With 2024 almost certain to be an election year, Colin Brown, head of Planning & Development, Carter Jonas discusses what policies for housing delivery we are likely to see discussed.

Delivery of new homes

The delivery of new housing has stalled. The Government’s target to build 300,000 homes per annum in England was downgraded to ‘advisory’ status in 2022, and whilst it is still the stated aim to achieve this figure, no timescale is attached. Meanwhile, fewer than 200,000 net additional homes per annum were actually delivered over the last decade, meaning that year on year the deficit in delivery is growing.

It is likely that both main political parties will maintain a focus on achieving the 300,000 per annum figure in their manifestos. Indeed, Labour have confirmed they will reinstate this figure as a mandatory target, in addition to updating planning laws to give local authorities a greater say in delivery.

The big debate looks likely to be around land value capture (a mechanism by which a greater proportion of the uplift in land value arising from planning consent can be captured for public benefit such as infrastructure and affordable housing).

Labour leader Sir Kier Starmer has referenced an ambition to build 1.5 million homes through a new generation of new towns. This is a highly ambitious strategy, and the mere fact that it is being advocated acknowledges the radical step-change that will be required to raise housing delivery to a rate anywhere near the target.

Under the Labour proposals, the development of new towns would be achieved through development corporations with CPO powers to capture the land value, so that the infrastructure has a better chance of being funded. There is some logic to this approach. It is likely to prove divisive for landowners, but we foresee that there will end up being a degree of compromise involving some sharing of the uplift in value. Indeed, if we are going to develop at scale, then some form of land value capture is probably almost inevitable.

The green belt

The debate around building major new settlements also raises the question of the green belt. Although the previous target of building 60% of all new homes on brownfield land has been removed, the ambition lives on in the NPPF (2023), and it has undoubtedly slowed the rate of housing delivery.

Brownfield housing development is not always viable and policy needs to reflect this reality. It is positive that Labour has recognised the potential of the low-quality, mostly brownfield, ‘grey belt’ that is unnecessarily protected through green belt allocation. In any case, there is nowhere near sufficient brownfield land to meet the 300,000 figure - certainly across multiple years - and meaningful greenfield development will be integral to increasing the rate of delivery.

House price affordability

Demand for homes will continue to be impacted by a fall in mortgage availability and affordability, exacerbated by the ending of the Help To Buy scheme for first-time buyers, with housebuilders also feeling the ongoing effects of labour shortages and elevated build cost inflation. Accelerating the rate of housebuilding will not be easy for whoever wins the election, and 2024 looks set to be a challenging year for housebuilders against the continuing subdued economic outlook.

Biodiversity net gain

One of the key changes for the planning system in 2024 is the introduction of biodiversity net gain (BNG). This requires most new developments in England to be able to demonstrate and deliver a mandatory 10% net gain in biodiversity either on the development site or by purchasing BNG units offsite from third parties in this newly created market. It will ensure that developers leave the environment in a better state than they found it by creating or enhancing habitats for wildlife. It comes into effect from January 2024 (or April 2024 for small sites) having been delayed from Autumn 2023.

We expect BNG to have a significant impact on the development process in the UK, with increased focus on green infrastructure and more innovative design solutions. It will also transform the relationship between developers and landowners, who will enter BNG agreements for mutual benefit.

Meanwhile, Local Planning Authorities (LPAs) have been preparing their own policies and guiding framework on BNG. Many have introduced BNG requirements prior to the implementation date, and some are exploring higher percentages of net gain than the 10% prescribed. We are increasingly seeing LPAs deviating from the national position, either in the percentage net gain required or in their guidance for delivery. We are also seeing more LPAs adopting measures to channel investment towards local sites to accelerate the local market. We expect that the year ahead will bring even more creative and resourceful local solutions.