How long does it take to get planning permission in the UK? Local planning departments have been under sever pressure to preform better with dwindling resources. 

We live in uncertain times. Over the last year, housebuilders have been struck on multiple fronts by a combination of Brexit, COVID, the war in Ukraine, and political upheaval both on the ground and in Westminster. Now, as the cost of a mortgage shoots up, an impending demand shock to the housing market can also be added to the mix.

On top of all of this, we have a new housing secretary - the sixth, so far, since housing came under MHCLG/DLUHC remit four years ago. Simon Clarke, a key Truss ally, has signalled further spending cuts. On top of a pledge from Truss to scrap the 300,000 units per annum housing target, it’s clear this government’s approach to planning will not be investment-driven.

Housebuilders have been put in a difficult position. As local authorities tear up local plan drafts to catch up with changing policy and are at risk to close their offices to address their backlog, the planning system according to Dorian Payne (Castell Group) is increasingly “part of the problem [and] not, as it should be, part of the solution.”

Where can housebuilders find certainty? How can they reduce risk?

How does the cost of living crisis affect housebuilders?

Since the start of 2022, share prices in UK housebuilders have been in freefall, a trend that looks set to continue in the short run.

To understand why investor confidence is low in the construction sector, we can turn to various factors driving the cost of living crisis for households and businesses in addition to planning-specific challenges. Specifically:

Build costs are rising

As households watch their weekly grocery bills rise due to inflation. Similarly,  housebuilders absorb cost increases in their construction process due to escalating energy and transportation costs. This is on top of supply chain delays caused by Brexit and COVID, passed onto them by their suppliers.

House prices growth is falling

Previously, housebuilders were “insulated” against rising build costs by rising house prices. As households lose expendable income and interest rates rise, demand for housing, which skyrocketed over the COVID crisis, is beginning the inevitable turn toward lower growth, with a potential housing market correction on the horizon.

The labour market is tightening

Like many industries across the country, construction is struggling with widespread skills shortages driven by an exodus of EU workers caused by Brexit combined with “more competition from other sectors” in the wake of the pandemic. The industry has been slow to modernise in response to massive shortfalls in the supply of skilled labour.

Planning backlogs are growing

Like many businesses, already under-resourced local planning authorities struggled with workloads during the pandemic due to virtual meetings and sick leave. Planning applications only increased during that time, reaching a peak in March 2021. In a recent post on LinkedIn, Justin Paul (of J10 Planning) noted that “there are now SME house builders facing extinction” due to planning delays, with one client down from 30 to 5 staff. 

As we’ve seen, the approach of this government is deregulatory in nature. Truss’ “historic gamble” banks on tax cuts freeing up investment for innovative businesses, whose job it is now to solve the problems facing the country. Planning applications take too long, and proptech has a duty to do something about it.

Why are local planning authorities facing planning delays?

In a planning system where “statutory deadlines mean nothing”, housebuilders face the real problem that “developments may no longer be viable by the time they are granted planning permission.” The risk involved in an investment in land and materials only grows as uncertainty around planning permission is exacerbated by planning delays.

In January 2022, several local planning authorities took months to complete validation tasks “normally only meant to take a few days”. Since then, some councils have closed their planning offices to get their applications backlogs down, and more are expected to follow suit.

A House of Lords inquiry into housing demand earlier this year found that national government spending cuts had caused “delays, issues with recruitment, and staff shortages in many authorities.” They point to evidence that skills shortages on the LPA side lead to “poor decision-making and greater reliance on the appeals process.”

This affects SME builders disproportionately because smaller sites have to provide the same level of detail and go through the same processes as larger sites, meaning more work - and spending - on planning for SME housebuilders for the same number of houses. The inquiry points to declining numbers of active housebuilders as evidence planning difficulties are holding back housing output.

How can a digital planning system help addressed planning delays?

At the start of the first lockdown, MHCLG’s Chief Planner, Steve Quartermaine, urged local planning authorities “to take an innovative approach” and ”to explore every opportunity to use technology” to process planning applications. This statement is echoed by the House of Lords inquiry, specifically in the realm of public consultation, which makes a special mention of Neighbourhood Planning, suggesting that community-driven development leads to housing delivery beyond local plan targets.

What would a digital planning ecosystem that addressed planning delays and built more houses look like?

Transparent local plans based on community needs.

One of the biggest problems with the discretionary system we have at present is the impact of “local opposition and [...] political lobbying.” HM Government is presently piloting a new digital planning system for local planning authorities. This digital planning approach combines a new standard format for local plans with an interactive map-based engagement system. Increasing the visibility of local plans “is a vital step in increasing local engagement and most importantly, getting homes built quicker.”

A nation-wide system doesn’t exist, giving rise to proptech firms banking their entire business case on scraping. However, such a system exists in Ireland, driven by the need “to improve efficiency [and] reduce the potential for invalid applications.” A nationwide digital planning system would allow housebuilders to target areas of housing need that they can easily overlook working, as they do presently, in the dark. 

Clear standards for data to facilitate information sharing.

The first step is to decide on a single format for geospatial data relevant to planning. HM Government has taken this step in providing a new national planning data platform. It now remains for the sector as a whole, and especially for local planning authorities, to move to a digital-first approach based on the standard.

A digital-first approach is imperative to speed up design, consultation and application processes. The impetus behind “simplified and standardised” local plans is simple: the planning system needs a single source of truth, a “common hymn sheet”. The same impetus demands a digital planning system with clearly defined separations of responsibility and single points of contact for data - and, above all, open standards for data.

I’ve written elsewhere about the possibilities realised by a codified planning system implemented in software. Imagine what would be possible in a planning system where “difference in opinions rather than policy compliance” was no longer the status quo. Imagine what would be possible in a planning system in which major planning applications were actually turned around in eight weeks.

Adoption of digital planning tools by developers

Aside from the need of equipping councils with the right tools to process planning applications faster, leading developers and their project partners adopt digital tools for a wide range of tasks, including place research, community consultation, and documentation of the impacts that their developments have.   

An innovative approach

Companies such as PlaceChangers, a leader in interactive planning tools, are committed to a digital planning system that speeds up essential planning tasks by: 

1. Gathering comprehensive information and feedback through community engagement consultations
2. Effective site analysis accessing publicly available databases that provide information on the economics of the site, community demographics, health factors, and access to green space, transport and local facilities. 
3. Incorporating the above information into planning applications ensures greater accuracy, ease of sharing and reduced application and approval processes.

The long-term vision is a system in which planning applications are submitted as data, not hundreds of documents, and in which the manual compliance checks can be automated.

The journey toward such a system begins with business and political leaders in the sector taking the first steps. PlaceChangers works with communities, housebuilders, and local governments on a daily basis to provide data-driven systems for digital planning. Planners will be able to see returns on the cost of labour analysing sites and consulting the community, as well as better quality feedback and greater support for their projects, giving them greater certainty and lower risk.