25 October 2018

Presumed permission: why self-build is crucial to a more prosperous Britain

By Stephen Ashmead

This week on CapX we are publishing the winning entry and the runners-up for the Institute of Economic Affairs Breakthrough Prize. The prize, supported by entrepreneur Richard Koch, sought ideas for a “free market breakthrough” policy to solve the UK housing crisis. Today one of the runners-up, Stephen Ashmead, explains why a new self-build framework would boost housebuilding and affordability.

The UK housing crisis is a product of its uniquely dysfunctional housing system. While our neighbours build good quality homes for their citizens to live in, the UK fails. We build half the homes we need and the few homes we do eke out are poor quality. As noted elsewhere, this failure creates a vicious cycle: we as a nation have decided that it is better not to build at all than to build badly. One of the particular anomalies of our housing system is the chronically low rate of self-builds. In Austria, 80% of new homes are self-built, in France 60%. Even in densely populated cities such as Berlin, individuals and groups are routinely able to build their own homes. And yet the UK, in the grips of a housing crisis, only achieves 7-10% self-build homes. There is not a lack of desire for people to build their own homes; a recent poll suggested that if the number of self-builds increased, support for new builds would also grow. Nor is there a lack of support for new homes, if they are well designed and appropriate for their environment.

We could be a nation of proud housebuilders and homeowners. As this essay suggests, this could be achieved without a single sentence passing through parliament, if local planning authorities and communities join together to allow individuals to self-build their own homes. None of the ideas in this paper are therefore new, except perhaps in how different elements of our existing system can be used together to maximise housebuilding. This paper proposes a framework for presumed permission for self builds. The presumed permission model involves:

  • The creation of ‘form based’ self-build frameworks outlining permitted smallscale developments
  • Self-build designs or modifications to existing dwellings which meet the local framework having a light-touch ‘notification’ process to receive planning consent
  • Presumed consent for self-build designs which meet the local development rights, regardless of current land-use, excepting common sense restrictions, and thus moving away from land-based permission
  • Local planning authorities promoting the local development rights both at the design stage and through supporting self-builders

There are many advantages to these presumed permission self-build frameworks. First, it allows individuals to build or adapt their own homes in their own communities. Self-builds allow individuals to bypass large-scale developers or the need for state intervention, creating a flexible, direct route to home building and home ownership. The local development rights would create certainty for selfbuilders who would know from the outset whether their proposed new home met the criteria in their neighbourhood. If self-build rates rose to meet those across Europe, we would double our housing output.

Second, it is politically feasible. The powers to bring presumed permission into fruition already exist; this proposal assumes that legislation would only be required to compel local planning authorities to use them. Communities would have democratic grass-roots control over new builds ‘upstream’ in the planning system by establishing what housing is needed for their community, reducing NIMBYism and providing certainty over new design. Form-based frameworks allow communities to shape the look and feel of new builds in a coherent way that people can actually understand and support. Promoting self-build would be politically popular and reduce concerns around inappropriate, large-scale developments. People building their own homes are more invested in the quality of their home, are making a commitment to the community they will live in and know best what will meet their needs.

Third, allowing people the opportunity to self-build would reinvigorate the whole housing market. The restrictiveness of our planning system means that land awarded planning permission is one hundred times more valuable than land without. Creating a system of presumed permission for self-builds would reduce the scarcity of land supply and thus reduce land prices. Large developers, whose current unique selling point is their ability to purchase land, would be competing against a newly powerful self-build industry, leading to better quality homes and innovative design. Once a steady supply of self-build homes start being built, large housebuilders would be less inclined to slow the release of new homes onto the market as the ‘absorption rate’ of the local market would be less affected by the appearance of new homes.

But perhaps the biggest impact of presumed permission for self-builds would be the impact on the national psyche. We are currently a nation which seems unable to build the homes it needs, while other countries manage to do so perfectly well. A pernicious fatalism has set in, undermining our country’s ability to find a solution. A strong policy promoting self-build would signal that building and owning one’s home is a right; that individuals should aspire to creating their own homes; and that, with a can-do attitude, we can solve the housing crisis in our own communities without outside intervention.

Why do we have a housing crisis?

Our highly restrictive planning system was introduced as a reaction to fears that ugly urban sprawl was eating into our countryside and was in part designed to make selfbuilding hard. Our system requires that every change to our built environment is scrutinised and open to challenge. The result of our planning system on our housing market is essentially two-fold. First, only large-scale developers are able to overcome the burdens imposed by our current system and the lack of certainty it creates. Initially, this was mitigated by large-scale housebuilding by the state, but this has ultimately turned out to be a temporary fix. Second, it creates a limited supply in land on which building is allowed, inflating land prices, which again favours large developers able to afford such excessive values.

Accordingly, we build half the new homes we need. Those that are built are to a poor standard as developers try to squeeze as many homes onto the overvalued land they are built on. This has led to widespread concerns about new housebuilding among locals, whose only say in the planning process is ‘downstream’ through objecting to new proposals. NIMBYism has become an entrenched feature of our planning system despite widespread support for new homes in our communities. Our current restrictive, top-down planning system has failed. Creating a new, bottom-up system would reinvigorate housebuilding and homeownership.

Reinvigorating self-build through community designed Local Development Rights

National permitted development rights already exist, although limited in scope and, in the case of converting offices to residential dwellings, in time. However, since
1990, local planning authorities have had the power to introduce Local Development Orders (LDOs) to grant additional permitted development rights. Despite the flexibility and extensive powers LDOs offer and despite being promoted under the localism agenda, uptake has been low. LDOs tend to be used for niche development purposes and, excepting a few LDOs such as Graven Hill in Oxfordshire, have thus far offered little for self-builders. The Localism Act 2011 further introduced Neighbourhood Development Orders and Community Right to Build Orders. Again uptake has been poor in the face of substantial bureaucracy. For example, proposed Community Right to Build Orders in rural areas still need to be granted ‘exception site’ status.

Instead of focusing on the status of the land a new build would be developed on, presumed permission self-build frameworks would focus on establishing appropriate designs for small developments. A self-build framework, similar to the powers listed above, would set out what a community considers appropriate, with only minimal common-sense restrictions to where the new homes can be built.

Under this proposal, communities would have direct control over designing a permitted development framework for self-builds for their community ‘upstream’ in the planning process. The current NIMBYism in our planning system stems from the lack of community input early on in the planning process. People have little say in changes into their community until far too late in the planning process, and only through contesting proposals that are made, creating uncertainty and fear over future developments. Unfortunately, the poor quality of new builds in our country today do little to assuage locals’ concerns. Yet recent research shows that people support new builds if they are aesthetically pleasing and fit in with their surroundings. Furthermore, there is a consensus around what types of homes are suitable in different community settings. Through proactively engaging with local communities, a broad, popular code can be developed that meets communities’ needs for new housing but also their need to preserve their existing heritage.

The self-build framework would be ‘form-based’, setting out the physical form of new buildings. Form-based codes in particular help achieve community approbation because they are intuitive and because they focus on how newbuilds integrate with their surroundings. For example, standards in rural communities would likely emphasise local vernacular styles or traditional building methods whilst urban sites for regeneration may instead encourage innovative construction methods or sustainable design. As the framework would be form-based, it would be sufficiently flexible to cover a range of designs and circumstances. These frameworks should also cover any home improvements or changes of use up to a new build, such as conversions, extensions and use changes, from building a granny annexe in the garden to barn conversions.

As previously mentioned, creating local development rights specifically for selfbuilders would be politically popular. The idea of self-build is in itself popular, with 52% of people saying they would consider building their own home. This popularity would inspire local communities to develop frameworks. Those who would most benefit from self-build frameworks would be people already living in, having connections to or be attracted to the area because of the type of community it offers. This would in turn provide stronger assurance that the homes built through the framework would be appropriate to the community and genuinely address the housing need of people living or aspiring to live there. Through the form-based selfbuild frameworks, communities would be reassured that new builds would neither be ugly, poor quality boxes nor Grand Designs-inspired vanity projects. Self-build homes would be built incrementally, instead of as a single, large and disruptive development, allowing communities to naturally absorb new developments. And selfbuild homes would be more creative in their use of land, for example through using odd plots of vacant or underutilised land which would be unprofitable for a largescale developer.

The benefits of self-build frameworks for the self-builders themselves would be even more apparent. Once designed, these self-build frameworks would create new, locally designed permitted development rights. These rights would create a way for self-builders to bypass the normal planning route – they would simply have to notify the local planning authority of their intention to build according to the framework and pay a small fee to cover administration costs. The self-build framework would dramatically reduce bureaucracy for aspiring home builders, and also provide certainty that their plans would gain consent. This certainty would feed into other aspects of the self-build project, including timescales, costs and accessing finance.

A new role for the local planner

Self-build frameworks would release local planning authorities from the bureaucratic and thankless task of scrutinising planning applications for small developments. Local authorities should be encouraged to promote the frameworks (through creating a new statutory duty if necessary), both through supporting communities to design them and through assisting self-builders find land and develop their plans to meet the local self-build framework.

Additionally, self-build frameworks would help draw together the increased local powers granted by government over the last ten years into a single coherent policy. Building on the ‘Right to Build’ established in the Housing and Planning Act 2016, where local authorities are required to meet the demand of individuals and associations seeking to acquire land for self- and custom-builds, permitted development frameworks would allow local authorities to actively assist aspiring selfbuilders to find land and design their new home in accordance with the frameworks in their communities. Again, self-build frameworks coupled with the General Power of Competence set out in the 2011 Localism Act would further empower local government to support people living in their own communities to build their own homes.

The wider reaching benefits of a presumed permission self-build framework

The benefits of presumed permission for self-builders are self-evident. Self-builders would have a near-certain route to planning permission as long as their plans meet the requirements of their local self-build framework. Such liberalisation of the planning process for self-builders would lead to an increase in both housing supply and home ownership, as people are able to build their own homes for themselves. The UK has an unusually low level of self-build construction, so it is unlikely that even large increases in the supply of self-build homes would lead to a drop in new homes constructed by other developers and indeed (as discussed below) may increase supply from other sources. Approaching rates of self-build seen in Europe would more than double annual housing output.

Local communities would have greater democratic control over future development in their neighbourhoods and be able to develop a distinctive future identity. The selfbuild framework would promote better land use, particularly in areas of high land values, including replacing poor quality homes, adding storeys to existing homes, or building on small brownfield plots. This would maximise the potential of already developed land, further reducing the need for future sprawl or inappropriate development. Communities would be given a route to promote innovative design through the local self-build framework, such as eco-homes or offsite construction methods.

Self-build frameworks would reduce land prices. Land with planning permission attracts such a premium because of its scarcity. As nearly all land would have presumed permission for self-build developments, land prices would adjust to take this into account. If local authorities decided to buy land to then release to selfbuilders, they would be able to do so at closer to existing use values, as the land value would not increase significantly if sold on as individual plots. With greater certainty surrounding self-builds, it should also become easier for self-builders to acquire finance to fund the construction of their new home. This itself would create a virtuous circle: as self-build construction becomes a more established route, mortgage and loan products for self-builds would become more mainstream.

Although the framework is specifically intended to help boost the number of self-build home owners, the framework would also benefit larger developers. UK developers are less likely to use innovative building techniques than elsewhere and, as previously noted, build homes of a lower quality. A system providing presumed permission for self-builds would reinvigorate large scale developers as the housebuilding market is opened up to a wider range of consumers. The additional competition from self-builders would promote innovation as large housebuilders’ unique selling point would no longer be their ability to acquire plots of land. Once a steady supply of self-build homes start being built, large housebuilders would be less inclined to slow the release of new homes onto the market as the ‘absorption rate’ of the local market would be less affected by the appearance of new homes. The framework would act as a signal for local appetite for development in both scale and style, allowing both developers and planning authorities to prioritise developments that meet local needs, making the planning process more straightforward, and leading to large-scale developments which are more customised to their community.

But perhaps the biggest impact of presumed permission for small developments would be the impact on the national psyche. We are currently a country with a housing crisis which it seems unable to solve, while other countries seem perfectly capable of building quality homes. Elsewhere, even in densely populated cities, individuals and groups are routinely able to build their own homes. Self-build frameworks would provide a democratic route for communities to shape the future identity of their neighbourhoods and homebuilding and homeownership would be increased. Having a clear policy which advocates self-build would send a strong signal that building one’s home is a natural right, that individuals can and should aspire to creating their own homes and build a new can-do attitude to home building and ownership.

Stephen Ashmead is a runner up in the IEA Breakthrough Prize competition and a strategic insight analyst.