Developers will build more homes if we let them

Cheshire East shows us that making more land available for development will see house building increase.

Planning isn’t really a constraint on housing delivery, claim those opposed to reforming our planning system to deal with the housing supply crisis. Rather it is developers who limit the number of new homes that are built. But is that really true? Cheshire East, in England’s North West, can show us the answer.

Cheshire East was formed in 2009 through the merger of the Crewe and Nantwich, Congleton and Macclesfield councils. The borough is vast, covering 450 square miles and home to more than 400,000 people.

The perception of Cheshire being wealthy is certainly true in parts. The “golden triangle” of Wilmslow, Alderley Edge and Prestbury, in the green belt to the east of the borough, is where Cheshire’s “old money” can be found living side-by-side with Premier League footballers. To the west, where there is little green belt, the picture is different; the town of Crewe contains some of the most deprived areas of the country. Overall, Cheshire East is slightly above the English average for employment rates (by 8%), incomes (by £1 per week) and house prices (by 10%, at £301,000). There is nothing to suggest its housing market should perform significantly differently to anywhere else.

In 2003, the three councils that would eventually become Cheshire East introduced severe restrictions on new housing development. They calculated that they had already built or approved all the homes they would need up until 2011, a full eight years ahead of schedule. To avoid building too many homes,¹ and in line with government policy at the time, they therefore introduced a moratorium on all new housing development. Planning permission would no longer be granted even on the most suitable sites, save for a few narrow exceptions. Housing delivery was limited as a result, tailing off as those already-approved schemes were completed. Between 2010 and 2014, an average of just 691 new homes were built each year².

Then two things changed.

Firstly, in 2012, the government introduced the National Planning Policy Framework (NPPF). This stopped housing targets being treated as a ceiling that couldn’t be exceeded, and required local authorities to produce their own estimates of housing need.

Secondly, and partly as a result, Cheshire East Council started preparing a new local plan, to guide development into the late 2020s. The housing target, of 1,800 homes per year, was around three times the rate of development in the moratorium period. Achieving that target meant identifying new sites for house building, including some in the green belt.

When the local plan finally came into force in July 2017, the number of new homes being built spiked. In the seven years since the plan was adopted, more than 2,500 homes have been built every single year. Those homes haven’t just been built in the wealthier east of the borough. In Crewe, housing delivery has increased from just over 100 homes a year between 2010 and 2014, to more than 500 since the local plan came into force.

Housing delivery increased across the whole of England in that period as the effects of the 2008 financial crisis dissipated and the NPPF began to take effect. But the change in Cheshire East is still striking - a 360% increase in completions compared to just 70% nationally.

Build rates in Cheshire East actually began to rise a little before the local plan came into force. The plan took an inordinately long time to prepare, with the final “examination” stage - where a planning inspector decides whether the plan conforms with national planning policy and law - taking three years by itself. Impatient developers submitted applications while that was going on, some because their sites were identified for development in the draft plan and they wanted to make a start, others because their sites weren’t proposed for development but the council was already falling behind on housing delivery.

And now, as the end of the period covered by the plan gets closer, build rates are starting to fall. That’s exactly what we would expect. The smaller sites allocated for development in the local plan have been finished, developers continue to build on the larger ones and a few laggard schemes are finally getting going. (Incidentally, among the slowest sites to deliver have been those controlled by the council).

None of that paints a picture of developers who are reluctant to build, or won’t increase supply even if the planning system allows more development. Rather, it shows us the opposite - that if planning restrictions are relaxed making more land available for development, more new homes will be built. Potentially lots more.

England might not have a moratorium on new housing development, but the planning system does restrict the supply of new homes. Our towns and cities are limited in their ability to grow either up (for fear of changing their character) or out (to protect the countryside). Between them, England’s local plans are aiming to deliver fewer than 240,000 homes each year.

Labour’s proposals to increase housing targets and oblige local authorities to do everything they can to meet them should see more planning permissions granted. As the experience of Cheshire East shows, we have every reason to expect developers will then build them.

1. Yes, you read that right - they didn’t want to build too many homes.

2. Our housing statistics are generally quite poor with different sources often giving very different figures for the same thing. The completion numbers in Cheshire East are taken from the Council’s own monitoring, which is usually more accurate than the ones collated centrally by the government.