Locally-led garden cities prospectus: this invites local authorities to put forward their ideas for how they wish to develop garden cities, how they wish to make use of the existing central government funding and support, and what other freedoms, flexibilities and support they need to make ambitious new garden cities a reality

We are creating an Urban Development Corporation for the Ebbsfleet area to accelerate the construction of a garden-city style development which will unlock up to 15,000 homes – with up to £200 million capital being made available. We have scrapped [political content removed] the eco-towns programme. which built nothing but resentment.

A new Estate Regeneration Fund of £150 million of recoverable investment will help kick-start and accelerate the regeneration of some of our most deprived estates. We are also working with the Greater London Authority to support the regeneration of Brent Cross and unlock 11,000 homes at Barking Riverside.

Promoting self-build and custom-build

[Political content removed]We are actively supporting the self-build and custom-build sectors, helping people design and build their own home.

We have also exempted self-build from the Community Infrastructure Levy and we have recently consulted on a similar policy change for section 106 tariffs. The £30 million investment fund for custom build homes has so far approved or is currently considering loan funding of £20 million.

At the 2014 Budget, we announced that we will consult on a new “Right to Build” to give self-builders a right to a plot from councils and we will shortly be identifying a small number of councils to act as vanguards to test how the Right to Build model will work in practice. We also announced a new £150 million investment fund to help provide up to 10,000 serviced building plots, and announced will we look to extend Help to Buy: equity loan to self-builders.

Getting empty and redundant land and property back into use

We have introduced a range measures to help get empty and surplus land and property back into productive use. We have abolished the [political content removed] controversial Pathfinder programme which sought to demolish homes and instead we have focused on refurbishment.

We are investing £160 million specifically to bring empty homes back into use. The New Homes Bonus rewards long-term empty homes being brought back into use and we have given councils the flexibility to remove tax subsidies given to empty homes, and use the money to keep the overall rate of Council Tax down.

The Public Sector Land Programme has identified land with capacity for over 100,000 homes which we aim to release to the private sector by March 2015. At the end of December 2013, we had released land capable of delivering 76,000 homes to be built.

Through the strategic land and property review we have identified scope to generate £5 billion of receipts from government land and property between 2015 and 2020. This will put land and property into the hands of those who can exploit them for commercial purposes, supporting deficit reduction and creating opportunities for housing and economic growth.

The National Planning Policy Framework makes clear that planning should encourage the effective use of land by re-using brownfield land provided that it is not of high environmental value, and that local councils can set locally appropriate targets for using brownfield land. We have also amended planning guidance to stress the importance of bringing brownfield land into use.

The new Right to Contest builds on our existing Community Right to Reclaim Land, which lets communities ask that under-used or unused land owned by public bodies is brought back into beneficial use. This new right applies to sites currently in use, but which are not vital for operations. It gives businesses and members of the public an opportunity to challenge government on the best use of its estate.

Changes to Community Infrastructure Levy rules now provide an increased incentive for brownfield development, through exempting empty buildings being brought back into use. We have also published proposals to lift section 106 burdens on vacant buildings being returned to use.

We have reformed permitted development rights to free up the planning system and encourage the conversion of existing buildings. The changes help support town centres, the rural economy and provide much-needed homes. These include:

  • changing offices to homes to bring underused offices back into effective use and provide new homes

  • change of use from existing agricultural buildings to a range of new business uses giving rural communities more opportunity and incentive to diversify their operations and contribute towards rural prosperity

  • change of use to a state-funded school or registered nursery from a range of premises; a new temporary change of use also allows buildings in any use class to be used as a state-funded school for 1 academic year to ensure that the opening of new schools is not delayed by the planning system

  • change of use from shops to banks and building societies making best use of existing premises, promoting a diverse and vibrant high street

  • change of use from shops or financial and professional services to homes and limited associated building works to make best use of existing premises, provide new homes and revitalise the high street

  • change of use from agricultural buildings to up to 3 homes and limited associated building works giving rural communities opportunity to bring forward new homes and make best use of existing buildings

  • larger extensions to homes, offices and shops allowing homeowners and businesses to invest in their homes and premises to adapt to changing circumstances without having to move; these larger home extensions are subject to a light-touch neighbours’ consultation scheme to protect the amenity of neighbours

To assist extensions and home improvements, we have also exempted them from Community Infrastructure Levy, stopped plans for a so-called ‘conservatory tax’, stopped any Council Tax revaluation which would have taxed home improvements, and introduced a new national council tax discount for family annexes.

We will consult in the summer on a package of proposals including:

  • change of use from warehouse to residential, from light industrial to residential, and from some sui generis uses to residential
  • a wider retail use class (excluding betting shops)
  • relaxations for change of use from retail use to restaurant use and assembly and leisure uses, and larger mezzanines in retail premises where it would support the town centre
  • greater flexibilities to erect ancillary structures in car parks and reconfiguration of loading bays within existing car park boundaries, to help local shops
  • consolidating the General Permitted Development Orders into a single new Order

We will announce further proposals to help regenerate brownfield land shortly.

Conclusion

There is more to do, but I hope this illustrates how this government’s long-term economic plan is building more houses, giving more power to local communities, and helping people move on and up the housing ladder.

Published 13 June 2014