At the end of January 2023, Building Magazine published the Building the Future Commission’s “Long-Term Plan for Construction” Report (“the Report”). The Report sets out eleven “Headline Recommendations” (“the Recommendations”), for both the Government and the Construction Industry, which it believes allow for the creation of a long-term plan for the UK’s built environment, as well as the overall economy. This article will focus on two key Recommendations which are of particular importance to developers and consider their potential implications.
Background
In September 2023, the Building the Future Commission (“the Commission”) released their interim findings following extensive examination of the challenges facing the construction industry and radical solutions for overcoming these.
As part of these initial findings, the Commission identified eight ‘major challenges’ for the construction industry. Notably, these included constant changes in policy from central government, which has hindered the private sector’s ability to plan and invest over the long term. Further, the Commission highlighted the role of successive housing secretaries in politicising housebuilding which it states has fuelled the supply crisis.
Following further consultation on the initial findings, the Commission now has published the Recommendations as part of its plan to overcome these challenges, with a long-term strategy.
Reform the Planning System and its funding
Recommendation 2 sets out the importance of a properly resourced planning system. At first glance, this seems a much needed and welcome recommendation. However, it suggests providing councils with the powers to ‘raise fees for full costs’ as a solution. Clearly, for developers, this has the potential to lead to significant increases in the costs of development. The cost of the planning process can already have a significant impact on the viability of a development.
Additionally, the Commission calls for local plans to be put in place by ‘revisiting the formulation of the presumption in favour of sustainable development,’ as introduced by the National Planning Policy Framework. Again, this could create difficulties for developers as it will undoubtably limit the types of work that can carried out, and the costs of implementing such works.
Adoption of Recommendation 2, therefore, may result in adding new challenges for developers, as it will limit the types of work possible whilst increasing overall development costs.
Act to increase affordable housing output
Recommendation 9 states that the Government ‘must act’ in tackling the shortage of affordable housing. It suggests both reviewing existing funding settlement for affordable housing and, importantly, suggests that ‘short-term’ stimulus packages, ‘government guaranteed’ loans and ‘investment incentives’ should be considered.
These measures would, undoubtably, make investment in affordable housing development far more attractive. To this end, developers should be alert to any potential adoption of Recommendation 9, at both a local and national level, in order to be prepared to reap the full benefit of any, or all, measures from which they may benefit, especially in relation to those, such as the stimulus package, which may be time limited.
Conclusion
It is uncertain to what extent, if at all, the Recommendations will be adopted by the Government or the Construction Industry in the long term. Developers should keep up to date with changes in policy, at both a national and local level, as well as changes to industry practice, in order to act quickly in obtaining the full benefit, or mitigating the potential detriment, of any such changes should they arise.
If you have any questions arising from this article, please contact our construction team.
