It has been 6 weeks since the outcome of the vote on whether Britain should remain in or leave the European Union.
Whilst the initial shock may be wearing off, the dust has far from settled as the country gets down to the business of trying to practically realise “Brexit means Brexit,” whilst not really having any indication of what that actually means.
In planning and property terms we may have all gulped when, within the hours following the referendum result, the public listed developers had all lost 20-25% of value. Whilst the knee-jerk nature of this response is stabilising, the Glenigan index highlights that construction starts have fallen in the aftermath of Brexit with residential starts 10% lower than a year ago and 36% down on the preceding three months.
However, all is not doom and gloom in the planning and property sectors and there are a number of reasons why small to medium sized developers should feel hopeful.
It is not all change in planning:
Teresa May mentioned in her inaugural speech as PM that housebuilding remains on the agenda. And with the Conservatives still at the helm it is likely we can expect continuity in planning. Most recently Gavin Barwell, the new planning minister, was urged by the Community and Local Government Committee to pick up where the previous administration left off and provide his feedback on reforming the legislative and local plan making process. He has also been asked to confirm his position on the review of the consultation on the NPPF which finished earlier in 2016 and has confirmed a response will be given by autumn.
In terms of of the Brexit impact on planning legislation, contrary to popular opinion, there is very little EU legislation that negatively affects planning in England. So if you are delaying your development project in the hope of more liberal planning laws, it is unlikely they will be coming anytime soon and certainly not as a result of the referendum.
Where Brexit may help is in viability assessments. We are already aware of Westminster City Council accepting a developer’s request to pay a £9 million affordable housing contribution in phases due to ‘current uncertainties in the financial and debt markets created by Brexit’.
Brexit hasn’t altered the fact that we have a national housing shortage:
There is still a national housing shortage and therefore national planning policies that seek to significantly boost housing supply continue to be relevant.
The pre-Brexit stats that informed UK estimates of housing need already allowed for a 45% drop to total net-in-migration by 2021. So Brexit’s promise of potentially greater control over immigration is unlikely to reduce the ever growing demand for housing.
Furthermore, should the slowdown of housing delivery from the national housebuilders have an impact on 5 year housing supplies, this will open a need for more 5 year land supply sites. Locations, such as Uttlesford, which can only deliver a 5.1 year supply of sites, are becoming increasingly vulnerable.
It is likely therefore that there will be an increasing need for smaller sites to enable delivery of housing as these are less exposed to the financial markets and can be delivered without the infrastructure burden.
And national inquiries suggest further support for SME developers:
Recently the Communities and Local Government Committee launched an inquiry into the capacity of the homebuilding industry to meet demand for new homes. The inquiry is ongoing and written submissions are requested before the 12th September 2016.
The terms of reference for the inquiry will focus on a number of areas, but of particular interest are:
- The structure of the homebuilding industry, in particular the role of small and medium-sized developers;
- Innovative approaches to increasing the housing supply, for example self-build, off-site construction and direct commissioning.
Furthermore a call for evidence has been launched by the National Housing Taskforce on supporting new sources of housing supply, including small, self, custom and community-led builders. Submissions are requested by the 21st September 2016.
It is clear that there is a real energy to explore small and medium sized developers as being part of the solution in helping to alleviate the British housing crisis.
In the current period of uncertainty there may also be an opportunity for small and medium sized developers to take advantage of any unexpected land sales, or lack of competition for land purchases during the next few months.
If you want to explore the development potential of your site and are interested to know more about inclusion in local plans, the presumption in favour of sustainable development, or how ongoing policy changes may affect you then don’t hesitate to contact the knowledgeable team at Plainview via firstname.lastname@example.org or alternatively 01242 501003.