On 7 February 2017, Theresa May’s Government published their long-awaited Housing White Paper. To many, it gave the impression of a document that had been kicked around Whitehall and steadily watered down from what was probably once a radical policy paper. Many sectors were dismayed by the absence of significant change after such fanfare in the lead up to publication. However, one sector that does seem set to be strengthened and could go on to win big is Build-to-Rent (BtR).

The Government is proposing further warm planning policy wording to the sector through modifications to NPPF/NPPG and an alternative approach to BtR called Affordable Private Rent. A sister document (Planning and Affordable Housing for Build to Rent) was published alongside the White Paper, to obtain views on measures to support BtR through the Planning System by 1 May 2017. It is well worth making a representation if you have an interest in the sector.

The case for intervention

Planning and Affordable Housing for BtR highlights that in the 1920s and 30s, the country had a housing sector anchored by high levels of institutional investment for the development and ownership of purpose-built housing for rent. The Government reaffirms its interest in getting that sector back, principally to boost housing supply/delivery, offer greater quality and choice, boost economic growth and create an attractive product for low-risk institutional investment.

Crucially, the document highlights land acquisition, the negotiation of affordable housing agreements and the predictability and speed of planning decisions as key barriers for the sector. Even more crucially, the document acknowledges the risk of market and/or regulatory failure without Government intervention. The Government wants to know whether these risks warrant intervention to stimulate the sector and facilitate its growth.

National Planning Practice Framework and Guidance wording

The existing version of the NPPF seeks to widen opportunities for home ownership, without referencing the same objective for rent. As such, policies since its publication have continued to focus more on home ownership than rent, with Right to Buy and Starter Homes at the heart of election commitments.

While the complementary NPPG does reference housing to rent and  the differences to build for sale, the document is unable to elaborate due to the need for consistency with the NPPF. Accordingly, the Government is consulting on a change to the NPPF that requires authorities to consider BtR at all stages of the planning process. Not in itself a silver bullet to the sector, but there could be significant positive outcomes if the new wording has the teeth to require authorities to identify sufficient land to meet the identified local need for BtR with land allocations specific to BtR.

Affordable Private Rent

As so often happens with national planning policies concerning affordable housing, land value capture, sustainability and design, the Government takes its lead from London case studies, for good or ill. The White Paper’s proposed Affordable Private Rent, which has its foundations in the GLA’s Discounted Market Rent, comprises a minimum of 20% of homes, offered at a minimum of 80% discount relative to the local market, with tenure-blind pepper-potting throughout the development.

The main benefit to developers is that this is likely to be classified as ‘affordable housing’, negating the need to provide alternative forms of affordable tenure. It will also provide certainty where there is currently considerable ambiguity.

Discounted interventions

The Government discounted a number of other policy interventions:

• Permission in principle in favour of Build to Rent schemes meeting certain characteristics. As currently configured, it would not be effective in BtR planning.
• Presumption in favour of Build to Rent schemes meeting certain characteristics. There is already a concept of presumption in favour of sustainable development in the NPPF.
• Permitted development rights for Build to Rent schemes meeting certain characteristics. Developments are generally quite large and so should be considered through the planning system as per normal.
• Creation of a restrictive zone or specific planning use class for Build to Rent. This could have perverse outcomes and limit the use of land for housing.

Additional consultation questions

The Government is consulting on a definition for BtR and specifically whether a minimum unit size should apply. They are also consulting on a clawback provision that requires an off-site affordable housing contribution to be paid if any Affordable Private Rent unit is taken out of the sector. Under this scenario, the Government is likely to prevent authorities from requiring minimum length covenants on the tenure.

Is it worth bothering with the Consultation?

It is evident from the Housing White Paper that policy proposals have been mooted in response to case studies that CLG have been alerted to. Furthermore, the Government needs as much encouragement and support as possible to create a positive and supportive policy framework for BtR.

Affordable Private Rent (APR), in its current guise, is an attractive alternative to affordable housing and so the Government’s decision to ringfence for BtR or open up to private housing schemes will have major implications for land acquisition. Similar ramifications could exist based on the extent of the new NPPF requirements. The devil will be very much in the detail.

Finally, whilst the consultation has largely ignored design issues for BtR, the consultation presents an opportunity for the sector to highlight to Government the need for a more flexible design framework; particularly relating to space standards, corridor lengths, single vs. dual aspect and units per core that are currently inhibiting the sector. It is essential that the industry gets its message across to Government through this consultation.