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Housing & Planning Act 2016 – Summary

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Posted by Claire Waring on 27 May 2016

Claire Waring - Development and Securitisation Lawyer
Claire Waring Partner

Part 1 – New homes in England

This Part of the Housing & Planning Act 2016 deals with the issues of starter homes and self-build and custom house building.  Section 2 of the Housing & Planning Act 2016 sets out what starter homes are and who will be eligible to purchase such dwellings.  The key points to note are:

  1. Starter homes are to be “new dwellings”;
  2. Starter homes will be available to first-time buyers only and purchasers must be at least 23 years old and no older than 40 (although this may be amended by the Secretary of State by regulations).
  3. Starter homes are to be sold at a discount of at least 20% of the market value and always for less than £250,000 outside of Greater London (and £450,000 in Greater London).

Starter homes are going to be “affordable housing” for the purposes of the National Planning Policy Framework and, therefore will count towards Councils’ affordable housing targets as well as the provision of “affordable housing” by developers under Section 106 Agreements. 

A lot of detail remains to be provided concerning starter homes (including provisions concerning their onward sale)and this will be provided through regulations which, in turn, are going to be informed by responses received to the Government’s Technical Consultation on the Starter Homes provisions which was launched in March 2016. 

The key point made by the Housing & Planning Act 2016 concerning self-build and custom house building is the conferring on local planning authorities of a duty to “give suitable development permission in respect of enough serviced plots of land to meet the demand of for self-build and custom house building in the authority’s area…”(Section 10 (1) HPA).  “Development permission” here will mean planning permissionor permission in principle (a concept introduced by the HPA).  Evidence of such demand will be provided by registers required to be kept under the self-build and custom housebuilding Act 2015.  It is worth noting that local planning authorities can apply to the Secretary of State to be exempt from this duty. 

Part 4 – social housing in England

This Part of the Housing & Planning Act 2016 deals with social housing in England. 

The key points to note are:

  • Under Section 64 of the Housing & Planning Act, registered providers of social housing (“RPs”) may be paid grants by the Secretary of State “in respect of right to buy discounts”.  However, there is no detail in the Housing & Planning Act as to the amount of the grant and whether or not it will be a grant equal to the full market value of the dwelling, nor when and how any payments will be made. Section 66 envisages that the Secretary of State will identify criteria for the voluntary right to buy which would then be monitored by the social housing Regulator.
  • Section 76 of the Housing & Planning Act imposes a duty on local housing authorities to consider selling vacant “higher value” housing (where such local housing authority keeps a Housing Revenue Account).  What constitutes “higher value housing” will be the subject of regulations made under the Housing & Planning Act and, it is possible, that such definition will take into account different types of housing, different local housing authorities and different geographical areas.  The rationale behind this duty is to raise more money to support the supply of more housing.
  • Under Section 80 of the Housing & Planning Act, the Secretary of State may (by regulations) “make provision about the levels of rent that an English local housing authority much charge a high income tenant of social housing in England.”  The regulations will deal with issues concerning the relationship of this higher rent to the market rate and allow for people with different incomes and social housing in different areas.  Under the provisions of Section 81, any such regulations will also require a definition of what is “high income”.
  • Sections 92 – 94 and Schedule 4 of the Housing & Planning Act deal with reducing regulation of social housing.  This includes:
  1. the removal of the disposal consent requirements, which could provide RPs with greater flexibility in relation to their asset management strategies Schedule 4, Part 1 of the Housing & Planning Act amends Section 133 of the Housing Act 1988 and Section 172 of the Housing and Regeneration Act 2008 so that consent for the onward disposal of housing obtained from local authorities and consents to the disposal of interests in social housing dwellings is no longer required.  This means that RPs who own properties acquired from local authorities will now be able to revalue those properties from the low Existing-Use-Value basis to the higher Market-Value-Subject-To-Tenancy basis, allowing them to raise more finance on the strength of their asset base.  Also, RPs are now free to dispose of their dwellings without the need to obtain the consent of the Social Housing Regulator allowing them more freedom to manage their assets. However, charitable RPs should note, the provisions of the Charities Act 2011 will apply unless some alternative arrangement is made with the Charity Commission.
  2. the removal of the consents regime to be replaced with a system of notification, providing RPs with more freedom and control over their businesses particularly in relation to group restructuring, mergers, conversions and reconstructions. Again, charitable RPs should be mindful of the provisions of the Charities Act 2011 which  currently continue to apply;
  3. regulations which limit or prevent local authorities from exerting influence over  private RPs through “(a) appointing or removing officers of private RPs; and (b) exercising or controlling voting rights”. Perhaps controversially, the Housing & Planning Act provides for the removal of local authority’s ‘golden share’ to override or modify any existing contractual or other rights or anything in a private RPs constitutional document.
  • Chapter 5 of the Housing & Planning Act deals with the major issue of the insolvency of RPs.  Section 99 of the Housing & Planning Act allows for the Secretary of State (or, with the consent of the Secretary of State, the Social Housing Regulator) to make a “housing administration order”.  Such an order will enable the appointment of a receiver of the RP. 

Part 6 – planning in England

A number of changes to the planning system in England have been made under the Housing & Planning Act and the key ones to mention in this summary are:

  • Neighbourhood planning.  Under Part 6 of the Housing & Planning Act, local planning authorities are required to make both neighbourhood development orders and neighbourhood development plans “as soon as reasonably practicable after the referendum is held” in a measure to prevent local planning authorities being slow to bring to fruition neighbourhood plans.  As to what comprises “as soon as reasonably practicable”, this will be the subject of regulations.
  • Local planning.  The key issue addressed by the Housing & Planning Act here is “permission in principle” (“PIP”) for housing-led development which will provide developers with greater certainty of consent at an earlier stage in the development cycle.  The term “housing-led” development is a little vague but appears to include those developments where there is retail / commercial / etc uses as long as the development’s key component is housing.  PIP will be granted either on the adoption of a “qualifying document” (e.g. a development plan document or a neighbourhood development plan) or on application to a local planning authority.

The intention of PIP is to speed up the planning process by granting automatic permission (subject to various technical details (such as location, uses, etc) for homes which are on a local planning authority’s register (which they are required to keep under s151 of the HPA).  Whilst no express mention is made of brownfield sites, it appears that this measure is aimed to regeneration the use of brownfield sites to help meet the ever-growing demand for housing. The PIP provisions will not commence until 13 July 2016 (being 2 months after the date of Royal Assent).

  • Planning obligations.  Sections 158 and 159 of the Housing & Planning Act set out new dispute resolution procedures in relation to planning obligations and make amendments to S106 of the Town and Country Planning Act 1990.  Under these sections of the Housing & Planning Act, the Secretary of State is permitted to make regulations which “may impose restrictions or conditions on the enforceability of planning obligations entered into with regard to the provision of (a) affordable housing; or (b) prescribed descriptions of affordable housing.”

Part 7 – compulsory purchase

Part 7 of the Housing & Planning Act (which applies to both England and Wales) sets out changes to the compulsory purchase system, the key ones of which are:

  • Sections 172 – 180 give all acquiring authorities the same powers of entry on to land for the purposes of carrying our surveys prior to such land being compulsorily acquired (such measures to include standard warrant provisions and a standard notice period of 14 days to be given to every owner / occupier of the land prior to entering the land to carry out the survey).
  • Clearer timetables and targets concerning the confirmation stage of the CPO process.
  • Section 181 grants confirming authorities the power to appoint inspectors to act in the stead of the confirming authority in relation to the confirmation of a CPO.
  • Section 203 confers the power to override easements and other rights where: (i) the land is the subject of planning consent for building or maintenance work; (ii) the land has become vested by a specified authority or has been appropriated by a local planning authority for planning purposes; (iii) the authority could acquire the land compulsorily for the purposes of the building or maintenance work; and (iv) the building or maintenance work is related to the purposes for which the land was vested, acquired or appropriated.

With legislation like this, a summary provides only an opportunity to highlight those issues which we feel will be of use to our clients.  

About the author

Claire specialises in residential development and social housing portfolio securitisation. Claire’s clients include developers, promoters, land owners and Registered Providers.

Claire Waring

Claire specialises in residential development and social housing portfolio securitisation. Claire’s clients include developers, promoters, land owners and Registered Providers.

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