The Levelling Up and Regeneration Bill
Released On 17th May 2022
Three Dragons comments on the Levelling Up and Regeneration Bill
Following the Queen’s Speech, the government has introduced the Levelling Up and Regeneration Bill which proposes substantial reforms to the town planning system and a new and comprehensive approach to town centre regeneration and urban planning.
The Bill proposes a locally set simple non-negotiable Infrastructure Levy based on the value of the property when it is sold. This will combine affordable housing, S106 and Community Infrastructure Levy requirements and should help to provide certainty and clarity for both local authorities and developers. Local authorities will have the “right to require” provision of onsite affordable housing.
Some larger sites will retain s106 type negotiation – but only where the amount collected is not lower than it would be through the new levy.
This key reform could help local authorities to secure more funds for infrastructure and affordable housing when there is a rising market, whilst at the same time protecting developers and housebuilders from unexpectedly falling prices without the need to go back and re-negotiate. Whether it is able to deliver affordable housing effectively, i.e. in the right amounts and in a way that contributes to place making and mixed communities, will be seen when the detailed guidance is published.
The Bill gives local authorities the power to set different rates within their area, we believe that the regulations will need to ensure local authorities take into account the economics of development not just in different locations within an area but also to look at different rates for different types of development. It is well known that non-residential uses have very different viability from residential uses but there are also differences between different types of residential development, with flats for instance, generally less viable than houses outside major urban areas.
As the levy is to be set in relation to house prices there is a danger that the funding available for infrastructure will be concentrated in the locations where values are highest, with less available in areas where house prices are lower. Although this is also an issue with the current arrangements, the new proposals are silent about any remedy.
Complex sites with high levels of contamination or clearance costs will also be less able to afford a high Infrastructure Levy rate than comparable schemes with similar house prices in greenfield locations. We will be looking back through some of our recent CIL studies to see how a revenue-based approach to the Infrastructure Levy will work in practice.
Regulations will also need to make clear how rented units are dealt with for Infrastructure Levy purposes.
We welcome the option to allow the local authority to require affordable housing provision to be on-site which promotes mixed communities and deals with situations where development land is in short supply. However not all sites and locations lend themselves to mixed tenure development and careful thought will need to be given to the circumstances in which an off-site contribution is required. The Bill does not specify how affordable housing financial contributions will be spent or how they will interact with Homes England funding.
The Bill does not specify whether affordable housing contributions can be sought from non-residential development and this too will need to be clarified in regulations.
Local Plan Preparation
The Bill aims to speed up the process of preparing and adopting local plans by providing standard policies and utilising digital tools. However, a consequence of making it harder to negotiate viability at site specific level could mean that challenges to plans will increase and authorities will need to provide a strong evidence base. This effect could be exacerbated by the withdrawal of the 5-year land supply requirement where authorities have an up-to-date local plan.
Authorities will also be able to introduce or update policies through a new ‘supplementary plan’ which will replace SPDs and carry the same weight as the local plan itself.
We welcome the commentary about more weight being given to Local Plans. The additional weight given to Neighbourhood Plans is a notable change, with the potential to have some important impacts locally.
The obligation for every authority to produce a Design Code will be a new process for many authorities and it is unclear at this stage what these will be required to contain but there is the potential for different approaches across England - which could have an impact on delivery and scheme viability.
We are pleased to see that the Bill enables local authorities to require the assistance of infrastructure providers and other bodies in the development of infrastructure strategies and development plans.
Clarification of rules on compulsory purchase is very welcome, although the devil is in the detail as to what “fair compensation” might be.
Community Land Auctions are an interesting idea. It is too soon to say how the land market might react. It would be helpful if local authorities could combine such an auction with allocation of land for specified uses which benefit the local community, including provision of Custom and Self Build and Older Persons housing as well as improvement of local facilities.
Self Build and Custom House Building
The Bill will also help to iron out some of the issues on development of self-build and custom housebuilding through the introduction of legislation to clarify what counts as a “suitable permission” for these purposes. Alongside the Bill, a government response to the Bacon review on this type of building will be published.
An interesting omission in the Bill is any measure to boost housing delivery. Given an ageing population and the high profile of affordability and availability of housing we might have expected more on providing enough new dwellings and the right mix of dwellings to meet England’s housing needs.
The Bill is also silent on any measures to secure Lifetime (or accessible) Homes. Space standards and accessibility are specifically excluded from the National Design Code (see Figure 2 National Model Design Code) and are to be covered elsewhere. It is still not clear if this will be through building regulations or individual local plans.