Over 100,000 homes held up due to defective EU laws will be unblocked between now and 2030, delivering an estimated £18 billion boost to the economy, the government has announced.
Currently, legacy EU laws on nutrient neutrality are blocking the delivery of new homes, including cases where planning permission has already been granted.
Nutrients entering our rivers are a real problem, but the contribution made by new homes is very small. These laws which originate from Brussels put a block on new homes in certain areas – taking away control over what is built, and when, from local people. Through an amendment to the Levelling Up and Regeneration Bill, the Government will do away with this red tape and allow for the delivery of more than 100,000 new homes desperately needed by local communities.
Thanks to the government’s action, it is expected that developers could begin construction on these homes in a matter of months.
The move comes alongside new environmental measures that will tackle pollution at source and restore habitats.
This includes significantly expanding investment in and evolving the Nutrient Mitigation Scheme run by Natural England, doubling investment to £280m to ensure it is sufficient to offset the very small amount of additional nutrient discharge attributable to up to 100,000 homes between now and 2030.
Natural England will work with local authorities, the private sector and others to tackle nutrient pollution and work towards the long term health and resilience of the river systems. The Government intends to work with the house building industry to ensure that larger developers make an appropriate and fair contribution to this scheme over the coming years, and is discussing the right structure and approach with the Home Builders Federation.
The Government will then accelerate work on full site restoration through further work on new Protected Site Strategies, which Natural England will draw up in partnership with local communities to set protected sites on the path to recovery in the most affected catchments with the highest housing demand.
Secretary of State for Levelling Up, Housing and Communities, Michael Gove MP said “we are committed to building the homes this country needs and to enhancing our environment. The way EU rules have been applied has held us back. These changes will provide a multi-billion pound boost for the UK economy and see us build more than 100,000 new homes. Protecting the environment is paramount which is why the measures we’re announcing today will allow us to go further to protect and restore our precious waterways whilst still building the much-needed homes this country needs. We will work closely with environmental agencies and councils as we deliver these changes.”
Secretary of State for Environment, Food and Rural Affairs Thérèse Coffey said “these new plans will cut nutrients and help support England’s precious habitats whilst unlocking the new homes that local communities need. We are going to tackle the key causes of nutrients at source with over £200 million of funding to reduce run off from agriculture and plans to upgrade waste water treatment works through conventional upgrades, catchment approaches and nature-based solutions. This builds on the key commitments made in our five-year strategy – our Environmental Improvement Plan – as well as our Plan for Water which brings forward more investment, stronger regulation and tougher enforcement to protect our rivers.”
Alongside the amendments tabled to the Levelling Up and Regeneration Bill, which is currently in the House of Lords, the Government has announced a series of new environmental measures to restore our protected sites, including a commitment to offset the very small amount of additional nutrients attributable to up to 100,000 new homes.
Beyond the immediate action that will be driven by Natural England’s Nutrient Mitigation Scheme, this package includes:
- Committing to further work on developing Protected Sites Strategies in the catchments most impacted by nutrient neutrality and with the most acute housing pressures. These bespoke plans will help identify specific action needed to restore habitats and species in specific areas. The aim is to agree and implement tangible actions to reduce pollution at source, through nature-based solutions such as wetlands and new innovations.
- Reducing nutrients entering the water from new development with new laws expected to drive significant investment from water companies to upgrade wastewater treatment works to the highest technical standards by 2030. The next water company investment cycle will be among the biggest and most ambitious ever.
- Conducting at least 4,000, inspections on farms each year – making sure that slurry and other sources of nutrients are being handled in a way that minimises pollution of the water environment.
- Reducing nutrient run off into our rivers from farms – supporting our farmers by investing £200m in grants for improved slurry storage infrastructure and precision spreading equipment. This makes a further £166m available for new investment into slurry infrastructure.
- Investing £25m to drive innovation to help farmers manage plant and soil nutrients. This will increase resilience, reduce input costs and improve productivity as part of a more circular economy for nutrients. The effective use of waste has the potential to create new revenue streams. We will also consult this year on modernising our fertiliser product standards to drive increased use of organic and recycled nutrients.
- Introducing from 2024 payment premiums into our environmental land management schemes. This will accelerate take up of certain high priority options, including those that provide benefits for water quality.
- Publishing a River Wye action plan this Autumn to tackle the unique issues in Herefordshire.
- Ensuring new homes built do not place undue stress on already stressed local water networks by consulting this year on new requirements where needed for Sustainable Drainage Solutions to reduce pressure on storm overflows from new homes and flood risk.
- All of this builds the Governments Plan for Water, which sets out measures to transform and integrate our water system, address sources of pollution and boost our water supplies through more investment, stronger regulation, and tougher enforcement.
The nutrient reduction plan will also help deliver on its legal target to reduce nutrient runoff from agriculture by at least 40% by 2038, and by 15% in nutrient neutrality catchments by 2028, and to reduce phosphorus loadings from wastewater by 80% by 2038, and by 50% by 2028.
The Government has a strong record on housebuilding, with more than 2.2 million homes delivered since 2010. The Secretary of State for Housing recently set out his long-term plan to go even further and unlock more development across the country.
Changes to nutrient neutrality rules and wider planning reforms will allow the Government to go even further towards its target of delivering one million homes this Parliament. The environmental measures announced today lead on from the Government’s Plan for Water published in April which set out actions to address all sources of water pollution, including through accelerating £2.2bn of water company infrastructure investment to prevent storm overflow discharges and improve drought resilience, and unlimited fines for environmental polluters.
The current EU-derived regulations have required Natural England to issue guidance to 62 local authority areas that new development must be ‘nutrient neutral’ in their area, including Somerset, Norfolk, Teesside, Kent, Wiltshire and the Solent. This has blocked or delayed new development – including around a large number of homes that already have planning permission and local communities have already said they want.
The amendment will remove this requirement, allowing Natural England greater freedom to develop catchment-specific solutions to the causes of nutrient pollution in partnership with each community, supported by government and private investment.
London, Birmingham and Manchester best placed for brownfield house building boom
Greater London, the West Midlands and Greater Manchester home to the largest proportion of brownfield land in the current market, data from Searchland has revealed. Housing secretary Michael Gove has signalled that the government will focus on redeveloping commercial brownfield sites into residential homes, rather than focusing on the green belt.
In response, Searchland said the government is effectively bowing to pressure from NIMBYs by not exploring building on the green belt.
Mitchell Fasanya, co-founder and chief executive of Searchland, said “despite the government’s best efforts to encourage brownfield building in recent years, it remains a complicated and expensive process and one that is unlikely to address the housing crisis in a meaningful manner. However, rather than tackle the controversial subject of green belt development head on, the government has decided to take the easy way out and pursue a half-baked plan on converting previously developed land that is no longer being used, such as abandoned or underutilised industrial areas and obsolete commercial units. Unfortunately, as our figures show, brownfield development could benefit many major cities, but its availability is also far too lopsided towards certain counties to help address the issue of housing supply on a national scale.”
London has the most brownfield land, as the capital’s 4,392 brownfield sites account for 16.5% of the national total which, if completely redeveloped, could deliver over 235,000 new housing units to the London market.
The West Midlands sits in second, with 2,522 brownfield sites accounting for 9.5% of the national total with the potential to deliver more than 135,000 new homes.
With 1,971 sites in Greater Manchester, brownfield building could also bring over 100,000 new homes to market (105,646).
Other counties boasting some of the largest levels of brownfield include South Yorkshire (4%), West Yorkshire (3.8%), Surrey (3.6%), Essex (3.4%), Dorset (2.9%) and Hampshire (2.8%).
The City of London (0.01%), Rutland (0.02%) and the Isle of Wight (0.3%) are home to the smallest proportion of brownfield sites in England.
Rights of light – What is happening and how it affects you
There is an increasing trend towards litigation in the rights of light arena. In March 2020 the case of Beaumont v Florala ended in an injunction, forcing the developer to cutback its newly constructed hotel, which reduced light to the claimant’s neighbouring serviced office building. More recently other cases have made their way through the courts, only to settle on the first day of trial. A claim against the M&G owned Wells House in Oxford Street (heard under case name Sirosa v Prudential), settled in November 2022 and a claim brought by the Estate Office against the HB Reavis owned site at Worship Square, Shoreditch (heard under case name Adjoin v Fortytwo House Sarl), settled in May 2023. Other cases are making their way through the courts.
There are a number of reasons for this trend. The first is heightened awareness. Some high profile rights of light cases have been picked up by the mainstream press. Another reason is the increasing prevalence of opportunistic surveying practices that actively identify new developments and bring claims. These are often brought on a no-win-no-fee basis, where the claimant does not need to pay for legal costs if the claim is unsuccessful.
Litigation thrives where there is uncertainty and rights of light cases have uncertainty in terms of both the technical tests and the legal arguments.
On the technical tests, there is uncertainty over whether the current Waldram method of analysis, which dates back to the 1920s, is appropriate. Waldram is based on light received directly from the sky at table top height in the room, but many believe other factors should be taken into account, e.g. reflected light, sunlight or seasonal variations.
Another difficult technical area is transferred rights. This refers to the concept of a demolished building being replaced with a new building where rights are said to “transfer” if new apertures overlap to some extent with old apertures. The cases are old and talk about “cones of light” which simply does not match the way light loss is measured, and says nothing about how to account for changing floor levels or changes in plane or axis.
The theme continues with uncertainty on the legal arguments in key areas. The most important is around cumulative impacts, where two schemes are coming forward that each impact a common neighbour. This is key in areas undergoing rapid development e.g. Vauxhall, Canary Wharf, Victoria. These raise the question of how the injuries are to be apportioned. The second scheme will face a worse baseline as the neighbour will already be worse lit following the first scheme. The limited caselaw (essentially a 1932 case called Sheffield Masonic) states that it is not “first over the line”. Modelling the various scenarios and insuring on an appropriate basis, is not straightforward. Other areas of legal uncertainty include whether and how certain provisions in old deeds, such as a reservation of a “right to build”, bind successors.
What this means in practice is a hardening insurance market. Policies are more expensive (both in terms of premiums – what is paid for the policy – and excesses – the initial amount paid by an insured on each claim before the insurer pays out) and we are seeing an increase in group excesses rather than individual excesses per impacted building. In most cases insurers request cutbacks and profit share numbers to sense check any budgets set by the surveyors, as these are normally based on a market methodology called “book values” rather than a profit share. It is not uncommon to see a policy where the combined excess and premium is equivalent to (or in some cases, more than) the surveyor’s budgets.
The insurance market is also getting smaller, with one underwriter exiting the market at the moment, and others looking mainly to underwrite perceived “simpler” schemes. For higher value policies with a large maximum for insurance coverage, brokers are having to work hard to layer a number of policies to achieve the required level of cover.
We are also seeing changes in how insurers handle claims. Previously there was a sense that an insurer would never ask a developer to down tools, absent an actual injunction prohibiting works. But this has been called into question by perceived market behaviour, for example the cranes on the Wells House scheme were dismantled before any injunction was secured. A developer would need to check any policy wording to see who bears the costs of such action.
For a developer facing an aggressive rights of light claim, getting the right technical and legal advice will be key, in order to harness any uncertainty rather than suffer from it.
Housebuilders are stuck with expensive new homes they cannot sell – a crisis is coming
It’s official. According to the property listings site Zoopla, home sales this year are set to be down on 2022 levels by 20%. This means that the number of completed sales will hit its lowest level since 2012 – when Britain was riding out the aftermath of the global financial crisis. According to new data from the Bank of England, there has also been a 30% fall in mortgage approvals.
So, not only are fewer home sales getting over the line, fewer people are being granted mortgages to buy them. Though wages are starting to rise, house prices remain incredibly high which means affordability is being stretched by rising interest rates – average 2- and 5-year fixes are still above 6 per cent – meaning buyers need larger mortgages, bigger deposits and higher incomes to buy homes.
None of this should come as a surprise. It has been on the cards since Liz Truss and Kwasi Kwarteng’s ill-fated “mini-budget”.
All told, the latest data suggests that the impact of the rising mortgage rates which have been deliberately hiked by the Bank of England as part of its attempt to tame high inflation is now being felt in the housing market. This housing market slowdown might not be a surprise, but it does have serious consequences for people who want to buy or move and, of course, for housebuilders.
Earlier this year there was a total collapse in sales of off-plan new build homes which has hit housebuilders where it hurts – their bottom line.
I am hearing that builders are stuck with expensive new homes that they cannot sell. Indeed, next door to my own building in east London is a shiny brand-new block of flats where no flats have sold despite being on the market for several months. A few years ago, they’d have been snapped up before they were even finished.
A few weeks ago, major housebuilders saw their share price fall after the builder Crest Nicholson said it expected to make a profit of about £50m this financial year, compared with the £74m it had expected in June. As a result their share price tumbled by 10%. The warning also saw Taylor Wimpey fall by 4% on the FTSE 100, while Persimmon, Berkley and Barratt were down by more than 2%.
The truth is that the worst is yet to come for the housing market. It takes time for higher interest rates to feed through into sales. We are now seeing the early signs of the effect they are having. For now, house prices remain reasonably stable. The much-feared market crash that was being discussed a few months ago has not materialised.
But, the truth is that the full impact of this new economic context won’t become clear until the first or second quarter of next year.
A housing market slowdown could be an early warning sign that there will be a recession. It’s worth remembering that back in 2012, the last time home sales were this low, Britain was in the midst of a double-dip recession. With the Bank of England set to hike interest rates again due to stubborn inflation and wage growth, this is a likely scenario.
The housing market is a bellwether for the rest of the economy, so there’s no doubt that the government will be paying close attention.
Their Autumn Statement is just around the corner and, as in 2012, they are considering a rescue package for housebuilders and the housing market. The idea of Help to Buy 2.0 has already been leaked and the Treasury will be cooking up ways to stimulate the housing market in order to avert a crisis for house prices and housebuilders.
What happens next depends on what the policy teams in Whitehall come up with. But, any rescue package that does materialise for the housing market really ought to be considered in contrast to the complete lack of support for people who are struggling to afford their rising mortgage repayments and, of course, for private renters who are struggling with historically high rents while the state support available to them remains frozen at 2019/20 levels.