The Competition and Markets Authority (CMA), which is currently investigating the housebuilding sector, could formally defend a presumption of planning approval in certain areas.
A zone system had been planned to be introduced in England by the government in 2020, but was subsequently put on hold by the leveling of secretary Michael Gove last year in the face of opposition from Tory backbench MPs. The proposals were seen as responsible for a partial electoral success for the Liberal Democrats in 2021.
In December 2022, Gove asked the CMA to look into housebuilding to ensure the market is “genuinely competitive and working in the interests of consumers”.
Earlier this year, the watchdog concluded that the planning system is having a “disproportionate impact on SME housebuilders” as the long and complex system favors larger firms that can maintain land longer and manage associated costs more easily.
It has now tabled a working paper on planning system issues asking for feedback on whether a zoning model, or a similar “rules-based system” where permission would be automatic as long as specific criteria are met, could be a solution.
Under the zoning system, developments proposed in “permitted areas” designated by local authorities “could be built without the housebuilder submitting a planning application”, the document says. Outside the zones, builders would still be required to submit planning applications.
Alternatively, under a rules-based system, planning permission for sites meeting specified criteria would be granted in most cases without review or with limited review and only in a limited number of cases. [would] they require more discretion”.
The CMA said the policies would “enable [housebuilders] prepare their applications more effectively and would provide them with greater certainty in allowing their developments,” adding: “It would also create a more efficient system where most permits are granted more quickly, freeing up more land to develop in a timely manner.”
The CMA paper also suggests that councils should consult far fewer stakeholders when assessing planning applications than they currently do.
The paper notes that options should not be isolated, but should be part of the “broader potential package for policymakers”.
The watchdog has also looked into the practice of land banking, where a significant proportion of an area’s developable land is held by a small number of housebuilders.
It found that 11 housebuilders together own or control land equivalent to around 1.17 million plots across England, Scotland and Wales. Of these, some 658,000 plots are in long-term land banks and 522,000 short-term.
But in each local authority area, most of the developable land is held by several different developers, the CMA said.
The regulator is seeking feedback on the state of local competition in these areas, as well as potential reforms to the planning system.
CMA director of markets Dan Turnbull said: “As we’ve progressed in our work, we’ve heard concerns that the way large housebuilders use land banks and complex planning rules they can harm competition and prevent the construction of new houses.
“We now want to receive feedback on these working papers from key people in the industry, be they council planning departments, builders or land owners, before we publish our findings early next year.”
