King's Speech: if you build it, growth will come

The new Labour government's decision to feature plans to ‘get Britain building again’ as one of its first announcements upon taking office highlights both the severity of the housing crisis it has inherited and the crucial role property development will play in its strategy to encourage investment and stimulate economic growth. Whether it is house building, onshore wind farms or data centres, early signs suggest that Labour will facilitate a raft of property-based activity that aims to provide a sustainable solution to the housing crisis, secure economic growth and (perhaps less importantly) keep Real Estate lawyers busy in the coming years.

Tom Beak and Lucy Reast in the Real Estate & Construction team, look at the key property-related proposals where changes are expected and highlight the opportunities and challenges awaiting landowners and property developer clients.

1. Planning

As promised during the election campaign, the King’s Speech included Labour’s proposal for wholesale planning reform. The proposal includes increasing devolved planning powers to local authorities (whilst simultaneously giving central government decision making power for ‘nationally significant infrastructure projects’) and a reintroduction of mandatory housing targets.

Our developer clients are certainly welcoming of planning reform – in recent years, inconsistencies and delays in planning decisions, together with regular turnover of planning officers has created financial nightmares for SME developers. However, wholesale legal reforms can create more problems than they solve, particularly when the legislation is rushed. With this in mind, it is reassuring to see that the new proposals involve consultation with the end user and also include investment in the system generally to increase the number of planning officers by 300 across the country. Whether that is enough to improve decision times remains to be seen. The scope of ‘nationally significant infrastructure projects’ also remains unclear and has received criticism for being at odds with the increased devolved powers – however, delays in planning decisions and the related financial devastation this can cause has scuppered projects previously and in recognising this fact, the government have shown that they are committed to these projects coming to fruition.

Mandatory housing targets are also a positive sign and should encourage growth, but our clients want to build houses that add value. If the reforms include properly incentivised devolution of planning powers, encouraging local authorities to collaborate with local SME developers, the government can ensure that planning decisions are not simply about hitting targets but have a genuine placemaking approach, allowing house building to be better tailored to location and local need.

2. Greenbelt

Reference in Rachel Reeves’ first speech to the need to unlock greenbelt land for development has been said to represent a “gold rush era” for housebuilders, landed estates and property companies. Local planning authorities will be instructed to review greenbelt boundaries, with a view to facilitating development on both ‘grey belt’ (low-quality neglected greenbelt land such as derelict buildings, car parks and wastelands) and brownfield sites (previously developed land that is no longer being used, often involving contamination risk due to previous industrial use).

Greenbelt building has always been contentious, but the government recognise that the housing crisis is at a stage where this luxury can no longer be afforded. The attitude to date, perhaps understandably, has been “not on my doorstep, thank you” and critics have suggested that residents and councils alike will now be forced to accept new developments on their doorstep. But this “gold rush” for developers does not have to spell disaster for local residents and does not have to spark a new age of NIMBYism. With appropriate Section 106 measures (shown by the government’s “golden rules”), modern construction and design and a focus on currently unused areas, controlled greenbelt building can add value, expanding and developing commuter towns rather than adding eyesores to the belt.

The clear focus on ‘grey belt’ land should remove the contention from greenbelt building. We have certainly seen more appetite from investors and developers to purchase and build on grey belt and brownfield sites, evidencing a growing market and a genuine solution to bring life back into disused land, rather than decrease the recreational areas of the greenbelt.

There are a wealth of SME developers waiting in the wings to support national developers in achieving the government’s new home target. Utilising developers who have a genuine understanding of the local area, the needs of potential buyers and a respect for the existing residents, increases the chances of achieving sustainable, place-focussed homes and decreases the chances of greenbelt land being used to simply hit targets.

3. Environmental

In their manifesto, Labour committed to ensuring that new housing stock is eco-friendly so that “the surge in housing does not come at an environmental cost”.

The previous government scrapped the plan to tighten the energy performance regulations which would have seen the minimum EPC rating for rented properties in England and Wales change from E to C by the end of 2025. Whilst indications in the King’s Speech may have been lacking or decidedly vague, the industry expects the Labour government to reintroduce these plans in the near future, as indicated by Rachel Reeves’ suggestion that they “will ensure homes in the private rented sector meet minimum energy efficiency standards by 2030”.

Far from increased energy standards and stricter requirements reducing investment, we are seeing builders and investors pre-empting future requirements and demanding higher standards in new builds than are currently required by law and so we anticipate that the construction market is well-placed to deal with more stringent environmental requirements.

However, away from the construction of new buildings, we would anticipate that any proposals to improve the environmental performance of existing buildings may struggle if they do not include proper incentives or financial support. As such, it is reassuring that the government propose to invest £6.6 billion as part of the “Warm Homes Plan” to assist in achieving improved energy performance in the private rental sector.

4. Wind farms

Labour’s lifting of the effective ban on new onshore wind farms has already been polarising, with the potential for vast areas of farmland and countryside to become populated with turbines in the coming years and new powers to ensure that the potential for disputes and objections is decreased.

This move shows that the government’s commitment to sustainability and net zero targets are genuine. It also invites real investment and development opportunity for our clients. 

In addition, there is an expectation the Government will themselves look to include several large-scale wind farms in a new Nationally Significant Infrastructure Project scheme approved on a central basis. Areas tipped for the new generation of wind farms include the Lake District National Park, North Norfolk, County Durham, Mid Sussex, Stroud and Teignbridge.

Conclusion

The King’s Speech (and indeed manifesto promises) is often lacking in detail. The government’s intentions are clear, but what we are missing is the “how” – this will be revealed once the draft legislation is available and once the bills begin to be debated. The logic of the government’s proposals is well signposted – we have a housing crisis and need economic growth, so getting “Britain building again” if successful, will get the economy moving in theory but the government must ensure that there is a place-based approach to building, not simply a target based approach – we need to resolve the housing crisis by building in a sustainable and marketable way.

FURTHER INFORMATION

If you have any questions about any of the real estate issues covered in this blog, please contact Tom Beak, Lucy Reast or a member of our Real Estate and Construction team.

ABOUT THE AUTHORs

Tom is a Senior Associate in our Real Estate team and is experienced in a range of commercial and residential property matters. 

Lucy is a trainee solicitor at Kingsley Napley and is currently sitting in Real Estate and Construction as her second seat. Lucy’s current work involves assisting with both residential and commercial property transactions.