New research has revealed that local authorities are increasingly relying on additional fees from developers to resource the planning process, while delays continue to hold up deadlines for new housing
Conducted by the Home Builders Federation and Paragon Bank, the research discovered that councils responding to a Freedom of Information request received an average of almost £600,000 each through Planning Performance Agreement (PPA) fees.
Of the eighty-five responses received from local councils, 12 received more than £1m through PPA fees over the last three years. The City of London received the highest amount during this period, taking home almost £5m.
Neal Moy, managing director at Paragon Development Finance, explained: “This research highlights an issue that many developers we work with regularly experience. When planning timelines become unpredictable, the impact is felt throughout the development process: developers are forced to commit additional resources for longer periods, which creates greater uncertainty for lenders around delivery programmes and funding timelines.
“Over time, this dampens confidence to invest and ultimately slows the pace of housing delivery.”
Research finds PPA fees are being relied on too much
PPA fees are intended to provide a framework through which applicants and local authorities can agree how complex planning applications will be managed, including key tasks, milestones, responsibilities, resources and timescales.
However, the report warns that ongoing capacity pressures in local planning departments are increasingly driving the use of PPAs to secure dedicated resources to progress applications.
Where an alternative timeline is agreed through a PPA, an application is no longer measured against the standard statutory determination period. Growing reliance on these agreements, alongside Extensions of Time (EoTs), can therefore make headline planning performance statistics less representative of how long applicants actually wait for decisions.
The consequences of these delays make developers less willing to take on projects
These delays are particularly acute for SME home builders, which have fewer sites to spread the financial cost of delays across.
Repeated exposure to these costs can make SME developers less willing or able to pursue future schemes. Over time, this risks driving experienced developers out of the market and limiting housing delivery.
HBF and Paragon call for government to intervene
To address these issues, the research calls on government to:
- Ensure transparency by requiring local planning authorities to publish annual information on the value and allocation of PPA income received
- Develop a more consistent national framework for PPA structures, charging schedules and service standards to reduce variation between authorities
- Publish updated guidance on when PPAs and EoTs should be used and how realistic timelines should be agreed. Their use as a routine response to resource constraints should be discouraged
- Continue investing in the recruitment, retention and training of planning officers, specialist consultees and technical experts to address the underlying capacity challenges that contribute to delays
Neil Jefferson, chief executive at the Home Builders Federation, stated: “With the government’s housing targets requiring a significant increase in delivery, we need sustained investment in planning departments alongside greater transparency over how additional fees are being used, and how PPAs should be used.
“A properly resourced and consistent planning system is essential to giving businesses a chance to successfully increase housing delivery.”
