10What needs to change?
To solve the housing crisis, the existing suburbs must build more homes. Reforms to achieve this must be bold enough to significantly increase construction in the most expensive cities. The real difficulties that building new homes in the existing suburbs entails mean there is little point in merely shifting new homes from city centres or the outskirts of cities into suburbs without increasing overall supply.
Reforms to increase suburban supply are therefore required to navigate complex trade-offs. Any proposed policy can only be expected to affect each individual neighbourhood a small amount to be technically and politically realistic. But they would also need to affect a large swathe of the existing suburbs to achieve the necessary scale to be worth the political risk.
The suggestions below cover a range of possibilities – from big national reforms that would fix the problem for good; to changes to the existing system that would alleviate the worst problems; and suggestions for experiments and
trials. Crucially, they are not replacements for making more land available for development on the outskirts and centres of cities. Addressing the housing crisis requires more responsive supply across every part of expensive cities, not just in a few neighbourhoods.
National reforms to increase total supply
These reforms would all need to be implemented by national government.
Shift the planning system towards a flexible zoning system
Many of the problems of the discretionary planning permission system could be avoided if land was instead regulated through zoning, as in Japan and some US cities like Houston. By designating how land could be used, and perhaps how it looks, before it is purchased and a development is designed and proposed, it would reduce risk for builders in the existing suburbs, especially SMEs. In this system, public engagement, including consultation, would be front-loaded and takes place when the plan for an area is decided.
A system that, in principle, allowed most kinds of development provided it was in the plan unless the council says “no”, rather than forbidding all development until the council says “yes” would be more responsive to demand and entail more suburban densification. Any such zoning system would need to be “flexible” by allowing many different uses and a range of densities within most zones, with some separate zones for polluting industrial uses.
Increase the scope of permitted development
Within England’s current system of regulating land-use, the primary alternative to planning permissions is permitted development (PD). Development which is considered to be PD can proceed provided it complies with building regulations. Extending PD, such as to include upwards extensions as the Government is considering, or infill development for very small sites, would make it easier to incrementally increase supply across the existing suburbs without major redevelopment.
Although there have been concerns about office-to-residential conversions under PD, these primarily stem from the relaxation of building regulations and the location of some of these conversions on employment sites. If building regulations were retained with an expansion of permitted development rights, then the existing suburbs could accommodate more homes without any reduction in the quality of housing stock.
Intensify the price element in the calculations of housing need
Currently, housing targets for local authorities are determined by demographic predictions from the ONS, with a multiplier for affordability. This multiplier increases the target for less-affordable local authorities face, but it does not capture the full differences in prices between cities.
This affordability multiplier could be much stronger. For instance, increasing the multiplier’s effect from 0.25 per cent to 0.33 per cent or higher would result in greater housing targets for the most expensive cities. Total supply in those areas of greatest demand would then increase. The higher targets would then need to be combined with other reforms to make it easier to build in the suburbs.
Reforms to make suburban supply easier
Use the National Planning Policy Framework to allocate some sites in the existing suburbs
The National Planning Policy Framework (NPPF) describes how Government policy on planning should be implemented and interpreted. The 2018 version of the NPPF currently lacks any policies explicitly around suburban densification, aside from a requirement for local authorities to deliver 10 per cent of their housing requirement on small sites, which remain undefined in the NPPF. This is not likely to have a major effect on suburban densification. With over 50 per cent of suburban neighbourhoods lying dormant, such a small threshold for small sites will not fundamentally change the pattern of supply.
The NPPF should require local authorities to set out in their local plans how they aim to increase supply in the existing suburbs in addition to their outskirts and city centres. This could be done by requiring as part of urban local authorities’ “Call for Sites” a specific request from cities for submissions from local homeowners who wish to see their property redeveloped to allocate their land in the local plan.
Introduce and update Public Transport Accessibility Levels for large cities and combined authorities
One of the factors shaping the densification of London’s suburbs has been the Public Transport Accessibility Level (PTAL), a measure of how well-connected land is to London’s public transport network. These PTALs have both made it easier for builders to understand where there is capacity for further suburban development, and ensured that new suburban development has good transport infrastructure.
Similarly, Greater Manchester calculates a Greater Manchester Accessibility Level for the same purpose, but no other combined authority does so. Other large cities with complex public transportation networks should calculate similar metrics for their urban areas to inform planning policy and improve the predictability of the system to developers.
While the PTAL framework has increased housing supply along certain public transport corridors in London, this has not been the case for every public transport corridor. London should research why the effects of PTALs on housing supply have varied, and update either the PTAL methodology or how it interacts with planning policy in the draft London Plan to increase supply on corridors below capacity.
Suburban Design Guides like Croydon’s to set out rules for developers and minimize the risk they face
Croydon has only recently adopted its suburban design guide, but if it successfully increases suburban densification within the local authority over the next couple of years, then other local authorities should adopt similar documents. Having a more predictable and less risky process of suburban densification will make it easier for developers to build more homes in expensive cities.
Similar proposals have also been suggested at the national level by the Building Better, Building Beautiful Commission.29 These would introduce a process by which local authorities could adopt either a national or local design codes with control over facades, materials, and other such aesthetic features. Developments which comply with these design codes could proceed through the planning process on an automatic, rules-based approach, while the discretionary planning system could be retained for developments which differ from the design code.
Replace Section 106 developer contributions with a simpler, flat 20 per cent levy on development
There are two distinct problems with Section 106 obligations and suburban intensification. The 10-dwelling threshold for contributions to affordable housing and highly-discretionary and uncertain negotiations which underpin such contributions discourage developers from pursuing smaller developments in the suburbs.
Both of these problems could be eliminated if Section 106 were replaced by a Land Development Charge where developers play a constant 20 per cent charge to the local authority on all development, as suggested in previous Centre for Cities research.30 It would make small developments of a dozen or more dwellings much more viable financially, and remove the uncertainty that Section 106 introduces into suburban development. These revenues from such a Land Development Charge could continue to be used for affordable housing.
A “double bonus” which increases the New Homes Bonus for infill development in existing suburbs
The New Homes Bonus was introduced to increase the incentives for councils to give planning permission to new houses. But it does not take into account that some planning permissions have higher political costs than others. The New Homes Bonus should be larger for infill development of suburban neighbourhoods to reflect the greater political risks. This “double bonus” should remain unringfenced, but could be used to fund the small infrastructure improvements that densification would require.
Increased funding for planning departments
From the perspective of planners, it takes almost as much work to take a very small site through from application to completion as it does a much larger site. Planning departments in cities have on average been cut by 40 per cent since 2011, and currently struggle to have the capacity to both work on small sites and meet government housebuilding targets.31 The distinct planning needs of suburban intensification will require a boost in capacity for planners, as they will require relatively more work than conventional methods of supply on large sites.
Granny flats and millennial pads in back gardens
California in 2017 legalised “Additional Dwelling Units”, or small detached annexes, as by-right development in the gardens of Californian properties. These now constitute a major component of housing supply in California, with over 10,000 permits submitted in Los Angeles alone since then, a quarter of all new supply in the city.32
Back gardens in England and Wales are almost certainly smaller than those in California, but granting either a permitted development right or a presumption in favour of small annexes in gardens above a certain size would increase supply in the suburbs. These annexes would work well for older homeowners who wish to downsize but stay in their immediate neighbourhood, or for young people who want some private space while living with their parents.
London YIMBY proposals
A recent suggestion to build support for suburban intensification has emerged from the Yimby (Yes in My Backyard) Alliance.33 In summary, it would devolve land use decisions, subject to a majority decision and a design code, to an extremely local level of a single side of a street or a block, and allow local residents to capture the increase in land value that development would bring. The aim would be to win support from local homeowners for more homes in the suburbs.
This idea should be trialled using Local Development Orders. In return for a share of stamp duty from the development, government should encourage and work with local authorities to develop a pilot, in a more expensive city facing a housing shortage.