PLANNING: An Introduction to London (Firms)

A New Government, A New Approach? 

At the time of writing we are in the early post-election period with a new Government enjoying a strong majority in the Commons. Following many months, if not several years, of political upheaval, we are looking forward to some comparative stability – and the market confidence that this shows early signs of bringing. Already we have seen a significant uptick in transactional activity in the (mainly commercial) UK Real Estate sector as liquidity is released to get deals done. How long this will continue remains to be seen as we edge through the transition period, scheduled for the end of the calendar year 2020.

As always, there are different stories to tell both across the different asset classes, and at a regional level. Commercial/industrial land, including warehousing, particularly in the south east region, is demanding an increased premium as businesses continue to secure production line resilience with the expectation of there being some form of friction at trading borders. Notwithstanding the residual concerns around how the UK will transact in its new world, anecdotally, the planning sector is busy – both legal and consultancy side.

Government has hinted at a simplified approach to town planning, in response to a think-tank report, with local political controversy to be side-stepped by a new zonal system that sounds like (details are sketchy at this stage) a cross between an enhanced permission-in-principle and a local development order. Whether this is conscionable at grassroots level, or consistent with an increasingly devolutionary rhetoric remains to be see. Meanwhile the infrastructure consenting regime appears to be continuing along its positive trajectory.

NPPF and PPG 

A new year and a newly revised National Planning Policy Framework (February 2019) and Planning Practice Guidance (in various respects throughout 2019) meets us.

The NPPF has been modified with the intent of, among other things:

(a) “improving” the local plan review and adoption process;

(b) updating the presumption in favour of sustainable development;

(c) standardising the approach to housing supply;

(d) introducing the concept of a net environmental gain; and

(e) continuing the protection of the green belt.

The PPG in particular provides useful detail on the approach to affordable housing provisions, particularly in the ever-growing built to rent sector. Across the residential sector more generally, a conformed approach to viability testing (both in plan-making and decision-taking) in terms of what allocated sites can support and how proposals should be assessed has been introduced. There is much more detail around the approach to recording performance against the five year housing land supply requirement, and assessing housing need. Much of this was trailed in the consultation draft NPPF in 2018, and so the market has been largely unsurprised (with the exception of some LPAs on the release of local figures).

The retail sector continues to adapt, as it is forced to do from online competition. In metropolitan locations, retail is becoming more of a hybrid, flexible, experiential offering. For many town centres, however, the struggles continue and it will be interesting to see what comes out of Government’s review of the business rate system. In the office sector there is an increased appreciation by the traditional providers of the competition from flexible office space providers. We are seeing new development schemes coming forward with a particular emphasis on facilities for the clients and workforce that really change the workplace environment. In both cases, the challenge for the planning system is how the inflexible and outdated use class system can respond. Consequentially, this could place responsibility on the shoulders of LPAs to construe flexibly the use class of floorspace to allow for a more contemporary approach to unit occupancy. Will a LPA be willing to accept an office space as B1 for example if there is a high degree of client entertaining space?

Infrastructure 

A number of very large infrastructure projects continue to develop. These include HS2 (and possibly HS3 and HS4), Heathrow and Crossrail 3. Most recently a trans-pennine railway upgrade has been spoken of. The National Infrastructure Committee continues to recommend a strategic, long-term approach to necessary and beneficial investment, and Government speaks of a long-overdue National Infrastructure Strategy.

We can see a continuing need to address energy security and supply through strengthening cross-border connectivity and domestic storage, as the technology allows. This together with the continued need to improve renewable energy generation means that times should continue to be busy in the energy sector. ]

So what are the challenges? 

In a phrase, climate change – albeit this has several aspects to it. We must also continue to appreciate that the social and political agenda, even in this age of immediate social media frenzy, takes time to permeate through the planning system.

There is an acute need for a long-term, strategic plan for the delivery of flood defence, at least some of which will be man-made defensive barriers. This winter has shown there is still work to do and the political imperative is obvious. In addition, the need to plan for the delivery of supporting infrastructure for renewable energy generation, energy storage and distribution and the expected boom in electric vehicle trips is urgent.

The expectation is falling more heavily on housebuilders to deliver modern, well-built and highly energy efficient homes at affordable prices. Whether this is through more stringent building regulations, planning policy or both (as is currently the case) remains to be seen.

The ability for new office and retail development to conform to high environmental standards without leading to unaffordable rental increases is in the spotlight. Occupiers are increasingly looking to be able to trade off a brand that grasps the issue of environmental responsibility, and landlords are eager to make it a selling point for their new space. An interesting question will be to what extent the planning system will seek to impose modern standards of environmental performance on schemes to refurbish existing buildings – and what effect any such proposal would have on rental levels.

We can reasonably anticipate a surge in activity in the first half of 2020 (and are in fact experiencing that), and it will remain to be seen how long that will last and to what extent activity slows while the gaze of the sector turns, once again, to the political class as the transition period comes to an end.