CIH response to Planning Reform Working Paper: Reforming Site Thresholds

1. Would a medium-sized site threshold help reduce barriers and accelerate delivery for SMEs, if linked to the proposed changes to regulatory requirements set out in the working paper?

Yes.

We support the government’s commitment to supporting small and medium builders (SMEs) through the proposals in this working paper. Research has shown the value of SME housebuilders, with specialist skills to help tackle trickier sites, strong local relationships, and commitment to supporting local communities by meeting local housing needs. We have a desperate need for more genuinely affordable housing, and to meet the government’s 1.5 million homes target, we must ensure that all housebuilders are supported to boost development and deliver the homes we need. Further views are outlined in our response to the Planning Reform Working Paper: Speeding Up Build Out.

Our members have reflected views that a medium-sized site threshold would help to reduce barriers and accelerate delivery for SMEs, alongside other measures to support SMEs, further outlined in question 13. However, it is important to note that these changes would not help to boost the delivery of sites in rural areas, which are often on rural exception sites of more than ten dwellings, which experience similar delays, risks and costs as smaller rural exception sites. Thus, we would support calls for rural exception sites of ten to twenty dwellings to be included in the Minor Development Classification. Further details on reforms needed for rural housing and other points on thresholds can be found in our National Planning Policy Framework (NPPF) response, linked below.

See research: LSE, Supporting SME Housebuilders: Challenges and Opportunities, Nov 2024. https://www.lse.ac.uk/geography-and-environment/research/lse-london/documents/Reports/Supporting-SME-Housebuilders-nov24-A5-proof4.pdf

See CIH response to the NPPF: https://www.cih.org/publications/cih-submission-to-the-consultation-on-proposed-reforms-to-the-national-planning-policy-framework/

2. Should the threshold be 10–49 units, or could other size ranges provide a better balance of simplicity and impact?

Not applicable.

3. Should the medium threshold apply to commercial and other non-residential development and how should mixed uses be reflected?

Not applicable.

4. If the medium-sized site threshold were introduced, should the exemption from paying the proposed Building Safety Levy for fewer than 10 dwellings be extended to align with medium-sized development sites?

Not applicable.

5. Should there be solely area-based size thresholds (ha) given the different contexts and densities, particularly for very small, small and medium-sized sites? Or would it be more appropriate to also specify a unit size threshold?

Not applicable.

6. Are the proposed streamlining options the right ones for government to consider?

Not applicable.

7. Are there further changes that could and should be linked to new or existing thresholds? Are there wider changes that could be made through national planning policy that would be beneficial?

As noted in our response to the NPPF (linked below), we support calls from rural housing colleagues for thresholds for affordable housing delivery to include sites of less than ten dwellings in parishes fewer than 3,000 population. Changing policy to allow these contributions to be secured would in addition reduce the cost of sites and sales of the affordable homes and guarantee a cashflow for SME builders.

See CIH response to the NPPF: https://www.cih.org/publications/cih-submission-to-the-consultation-on-proposed-reforms-to-the-national-planning-policy-framework/

8. Is the planning application process for small sites more challenging on brownfield land than greenfield land? If so, then what are these challenges or barriers?

Not applicable.

9. Are the determination periods detailed in this working paper the correct ones? Would shorter determination periods be appropriate for a particular site size once wider reforms to planning fees have been implemented - including those set out in the Planning and Infrastructure Bill?

Not applicable.

10. What are the specific barriers SMEs face during s.106 agreements and what would be the most effective action for government to take, in line with its manifesto commitments on affordable housing?

At CIH, we have been working with our members and sector partners to determine the current barriers in the Section 106 process, which may disrupt the delivery of affordable housing (nearly half of affordable homes have been delivered through Section 106 in recent years, according to the UK Housing Review). Whilst there are difficulties for all parties in the process (with our members outlining the “perfect storm” of issues), there are specific concerns for SMEs. Section 106 agreements are often resource-intensive and require legal expertise for complex negotiations on financial viability. This often means the process favours large developers, who have the resource and skills that both local authorities and SME developers do not have. This means Section 106 agreements can be difficult to secure for smaller sites, as SMEs are often the housebuilders best equipped to deliver on these smaller developments, but have the above barriers to operating in the Section 106 process effectively.

There have been a range of proposals for improving the Section 106 process, including guidelines outlined by the G15 and L&Q (link below). From our member engagement, it is clear that the most effective way to improve the Section 106 process is for early engagement between local authorities, developers and housing associations, to establish clear expectations and develop relationships for future development initiatives. This would favour SMEs as they often have strong existing relationships with local partners and communities. However, this would also require additional support for SMEs to compete within the Section 106 market, as further outlined in question 13.

See G15 and L&Q guidelines: https://g15.london/news/g15-publishes-guidance-for-developers-on-s106

11. What are the barriers to developing very small sites as defined above and what parameters could be helpfully addressed in a design code?

Not applicable.

12. What types of rules set out in design codes would be most beneficial in unlocking development?

Not applicable.

13. Are there other issues or opportunities to consider for ensuring the success of these proposals?

As a broader point, it is important to note the significant factors impacting upon development in recent years, and where further support is needed to boost the delivery of affordable housing. Research by LSE (linked below) outlines some of the barriers for SMEs, including the planning system, land market, insufficient access to finance, labour availability and the cost of materials. This follows wider financial and political uncertainty in the housing and construction sectors, as constant policy changes and external shocks (such as interest rate changes and supply chain disruptions) have impacted upon the speed and ability to develop. These pressures are particularly acute for SMEs, who do not have access to the resources or support of the larger housebuilders, and are outlined in HBF’s SME: State of Play report (linked below).

We welcome the government’s recent introduction of the Small Sites Aggregator initiative, to address concerns about unlocking small sites for development. One of our members outlined that they focus their work on underused parcels of land that are often overlooked, but can be some of the quickest to complete in local partnership. These initiatives have been historically under-supported, but the Small Sites Aggregator initiative shows that, with the right support, these small sites can unlock significant social value and contribute to tackling local housing needs, in which SME housebuilders can play a significant role.

See research: LSE, Supporting SME Housebuilders: Challenges and Opportunities, Nov 2024. https://www.lse.ac.uk/geography-and-environment/research/lse-london/documents/Reports/Supporting-SME-Housebuilders-nov24-A5-proof4.pdf

See report: HBF, SME: State of Play report, December 2024. https://www.hbf.co.uk/news/hbf-report-state-play-challenges-and-opportunities-facing-sme-home-builders/

14. Do you anticipate any environmental impacts from these proposals that the government must consider under the Environmental Principles Policy Statement?

Not applicable.

15. Do you have any views on the impacts of the above proposals for you, or the group or business you represent and on anyone with a relevant protected characteristic? If so, please explain who, which groups, including those with protected characteristics, or which businesses may be impacted and how. Is there anything that could be done to mitigate any impact identified?

Not applicable.