"The number of permissions being granted is a strong indicator of future housing supply and will feed through into completed new homes in the years to come"
Permission for 293,127 new homes were granted in 2016, the highest yearly total since the HBF Housing Pipeline survey began in 2006 and a strong indicator that increases in house building are set to continue.
The number of permissions granted tends to be reflected in the number of homes being completed around three to four years later – a delay indicating the time taken to navigate the planning system from an initial, outline planning permission to the point where actual building work can start.
The industry welcomes the fact that Local Authorities are continuing to increase the number of permissions they are granting but there is concern that the number of sites permissioned is falling by 11% compared with 2015 (from 19,600 in 2015 to 17,500 in 2016) indicating permissions are being granted on larger ‘strategic’ sites. Whilst the headline number of plots permissioned now exceeds the pre-crash peak by around 15%, the number of sites on which those homes could eventually be built is down by more than 10% on the same time period.
Because of the infrastructure requirements on larger sites, these permissions tend to take longer to start being delivered. It is also key that Local Authorities are realistic about the rate at which large sites can deliver and don’t expect one large site to address their housing requirements. As per the Government’s Housing White Paper, local authorities need to work with developers to determine accurate build out rates so they can accurately predict the number of homes are being delivered on a site- and thus overall housing delivery in their area.
The average permissioned site has increased by 16% in the last 18 months as local authorities, with ever-stretched resources focus their attention on larger sites. This highlights the problems small housebuilders have in finding suitable sites and progressing them through the planning process, issues explored in the recent HBF report, Reversing the Decline of Small Housebuilders, which found that returning even to 2007 levels of SMEs in the sector could boost housing supply by 25,000 homes per year. The Housing White Paper took on one of the report’s recommendations, calling for local authorities to provide a mix in the type and size of sites it is granting permission for- and not rely on a few large sites.
Whilst housing supply is up 52% in the past three years we are still not delivering enough homes to adequately cater for our population and the planning system remains one of the major constraints on supply. Speeding up the rate at which builders get onto sites, and ensuring Local Authorities abide by their responsibilities and allocate sites that meet their local housing needs are key requirements if the house building industry is to deliver much needed housing.
Stewart Baseley, Executive Chairman of the HBF, said: “We welcome the fact that local authorities continue to increase the number of planning permissions being granted. The number of permissions being granted is a strong indicator of future housing supply and will feed through into completed new homes in the years to come.
The drop in the number of sites on which the permissions are being granted on is concerning. As the White Paper indicates, we need to ensure that permissions are being granted on a mix of site sizes and that local authorities are not reliant on one or two large sites. A mix of site sizes will better ensure a flow of housing completions and also enable SME builders to play their part in delivering new homes.”
Allan Wilén, Economics Director, Head of Business Market Intelligence at Glenigan said; “The strong level of unit approvals during the final quarter of 2016 takes the number of new homes securing planning approval last year to its highest level in over a decade. Growth has been largely driven by private housebuilders and the strong development pipeline demonstrates developers’ confidence in the long term prospects for the UK housing market. Encouragingly the fourth quarter also saw a recovery in social housing project securing approval.”