Understanding the UK Planning Process and Housing Crisis
If you’re wondering how long the planning process takes, here’s a quick answer: typically, it takes around 8 weeks for household applications with minor proposals, or about 13 weeks for medium developments. However, for large applications, especially those subject to an Environmental Impact Assessment or significant size, the timeline can extend to around 16 weeks. These are general guidelines; in practice, delays are common.
The UK faces more serious planning challenges regarding housing than any other country. The housing crisis is not a short-term issue or merely a consequence of the financial crisis; it has persisted for over 45 years, leading to rapid increases in house prices—faster than any OECD country. This crisis has resulted in a significant and growing housing deficit, with 40% of newly built homes considered smaller than those in other densely populated European countries.
In the Greater London Area (GLA), average prices have risen by £65,200 annually since March 2015. In recent years, capital gains for average London homeowners have surpassed those for renters, pushing lower-income individuals out of the city. This crisis has also led to a consistent decline in employment in inner London since 2011. While the UK planning office is working on solutions, the issues remain. In this post, I will outline the various challenges and the government’s ongoing solutions.
The Flaws in the Current System
The UK housing policy is constrained by three key factors:
- Development Control System: The UK operates a development control system that is inherently driven to limit development. Unlike the rule-based zoning system used in most of the world, any alteration or change of land use requires development control permission at the local level. This process is complicated by Section 106 agreements, which necessitate extensive negotiations between local authorities and architects.
- Inadequate Local Revenue: Local authorities receive insufficient revenue to support residential development. The situation is exacerbated by an equalisation system that offers little benefit to local authorities from permitting development while they bear the burden of local congestion.
- Restrictions Since 1947: Since the Town and Country Planning Act of 1947, residential development has been continuously constrained.
Solutions in Progress to Combat the Housing Crisis
Help to Buy Scheme: The government has initiated various Help to Buy schemes (HtB) to stimulate housing demand and generate new housing supply. However, these goals have not been met; housing prices rose by 25.8% between 2013 and 2014 following the first HtB launch. The supply of residential properties has failed to keep pace, and home ownership continues to decline. The HtB system places much of the risk on the government through guarantee schemes, while homebuyers bear the remaining risk.
Tight Local Planning Constraints: The Barker Review (2003) highlighted that housing supply does not respond to shifts in demand. Increased earnings and population without corresponding construction lead to rising house prices. A study published in the Economic Journal by Wouter Vermeulen examined the impact of three local constraints on house prices: planning-induced, scarcity of developed land, and topographical constraints. The research indicated that between 1974 and 2008, house prices could have decreased significantly if these constraints were fully relaxed, with the scarcity of developed areas particularly affecting highly urbanised regions like the GLA.
Benefits and Costs Analysis: The planning system impacts both benefits and costs. While there are substantial potential benefits in addressing market flaws, the UK planning system tends to prevent, preserve, and protect even in the absence of actual market failures, often overlooking the costs that may overshadow the benefits.
Conclusion
The UK planning process presents a complex mix of challenges and advantages. Unfortunately, the ongoing crisis currently outweighs the benefits of the planning system. While solutions are in place, they have not proven very effective. It is essential to recognise that this situation has developed over 45 years and will require significant time and effort to resolve fully.
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