Osborne to Change Planning Rules to Speed U.K. Homebuilding

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U.K. Chancellor of the Exchequer George Osborne and Business Secretary Sajid Javid announced a plan to overhaul planning laws to accelerate housing construction as a shortage of new homes drives up prices.

The proposals include a “zonal” system that will give automatic planning permission on some so-called brownfield sites, the Treasury in London said in a statement Friday. It will also give the government greater compulsory-purchase power and more authority to intervene with planning decisions of local authorities.

“We’ll make sure the homes that are needed get built,” Javid said in the statement. “If a council fails to produce a suitable local plan, we’ll have it done for them.”

Home construction has lagged behind demand as the U.K. population increases and government measures spur purchases. Homebuilders and industry analysts have cited slow planning decisions by local authorities as a reason that building has fallen short. The new plans would allow the government to penalize local councils that make fewer than 50 percent of their planning decisions on time.

“The raft of planning announcements today really hit the nail on the head for a number of planning issues,” Melanie Leech, chief executive of the British Property Federation, said in a statement Friday. “However, we strongly urge government to begin a dialogue with both the public and private sectors on how to address the severe shortage of funds which is afflicting local planning departments.”

Devolved Powers

The government proposals also include devolving planning powers to the mayors of London and Manchester and will require higher-density development around key commuter hubs. In London, the changes would remove the need for a homeowner to get planning permission to extend their property to the height of an adjoining building.

England needs about 245,000 new homes a year to keep up with growing demand, Bloomberg Intelligence reported, citing the National Housing Federation. On average, about 115,000 properties were completed in each of the last five years.

There is enough previously developed land, known as brownfield, in England to build 226,000 homes by 2019, the Royal Institution of Chartered Surveyors said in April.

“That only represents one year of supply of what is actually required,” said James Pargeter, head of residential projects at Deloitte Real Estate. “It won’t be enough to address the full spectrum of the housing-market needs on its own.”

Contaminated Land

Some brownfield land is badly located for homes and the cost of decontaminating a number of the land plots may make them unviable, he said.

The government has boosted housing demand through lending assistance programs such as Help-to-Buy. It has also promised to give 1.3 million poorer families the chance to buy homes rented from housing associations. Both plans have been criticized for boosting demand while failing to address the lack of supply.

Berkeley Group Holdings Plc, London’s biggest homebuilder, saw deliveries of new homes fall by 5 percent in the year through April to 3,555. Barratt Developments Plc reported a 10.8 percent increase in completions in the year through June.

The Bloomberg U.K. Homebuilder Index has increased about 29 percent this year.

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