Costly, slow and risky planning system 'burdening' SMEs, says report

The average time taken to obtain outline planning permission for a development is now a year, compared to 13 or 14 weeks in 1990, according to new research by Lichfields.

A new study commissioned by the Land, Planning and Development Federation and United Trust Bank, looked at the impact of various changes to the planning system on SME housebuilders.

The report, entitled Small builders, big burdens, points to research showing SME housebuilders in 1988 delivered 39% of all homes but by 2020 this had fallen to just 10%. It argues the planning system in its current form places burdens on housebuilders that create barriers for SMEs, defined as those building fewer than 100 homes a year.

It said, based on interviews with housebuilders, that a typical site of around 40 homes on a greenfield site that would have taken around 13-14 weeks in the early 1990s now often takes a year in 2023. This is followed by a further six to eight months to agree reserved matters and achieve full planning permission.

The report says that securing outlining permission has become more costly and risky, with broad costs increasing from £28,000 in 1990 adjusted for inflation to £125,000.

It said: “Now, seeking an outline permission on a similar site requires evidence from around 10-12 consultants and costs around £125,000 in consultant fees just to establish the principle of development.” On top of this, planning fees have increased by 72% since 1990 and are set to increase by a further 35%.

It also said the risk has increased.

“Whereas in the past, the principle of development could be straightforwardly established with little supporting evidence, validation lists now typically stretch to 30 separate assessments, and come with guidance notes that can exceed 100 pages”, it said.

It added: “This is made worse by too few areas having up-to-date local plans allocating sites for SMEs, meaning it is outline planning applications that have to do the heavy lifting.”

>>See also: Making SME house builders great again

The report makes a number of recommendations to improve the situation.

It calls for the evidence required at outline permission stage to be simplified and scaled back to “reduce the costs and potential barriers to entry” for housebuilders.

It also calls for local planning authorities to allocate more hand to smaller housebuilders, for planning fees to be reduced or eliminated on smaller sites and for local planning authorities to work with consultees and committee members to ensure that expectations for outline permissions are understood.

Housing Today’s A Fair Deal for Housing campaign has called for evidence on how planning for smaller sites can be speeded up.