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Local homes for local people
Housebuilder – October 2010

Mark Smulian talks to housebuilders, planning consultancies and local councillors about the effect of the new localism policy and the potential opportunities and pitfalls for the industry

"Be careful what you wish for", the old saying goes. Housebuilders who reviled the regional planning system have seen it abolished, only to be replaced by what sounds like their worst nightmare.

The coalition's localist policy will allow councils to choose their housebuilding totals, and since the chorus of nimbys usually drowns out anyone else, this change has stoked fears that little will get built in areas of high demand.

Things will not though be left entirely to local political pressures, as housing minister Grant Shapps has said that councils that permit development will get a financial bonus from the government.

The details are yet to come, but in opposition the Conservatives said it would be the equivalent of the council tax paid on each new home for six years.

tidy sum

If that happens it could raise a tidy sum for a council. Say 100 new homes are built in its area each paying average Band D council tax, that's 1.4 million before one adds on section 106 agreements and contributions from the new tariff.

Councils face alarming financial stringency as the spending cuts bite, so in theory they should be beating down housebuilders' doors in their eagerness to get new homes built.

But not all will. Just look at what has happened since communities and local government secretary Eric Pickles told councils in June they could ignore the regional spatial strategy figures when deciding on local building totals.

It was as if Christmas had come for the anti-building lobby. Take Aylesbury Vale District Council, which is in the Milton Keynes South Midlands growth area. In September councillors unanimously voted to tear up its core strategy, which had required 26,890 new homes by 2026. It now seeks fewer than half that total at 12,700, of which 8,000 already have planning permission.

Carol Paternoster, cabinet member for planning, says: "We have always had our housing numbers imposed on us through the regional strategy and, if you go back far enough, by county structure plans. Now, for the first time in many years, we can set our own housing numbers."

South and West Oxfordshire were the first councils to halt their core strategies. Even outside the pressure points of the south there is a similar story, with Derby, South Derbyshire and Amber Valley having suspended their joint core strategy and Stafford expected to plan only for its own needs, not inward migration.

What is a housebuilder to do? One willing to discuss his strategy anonymously says: "We will be targeting those local authorities that we think will be most receptive to new building, and we think those will be the ones with relatively healthy balance sheets, because those that are in difficulties are probably in difficulties for a reason.

"I'll be looking for those with strong leadership and a clear policy direction and I have people ready to research councils' financial positions.

"We expect to start with councils where we have land with options for building, by seeking to meet the leader and chief executive to talk about what they want and what we can offer."

benefiting the locals

Consultants who have helped developers win public backing for projects naturally stand ready to guide them through this new approach. Ian Thorn, md of Meeting Place Communications, says: "For financial incentives to work there must be a very clear demonstration of how that cash would benefit local residents.

"That is absolutely critical or there is a danger of nimbys saying that the sums are not enough to compensate for the effects of development." Thorn says the financial incentive could be earmarked for, say, a bypass or school, but not simply for the council's coffers.

"Local authorities where one party has a large majority will look very seriously at the issue of gaining financially from residential development," he predicts. "If they have elections every four years, rather than every year where you are in perpetual campaigning mode, they may reckon they can afford to lose a few seats because they can see the benefits development will bring."

Tom Curtin, md of Curtin & Co, thinks the government's effective cap on council tax rises will see "councils look elsewhere for funds, and development will be their first port of call".

He explains: "Housebuilders are going to have to get more savvy in the way they come at things. It used to be they would argue at an RSS examination-in-public and see who won, but now they have got to get under the skin of communities and show the benefits.

"There is no such thing as a generic community, so there is no point in assuming that 'communities' will automatically oppose them, they must go down there and talk to local people and ward councillors and understand what they want."

The message is that most communities are persuadable if they can see a tangible benefit from housebuilding, and so will most councils be if they can see money coming their way.

Indeed, since the financial incentive will be paid for out of total local government spending, councils that shun development will in effect subsidise those that welcome it.

Success in this system means builders need to know less about spatial planning technicalities and more about the perhaps unfamiliar areas of local politics, council finances and public opinion.

What council leaders think

John Fuller (Con) South Norfolk

"Clearly not everyone is against development, the concern is more about the concentration of it. "The objections come against large anonymous estates. I think we may get improved design from this change of policy, with more local vernacular styles rather than something that could have been built anywhere.

"I can see builders might be in a muddle if they have bought land where they can only recoup their investment by building at high density because that is something people really don't like, it's not even the number of homes they dislike so much as the density.

"We are reviewing our allocation of 21,000 homes by 2026 and I think that will be reduced, but there is no way builders were going to build that many anyway."

Neil Parkin (Con) Adur

"The financial incentive really gives us an incentive to build. We know we will need more homes for our kids to live in and we can't stop building just because of nimbys. I'm quite excited by this. "We will be able to tell people that building will allow us to maintain services that people love when we otherwise could not afford to."

Keith House (Lib Dem) Eastleigh

"Councils that take their housing responsibilities seriously will feel liberated by being able to meet their local objectives. Quite a lot though will see if they can get away with no housebuilding.

"I don't think the financial incentive will make much difference. In very simple terms if a council does not want to build a few thousand or even a few hundred thousand pounds is neither here nor there in the scheme of things and would not be enough to make a difference to the local politics. "We will be reviewing our figures but we do want to meet our housing demand."