CMA moots zonal planning rules to help small builders

A presumption of planning approval within certain areas could be formally advocated by the Competition and Markets Authority (CMA), which is currently investigating the housebuilding sector.

A zonal system was set to be introduced in England by the government in 2020 but was subsequently shelved by levelling up secretary Michael Gove last year in the face of opposition from backbench Conservative MPs. The proposals were held responsible for a shock byelection gain for the Liberal Democrats in 2021.

In December 2022, Gove asked the CMA to examine housebuilding to ensure the market is “truly competitive and working in the interests of consumers”.

Earlier this year the watchdog concluded that the planning system is having a “disproportionate impact on SME housebuilders” as the lengthy and complex system favours bigger companies that can hold onto land longer and manage the associated costs more easily.

It has now put forward a working paper on issues in the planning system asking for feedback on whether a zoning model, or similar “rules-based system” where permission would be automatic as long as specific criteria are met, could be a solution.

Under the zonal system, proposed developments in “permitted zones” designated by local authorities, “could be built without the need for the housebuilder to submit a planning application”, the paper says. Outside the zones, housebuilders would still be required to submit planning applications.

Alternatively, under a rules-based system, planning permission for sites that meet specified criteria would be “granted in the majority of cases with no or limited review and only a limited number of cases [would] require greater discretion”.

The CMA said the policies would “enable [housebuilders] to prepare their applications more effectively and would provide them with greater certainty in their developments being permitted,” adding: “It would also create a more efficient system where the majority of permissions will be granted more quickly, thus releasing more land for development in a timely manner.”

The CMA document also suggests that councils should consult far fewer stakeholders when assessing planning applications than they do currently.

The paper notes that the options should not stand alone but be part of “potential wider package by policymakers”.

The watchdog has also looked into the practice of landbanking – where a significant proportion of developable land in an area is held by a small number of housebuilders.

It found that 11 housebuilders together own or control land equivalent to about 1.17 million plots across England, Scotland and Wales. Of those, around 658,000 plots are in long-term landbanks and 522,000 are in short-term ones.

But in each local authority area, most of the developable land is held by several different builders, the CMA said.

The regulator is looking for feedback on the state of local competition in those areas, as well as for potential reforms of the planning system.

CMA director of markets Dan Turnbull said: “As we’ve progressed our work, we’ve heard concerns that the way large housebuilders use landbanks and complex planning rules may be harming competition and holding up the building of new homes.

“We now want to get feedback on these working papers from the key people in the industry – be that council planning departments, builders or landowners – before we publish our findings early next year.”

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