Building Blocks: Can the Government hit its housing targets?

The new Government has set an ambitious target of delivering 1.5 million new homes over a five-year period – at a rate that hasn’t been achieved since the 1960s – and has put planning reform at the heart of its agenda. But successive governments have aimed high, but delivered low, when it comes to housebuilding. Overcoming this record will require a lot of capital expenditure, in both political and cash terms.

What are the devils in the detail when it comes to getting controversial planning reforms right? What other interventions might be needed to enable firms to build new properties at scale? Where should new homes be built, and what role should social housing play? And how will future homeowners – and their neighbours – be affected by a successful housebuilding drive?

1. Building Blocks Can the Government hit its housing targets? James Shuttleworth, Head Of Planning at Salford City Council Sam Stafford, Planning Director at the Home Builders Federation Camron Aref-Adib, Researcher at the Resolution Foundation Chair: Lindsay Judge, Research Director at the Resolution Foundation September 24 @resfoundation

2. @resfoundation Building Blocks Can the Government hit its housing targets? 12 September 2024 Camron Aref-Adib, Researcher, Resolution Foundation

3. 3 Number of net additional dwellings: England, 1971-2023 Notes: Net additional homes is calculated using calendar year data pre-1990. Source: RF analysis of MHCLG, Live table 104. Putting the 1.5 million target in context: achieving it would be unprecedented

4. “An overhaul of the planning system” Reintroduction of mandatory housebuilding targets for local planning authorities Release of lower quality ‘grey belt’ land from the Green Belt for development More pressure on councils who fail to keep their local plans up-to-date Reform of compulsory purchase compensation rules to make acquiring land cheaper 3 00 extra planners P lanning , planning, planning 4 Quick recap of what the Government has announced @resfoundation

5. Why focus on planning?

6. 6 Average annual major dwellings approval rate, bottom 10 and top 10 local planning authorities: England, 2004-05 to 2023-24 Approval rates range from under 60 per cent in most restrictive local authorities, to over 90 per cent in the least restrictive. Notes: National parks are not included. Isles of Scilly and City of London corporation not included due to small number of overall applications. ‘Major’ refers to planning applications for 10 or more dwellings. Planning decisions made by development corporations are excluded. Source: RF analysis of MHCLG, District Planning Application Statistics (PS2). @resfoundation 1. The planning system is highly discretionary

7. 7 Average number of completions per 1,000 dwellings and major dwellings applications/approvals per 1,000 dwellings by local planning authority: England, 2009/10-2023/24 Notes: Major refers to planning applications for 10 or more dwellings. Bin scatter plot used with local planning authorities separated into 20 bins. Planning decisions made by development corporations are excluded. Source: RF analysis of MHCLG, District Planning Application Statistics (PS2); MHCLG, Live Tables253a; MHCLG, Dwelling stock by tenure and local authority, England. @resfoundation 2. There is evidence that areas that approve more, build more

8. 8 Average number of completions per 1,000 dwellings and major dwellings applications/approvals per 1,000 dwellings by local planning authority: England, 2009/10-2023/24 Per 1,000 dwellings, average authority in top half of approvals has seen over 50 per cent more completions compared to average authority in bottom half. Notes: Major refers to planning applications for 10 or more dwellings. Bin scatter plot used with local planning authorities separated into 20 bins. Planning decisions made by development corporations are excluded. Source: RF analysis of MHCLG, District Planning Application Statistics (PS2); MHCLG, Live Tables253a; MHCLG, Dwelling stock by tenure and local authority, England. @resfoundation 2. There is evidence that areas that approve more, build more

9. 9 Land value estimates, £ per hectare, by type of land use and region: England: 2019 Notes: Figures presented here are an average across local authorities in each region. For residential land values, all non-London residential developments use figure calculated on the basis of 35 units, with a total floorspace of 3150 square meters, whereas in London assumptions differ on units and floorspace by local authority. Source: MHCLG, Land value estimates for policy appraisal 2019, August 2020. @resfoundation 3. The scale of the uplift in the price of residential land suggests an uncertainty premium, with planning the constraint

10. 10 Digging deeper into the Government’s planning reforms @resfoundation

11. 11 Average percentage change in local planning authority housing targets between existing and revised method, by decile of house price to earnings ratio: England, 2024 Notes: House price to earnings ratio deciles are calculated using a three year average of the latest published ONS data (2020 to 2023) for the workplace-based median house price to median earnings ratio by local authority (in line with the measure used to calculate local housing need). Source: RF analysis of MHCLG, Outcome of the proposed revised method, August 2024; ONS, Housing affordability in England and Wales: 2023. @resfoundation 1. Changes to housing formula has increased targets in more affordable areas of England…

12. 12 Total change in local planning authority housing targets between existing and revised method, by decile of house price to earnings ratio: England Notes: House price to earnings ratio deciles are calculated using a three year average of the latest published ONS data (2020 to 2023) for the workplace-based median house price to median earnings ratio by local authority (in line with the measure used to calculate local housing need). Source: RF analysis of ONS, MHCLG. @resfoundation 1. …but in levels term we’d still build more in unaffordable areas

13. 13 Estimated number of homes that could be built on brownfield, ‘grey belt’ land, and remaining homes that would be required to meet the Government’s targets: England Equivalent of: an additional 2,100 hectares of currently undeveloped land (larger than the 'grey belt’) O R 44 per cent of brownfield and 'grey belt' homes increased in height by one storey Source: RF analysis of MHCLG, Land use statistics. @resfoundation 2. Land for a further 320,000 homes would be required, after a brownfield and ‘grey belt’ first approach

14. 14 Percentage change in real local government net expenditure, by service: England, 2010-11 to 2019-20 300 additional planners would reverse less than 10 per cent of the total fall in public sector planners since 2010. Source: Royal Town Planning Institute, State of the Profession 2023. @resfoundation 3. Right to focus on capacity but need to go much further

15. 15 Planning reform is necessary, but arguably not sufficient to hit the Government’s housing target @resfoundation

16. 16 Number of housing units granted planning permission and housing starts: England In 2023, there were over 80,000 fewer starts compared to the number of housing units that were granted planning permission. Source: Glenigan planning permission data: snapshot as at 23 May 2024; MHCLG, Table 244. @resfoundation Planning reform should not be viewed as a silver bullet

17. 17 Number of permanent dwellings completed, by tenure: England, 1946 to 2023 At the peak of housebuilding in 1968, 42 per cent of new homes were built through the public sector. By 2023, just 24 per cent of new homes were built by local authorities or housing associations. Notes: This measure relates to total number of completions of new dwellings, and does not for example include the effect of demolitions or changes of use on the housing stock. Source: DLUHC, Live table 244. @resfoundation We can’t get away from the need for direct public investment

18. 18 Number of additional affordable homes built, by tenure and funding type: England Assuming similar ratio of building through S106 would suggest around 40,000 additional affordable homes (if target reached). But developers might try to negotiate this down. Source: RF analysis of MHCLG, Live Table 1000. @resfoundation …which will also be critical for housing mix

19. The Government’s focus on dramatically increasingly housing supply is encouraging given the acute housing affordability pressures across the country. Planning system has a central role in 1.5 million target. Given highly discretionary and varied way planning policy currently operates, reform of the planning system is a plausible route to boosting housebuilding. H owever , planning reform alone is unlikely to deliver either the scale of housebuilding or the tenure mix the Government hopes to achieve. U ltimately , planning reform must be delivered alongside direct investment into social housing, and next year’s Spending Review marks a critical juncture for this. 19 Conclusion @resfoundation

20. Building Blocks Can the Government hit its housing targets? James Shuttleworth, Head Of Planning at Salford City Council Sam Stafford, Planning Director at the Home Builders Federation Camron Aref-Adib, Researcher at the Resolution Foundation Chair: Lindsay Judge, Research Director at the Resolution Foundation September 24 @resfoundation