S.O.S.! Tackling the Housing Crisis, CIL and Build to Rent

Property tax surveyor, Ian Barwick, attended the British Property Federation (BPF)/Planning Officers’ Society (POS) Planning Conference on 29 March 2017 entitled ‘Gimme! Gimme! Gimme! a Plan After Midnight’.  The well attended event, held at Clyde and Co.’s London office, was focused on the new Housing White Paper, including the recent independent report on the Community Infrastructure Levy (CIL) and the Built to Rent sector (BTR).

The conference was attended by a wide variety of property professionals, as well as people involved in planning on both the local government and private advisory side, which provided a wide mix of perspectives and opinions. Not only this, the speakers and panellists offered up some interesting viewpoints on various planning issues and themes and gave all developers much food for thought!

White Paper

The keynote speech by Gavin Barwell MP, Minister of State for Housing and Planning, gave an overview of the White Paper published in February this year.  His key message was that “the solution to the Housing Crisis has to come from the supply side”. 

A panel discussion introduced by Ian Ginbey, Partner of Clyde & Co, followed the Minister’s address, where opportunities for further comment were highlighted.  Adrian Penfold OBE, Head of Planning for British Land, summed up the view of many of those present by saying that the White Paper was ‘evolution, not revolution’.  However, there was general support for the overall thrust of the proposals.

CIL

The next topic of discussion was the Community Infrastructure Levy (CIL), in light of the Independent Review published at the same time as the White Paper on 7 February.  Stephen Webb, Partner of Clyde & Co chaired a discussion between a diverse group comprising Andrew Whitaker of the Home Builders Federation, Graham Jones - Treasurer and CIL topic specialist of the POS, Simon Ricketts of specialist legal firm Town Legal and Gordon Adams, head of planning for the Battersea Power Station Development Company.  The panellists all concluded that CIL had not met its objectives, with Graham Jones commenting that “CIL has failed in every aspect”. A long list of unintended consequences arising from the poorly-drafted legislation were raised; especially emphasising the lack of money actually being collected by the Local Planning Authorities (LPAs) as a result of the annual amendments and various exemptions to the CIL Regulations.

The independent CIL review proposes radical changes to the CIL process and the introduction of a simplified version of the process called the Local Infrastructure Tariff (LIT). But with a retained but less restricted s.106 working alongside.  The main aim reinstates the original ambition for CIL that it would be a low level payment but applied to ALL development – and not the current system, largely skewed towards residential development with only a few LPAs applying it more widely on retail, Purpose Built Student Accommodation (PBSA) or other planning categories.  This revised LIT would not have any exemption; making the process far simpler than it currently is.

It remains to be seen how these proposals will be fully developed into new legislation and if CIL will be phased out for LIT as the review recommended.  It also proposes to make LIT mandatory for all LPAs, unless they can make a strong case that it would be economically unviable.  However the LIT rate is aimed at being assessed by each LPA and thus should take account of the wide variance of residential value across the country.  Many developers no doubt hope that 2019 will be ‘Our Last Summer’ with CIL.

Build to Rent

The final topic of the day was the growing Build to Rent sector, which formed part of the solution to the Housing Crisis offered in the White Paper.  The speakers, drawn from planning advisers,  local and central government, suggested that the Build to Rent sector offered considerable opportunity, if property investors were willing to ‘Take a Chance’ on it.  Both the Government and the Greater London Authority have recently published greater guidance on Build to Rent, and it is now starting to be seen as a more viable asset class than it had done previously.

Conclusion

The conference explored some of the key issues facing those who work in the property sector, and offered hope for the future in terms of how these might be resolved. However, ‘When All Is Said and Done’ it remains a long term issue with no immediate ‘quick fixes’ and there needs to be clear political will to strategically rethink the UK housing market.  The current White Paper is a useful ‘first step’ but there is much more work to be done!