Easing restrictions in the UK’s planning regime is one of the few ways to boost economic growth, according to property developers, consultants and advisers, who argue that uncertainty over planning permission to build new homes and infrastructure is a brake on investment in the country.
Planning is the process by which the public sector decides how land should be used and protected in communities to achieve sustainable development and wider benefits to society. Despite its crucial protective role, the UK’s politicised and unpredictable planning system is blamed for stalling construction of new homes and commercial buildings, particularly in the “green belt” near the most prosperous cities in the south-east of England.
“Planning is now such a roadblock, that [international investors] can’t be sure they’re going to spend the money that they’ve committed [to the UK],” says Harry Downes, managing director for investment management in Europe for Greystar, a US-based real estate developer and manager.
Ahead of the general election on July 4, the opposition Labour party pledged in its manifesto to implement planning reforms to “make it easier to build laboratories, digital infrastructure, and gigafactories”. The Conservative-led government laid out its intention to simplify planning in two white papers published in 2020 and 2022. However, prime minister Rishi Sunak watered down housing targets in December 2022 after opposition from local councillors and backbench Conservative members of parliament.
“[Planning reform] is essentially the only lever left for growth,” says Edward Clarke, an associate director at Lichfields, a UK planning and development consultancy, who notes that there is “no room” for the UK government to tax or borrow more to power up the economy. “Large amounts of capital are waiting [for certainty] to invest into the UK market. The next government, whichever colour it is, needs to prioritise setting out a very clear message that we are pro-development and looking at local plan coverage.”
While other advanced economies use a flexible zone-based system for planning, the UK takes a case-by-case approach with various local planning regimes that creates additional uncertainty. England currently builds between 220,000 and 240,000 new homes per year, France builds about 380,000, while Japan is constructing 860,000 homes per year, according to an analysis of official data by think tank the Centre for Cities.
Iain Jenkinson, co-lead of the UK planning team at CBRE, a commercial real estate services provider, says the philosophy of UK planning is to be “very inclusive” by engaging with multiple stakeholders, but the outcomes are usually determined by local political decision-makers.
“You could have the best planning statement and case, but on a whim, the [answer from local authorities] could be ‘No, we just don’t like it’. There’s a real need for a whole system reset,” he says.
Part of the problem is a lack of resources and staff in local planning authorities to be able to process applications. Between 2013 and 2020, a quarter of all public sector planners left the profession, while private sector planners rose by 80%, according to the Royal Town Planning Institute.
The time taken for receiving permission has risen too. Just 51% of major planning applications were decided upon within the statutory time of eight weeks in the latest financial year, down from 83% in 2013-14, according to data from the Department for Levelling Up, Housing and Communities.
While planning performance statistics like these are usually viewed as a delay, “they often mask the complex reality of development schemes and the reasons why time is taken in the planning process”, say Gavin Parker and Mark Dobson, two academics at the Henley Business School who have published a book entitled Slow Planning? Timescapes, Power and Democracy.
While planning is essential for democratic decision-making and ensuring quality projects are built in local communities, property leaders stress reform is needed to ensure it does not stifle investment.
“If the planning system is a blocker, that’s a risk that you’ll lose investment coming into the country. Likewise, even our strong corporates that want to invest more, might be more likely to […] go offshore and get someone else to test and innovate rather than doing it locally,” says Martin Guest, head of the UK public sector at CBRE.
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