Last week the Government launched The Growth Plan 2022. This “mini-budget” outlines their plans to help boost economic growth and includes a range of incentives centred around the UK property industry. Key highlights are to release more house building sites, cut red tape in planning applications, and reduce land taxation for both businesses and consumers.

Here we summarise and consider what the implications are for stakeholders, including builders and developers.

1.     More land released to feed housing supply

Developers’ pipelines are to get a boost, with the release of more land to use as building sites for residential development. The Government is to encourage councils to sell off any public sector owned land which is surplus to their requirements, including sites for housing.

With a shortfall of nearly 120,000 or 40% overall, the Government failed to meet their self-imposed target for building 300,000 new homes last year. Our feature on Housing Delivery Test Results analyses the impact of this in more detail, including a list of the local authorities which have most dismally failed to meet their targets. Worst affected areas include in the Southeast of England and Greater London, where there are building constraints include being ringfenced by Green Belt.

Incentives for the successful roll out of this plan include a review of government asset disposal targets and allowing councils greater financial control over the proceeds of any land sales. If this means more building land can be unlocked in those areas where more homes are needed, it generates opportunities that will also almost certainly achieve planning – one to watch and great news for developers.

2.    Help to speed up planning consent in selected locations

New Investment Zones will be created in selected geographic areas, with tax incentives and a more liberalised approach to planning, designed to “drive growth and unlock housing”. The proposal’s aim is to encourage localised development and investment. Zones will be selected following discussion with local authorities, who will be required to bring forward and build a case for sites within their local council areas. The Treasury’s Investment Zones Factsheet includes a list of the thirty eight local authorities currently being consulted, including in the Midlands, Yorkshire and North West, as well as Norfolk, the South East, South West and Cornwall.

Within these Investment Zones, help for developers includes:

Removing red tape from planning applications

Planning is to be eased within agreed Designated Development Sites, in a move to both release more land for housing and commerce and support accelerated development. Within this, for new developments:

 “The need for planning applications will be minimised and where planning applications remain necessary, they will be radically streamlined.”

Whilst, for ongoing applications,

The Goverment will “actively work with sites” to understand what specific measures are needed to “unlock” hold ups, including “removal of any legacy EU red tape where appropriate.”

(Source: HM Treasury, 2022)

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SearchLand data confirms that the last two years have seen the lowest approval rate of planning applications since 2008. That said, historic statistics show regional variations, with a higher success rate for applications in the North of England, in contrast to the South.

Whilst some regions will clearly benefit more than others from an easing of planning regulations, these positive steps to reduce red tape, speed up the application process and foreshorten timelines for builds, can be seen as encouraging signs of change and a win-win for all involved.

Tax incentives for businesses, builders and developers

In addition to planning liberalisation, selected Investment Zones will benefit from tax breaks for both business and housing development. Tax incentives under consideration include:

·       House builders will have full SDLT relief for purchases of land or buildings for new residential development.

·       Full SDLT relief is on offer for land bought for occupation or development for commercial purposes.

·       Additionally, businesses will have 100% business rates relief on newly occupied and expanded premises.

The planning reforms are being delivered in conjunction with the Department of Levelling Up, Housing and Communities. These incentives, according to The Guardian, may include a relaxation on affordable housing and scaling back on Section 106 Agreements, however, other than stating that a “localised” approach will be taken, details for the rollout out are still to be confirmed by the DLUHC.

3.    A tax boost for home buyers

Stamp Duty Land Tax (or SDLT) is a levy payable on land or house transactions above a certain threshold. From 23 September, for homebuyers in England, the lower threshold for purchase of a residential property has doubled, from the previous starting rate of £125,000 to a base level of £250,000, before tax is due.

First time buyers will also benefit from an uplift in the starting level for SDLT - from £300,000 to £425,000 - and first-time buyer relief increasing to a maximum eligible property value of £625,000 (from £500,000).

In real terms, this represents a discount of £2,500 (around 45%) on the SDLT bill for the average home buyer (based on average house prices in 2022 in England of £312,000).

This welcome tax relief comes at a time when many homeowners will see increased mortgage rates, as a result of the recent interest rate rise, on top of the ongoing cost of living crisis.

With developers’ margins also being squeezed by the rise in costs of construction, reported to be over 24% in 12 months, any buyers incentives will be critical to helping mitigate these negative impacts on the UK property market.

A new era for house building?

The UK Government acknowledges the need for planning reform, with one of its key targets in the Growth Plan as “liberalising the planning system and streamlining consultation and approval requirements” (HM Treasury, 2022, p.19). Whatever the underlying sentiment, the localised measures aimed to help to free up more building land, and cut through planning red tape, are all great news for house builders. That said, it remains to be seen how and where this is taken up by local authorities, and what incentives are actually to be given to developers.

SearchLand’s automated mapping tools will help you find these opportunities quickly and efficiently. Meantime, why not sign up to our newsletter or follow us on socialmedia for news and insights into evolving planning policies.

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