Growth, Development, Protection: What Does the New Planning Bill Mean for Investors?

Looking to the past

Very few people alive today have any concrete memory of 1947 – the Queen herself was just a newlywed at the time – and yet, until the agenda set out in the recent Queen’s Speech, the UK’s planning system has been leaning on practices that date back over 74 years. The new planning bill outlined in the Speech is designed to modernise and simplify this archaic system, and, as its policy paper suggests, the beating heart of the proposal is an admirable move away from “procedures designed for the last century.”

In brief, the new bill will transform the existing system, which is heavily based on documentation, to a more efficient digital service. Under these proposals, councils will be required to categorise areas of land under three headings: “growth”, “protection”, or “renewal.” In perhaps the most notable aspect of the bill, land designated for “growth” will receive automatic outline planning permission. Provided that applications within such land follow local rules, councils will not be allowed to reject them.

Meeting the demand for homeownership

The prospect of building new houses swiftly is an affirming one for the simple reason that new houses are needed. There is no question that the demand exists, and that it is just waiting to be fulfilled. A recent report from the Commons Library revealed the extent of this demand: 345,000 new homes are required per year in England alone. The proposed planning bill offers a useful and pragmatic road towards fulfilling that requirement – and, in the same gesture, signals the beginning of potentially lucrative opportunities in the world of property.

Given the urgency of the above figures, it is heartening to hear that cutting down on red tape and placing an emphasis on speed is such a big part of the new bill. Such moves will undoubtedly increase the speed and efficiency with which homes and other infrastructure can be built. Those unsure of the need for this quickened pace need only glance at the current backlog of developments: as the Local Government Association has pointed out, “over 1.1 million homes given planning permission in the past decade are still to be built.”

With this reaffirmation of the government’s commitment to lowering barriers to planning and constructing homes, there is real cause for optimism for investors, especially given the UK’s huge appetite for buying houses. Dean Clifford, co-founder of Great Marlborough Estates, has pointed out that “homeownership remains the aspiration for the vast majority of Britons, and it is right the government should look to prioritise getting people onto the housing ladder” – a priority which the efficiency outlined in the planning bill should help to accomplish.

Lighting the fires of investment

Of course, the outline proposed in the Queen’s Speech is just that: a proposal. As real estate services provider Savills points out, “what the development industry needs most is detail as soon as possible to enable delivery of the new homes, jobs, and infrastructure that are so central to the Government’s agenda.”

Once such details are revealed, however, the new bill is likely to mean good news for investors. As noted by Melanie Leech, CEO of the British Property Federation, “The planning system’s failures have long been a barrier to new investment and growth in places and communities, but this transition will put significant pressure on local authorities to produce up-to-date, fit-for-purpose local plans.” Efficiency, speed, and fewer barriers all present the hallmarks of a strong environment for investment.

This sentiment has been echoed by Paresh Raja, Chief Executive of Market Financial Solutions. As he says, the planning bill “is a move that could light the touch paper for the construction and housing sectors, spurring on a huge amount of investment in the real estate industry in the years ahead.” With the touch paper lit, the future for real estate investment is looking brighter than ever.