11 May, 2021

What will happen to construction if the government’s ambitious plans for a radical reform of the UK’s planning system come into effect?

The direction of change has been signalled by the broad range of proposals published for consultation in August 2020. An expansion of existing permitted development rights has already been implemented. In addition, converting buildings to residential use no longer requires consent, subject to some exemptions and provided that any redeveloped building remains inside the footprint of the structure it’s replacing. That additional latitude should drive more conversion and extension work for the building industry although ultimately, it’s the property market that will dictate how many financially viable projects this relaxation unlocks.

As to the broader, systemic changes our Planning team has already published its own expert analysis which you can find here.

Will planning reform lead to a building boom social cardIf it was possible to achieve a simpler planning system, it could lead to quicker decision making and more certainty. Whilst the majority of experienced property sector clients don’t pause their design teams waiting for planning approval to be given, this design at risk approach would probably be adopted more widely. That would make resource planning for design consultants easier. And if there was, for example, less control over the approval of design detail, the team’s focus would switch to design for procurement rather than design for planning. That would mean earlier contractor engagement and tender activity. For clients this offers a faster, lower risk route to the start of construction on site, even lower design costs.

What is harder to estimate is whether the simplification of the system will unleash a frenzy of building as the government hopes.  Arguably making it quicker and easier to get planning consent should have an impact on the overall volume of development, although it is only one factor in determining levels of development activity. What would make a difference is the actual designation applied to districts in the new local plans. If more land is allocated for growth and renewal, then more opportunity is created for development. The market should do the rest. It seems likely that the Government will encourage local authorities to maximise potential areas for development and if this happens we can reasonably expect an increase in development and construction activity, and as with any increase in demand for finite resources, building costs will rise in the short term until new suppliers enter and the market rebalances itself.

For the real estate sector this an area to watch. A new planning system will create opportunities but taking advantage of them will mean being a good client. In busier markets, design consultants and building contractors will have the luxury of choice. They’ll want to work with clients who they know and trust to treat them fairly. Quicker decisions, shorter design programmes and earlier construction starts save money at every stage. Less planning risk would bring more certainty and reduce risk pricing. All critical factors that encourage more building activity.