The Covid-19 pandemic's lockdown measures led to the pause button being pressed on the British economy. Development schemes stalled across the UK, placing added pressure on the Government's housing and infrastructure delivery targets.
Rishi Sunak is due to give his third major financial statement in the Commons in July. It's been widely reported there will be more money for infrastructure spending as a kick-start to boost the economy. Alongside the financial statement, the planning system in England and Wales again finds itself in the spotlight. Yet another review is ongoing, with the Financial Times suggesting on 10 June that the Communities Secretary wishes to "rethink planning from first principles".
The Sunday Times has reported Jenrick, Cummings and Sunak are taking soundings from a panel of experts said to include Christopher Katkowski QC, Sir Stuart Lipton and Dame Bridget Roswell. Everything is said to be on the table, and bold and creative thinking is apparently being applied to how to make the system fit for the future.
The word of the minute is "zoning", with talk of a more streamlined system of in principle permissions by reference to local ordinances. How far the Government goes down this route remains to be seen, with any revolutionary approach to land use planning in England and Wales certain to be the subject of extensive discussion before legislation is passed and any impact on the current system felt.
In the short term, we do however have a few early insights into the Government's direction of travel.
Extension of Planning Permissions
On 22 June the Government announced that legislation will be introduced into Parliament to secure an automatic extension until 1 April 2021 for planning permissions which were due to expire between the start of lockdown and the end of 2020. We will need to wait to see precisely which permissions stand to benefit, but on the face of it this will come as a huge relief to many developers and funders and ensure that schemes temporarily stalled as a consequence of the pandemic do not stop altogether.
The Government has also announced it will allow the Planning Inspectorate to roll out multi-track planning appeals to secure earlier decision making, with simpler matters addressed by written representations thereby shortening inquiry or hearing times.
Schemes which looked viable four months ago, may look less clever now in the mid-pandemic world, and whilst Government reform and financial gestures are all well and good, challenging times also call for the need to look at the mechanisms available immediately to those dealing with the day-to-day delivery of live development schemes through the planning system machine.
So it is time for developers to dust down the tools available to optimise schemes, and for those assets which have fallen into distress the same toolkit is available to appointed receivers looking to safeguard and increase value ahead of sale.
The developer's friend in difficult times remains – as always – a cooperative and productive relationship with your local planning authority. The 2008-10 financial crisis demonstrated that when looking at scheme optimisation, the key to success is to bring the local authority planners, and where appropriate, local politicians, alongside.
More often than not changes sought to ensure the viable delivery of a scheme will result in a win-win for the authority which will be keen not to lose the local benefits which flow from an approved scheme.
One of the best things the Government could do just now is ensure the "virtual office" doors to planning officers are seen to be open and welcoming to any developer or funder who wishes to discuss getting development moving.
But what is the toolkit available to optimise a development scheme?
Conditions. Current legislation in England and Wales provides for the making of minor material and non-material amendments to planning permissions. What type of amendment falls into which box remains a matter of fact and degree and planning judgement; but on schemes where viability is weak, now is a good time to assess whether to seek amendments to conditions the satisfaction of which is expensive and where a cheaper solution may be acceptable; for example through changing the approved material pallet.
Optimising layout and introducing improved phasing on larger development can also normally be secured with local authority buy-in.
Planning obligations. It is always possible to re-negotiate a section 106 agreement with the buy-in of the local planning authority.
So in relation to your scheme agreements, now is as good a time as any to revisit the timing or amount of financial contributions, the extent/cost of works required to be carried out (such as highway works), or the tenure and mix of affordable housing required.
It remains important to note that for now at least, if the local authority does not want to discuss making amendments which can be reasonably justified by the developer or any incoming receiver, current legislation requires a period of five years to pass from the date of the agreement before an appeal can be made in respect of any refusal to make necessary changes.
CIL. Oh CIL! In a perfect world we would of course hope the Government might suspend the bane of many a developer's life – but that looks unlikely.
Making full use of any exemptions and reliefs provided for in the CIL Regulations, including the "Exceptional Circumstances" relief which allows relief where "paying the full levy would have an unacceptable impact on the development’s viability" could therefore be key in areas where a Charging Schedule is in place.
Few authorities have adopted this relief to date, but given the current pressure placed on the development industry, and housing targets still bearing down on local authorities, we may see this adopted on a temporary basis by authorities looking to kick-start developments where the payment of CIL is making developments unviable.
Do Nothing. Of course, sitting out the storm remains an option where finances allow.
Do not however forget that the legislation the Government has promised to introduce to extend the life of unimplemented planning permissions is due to only confer an extension until 1 April 2021 – and only time will tell whether it is a fool's choice to be brave enough to wait out the current economic uncertainty that long before commencing a stalled scheme.