Changes to the planning system under the coalition and Conservative governments have brought profits to landowners at the expense of local communities, according to new research.
The London-focused academic study, published on Monday, comes as ministers prepare to publish a housing white paper that will include more planning changes aimed at increasing construction and addressing the housing shortage.
A new planning framework published in 2012, which aimed to encourage development, caused land prices in London to rise, while the number of affordable homes has dropped, the study found.
The framework “reposition[ed] gains from planning more squarely in the hands of landowners while ensuring the developer’s profit, even if this means an erosion of value to the community,” said the academics at the universities of Reading and Kingston and the Royal Agricultural University, who worked with the property analysis firm Ramidus.
They blamed the financial viability process, in which private developers must set out how many affordable homes and other community amenities they can provide while still making a profit.
This process has meant that when developers pay a high price for land, they can say that building significant numbers of cheaper homes would make a development unaffordable.
This “shift in power relations” has moved the focus onto “increased developer confidence”, the academics said.
Residential land values in London rose by as much as 145 per cent between 2009 and 2015, the study said, while annual affordable housing delivery dropped by 37 per cent.
Sadiq Khan, the London mayor, has sought to address the effects of the process by offering an exemption to developers who plan to include 35 per cent or more affordable housing on sites. These developers do not have to show their financial models to local councils.
It may also include measures to push housebuilders to build more quickly on sites where planning permission has been granted.
John Healey, shadow housing minister, said: “The clearest result of current Conservative housing policy is the lowest level of newly-built affordable homes last year for 24 years, with the number of new social rented homes built the lowest on record, probably since the second world war.”
The Department for Communities and Local Government said: “As this report acknowledges, there is no direct link between the introduction of the NPPF [National Planning Policy Framework] and changes in land values.
“The reality is, this government has the most ambitious plan for affordable housing in 40 years, with more than £3 billion set aside for investment in London.”
No fake news from the DCLG press office the report says
Whilst there is no fundamental way of proving a direct link between the introduction of the NPPF and changes in land values, it is clear that changes to the planning system set the tone and the environment that has caused behaviour to push values beyond the point where a market equilibrium would have been reached without it.