Lenders open to privatising the planning system due to 'complete chaos' and costly delays

The planning process has been a thorn in developers’ sides for years now, with many SMEs viewing this as one of their biggest barriers to growth, according to a recent study by Close Brothers Property Finance, the Home Builders Federation, and Travis Perkins.

Over the past decade, the planning process has progressively got slower, as the number of applications decided within the statutory time period — eight or 13 weeks, depending on the size of a scheme — has dropped from 77% in Q1 2013 to 45% in Q1 2023.

The frustration at what is seen as a sluggish and inefficient government-run planning process has led some within the industry to ponder taking the process in a different direction — a privatised planning system.

"It's not easy to get a planning application through, and things are just getting more onerous,” said Guy Murray, head of development finance at West One Loans.

Like many within the industry, Guy is all too aware of the dangers that an inefficient planning process can pose to a development: “Planning has always been, for a long time, a mess, and I don't really think the planners take into account the potential costs that the delay in them issuing planning consents can have on a developer.”

While privatisation of the planning system is just a budding idea, Guy feels that testing this through a certain number of borough councils could be the jump start needed.

And he is not alone in his desire to see a shift in practice and method within the process — Emma Burke, head of origination at Maslow Capital, shares the same sentiment, along with a ‘why wait’ approach.

“I think there's a lack of professionalism in the planning process," she said. "I think it shows complete chaos. It affects SMEs massively.

"There’s a lack of customer service and real accountability within the boroughs. 

"But there are some really good planning officers that really want to do their job well within the local councils and I think the process prohibits them from doing so.

“Something has to be done . . . I don’t ever speak to a developer who doesn’t have some complaint or hasn’t experienced delays, and the hold-ups with development in any aspect are costly from a debt and professional fees perspective, so it definitely needs an overhaul.

“Local authorities are not run like businesses — if they were, they’d probably run smoother. There'd be more ownership of responsibilities, more cost efficiency, and it would bring competition and encourage a smoother, faster process.”

Like Guy, Emma feels it should be transitional, with a distinction in sizes of projects being handled by different institutions; smaller developments being outsourced to private companies, while larger ones remaining with government planning teams.

She also emphasised the impact that planning has on local communities and its purpose in not needlessly tearing down buildings that make up pieces of the UK’s cultural heritage. With this in mind, she highlighted the need for strong regulation.

“It's a big responsibility to hand over for sure; I think it should be gradual. There should be a governing body and a framework that all councils operate within. There needs to be accountability,” she said.

While there could be issues to iron out in terms of regulation and integrity, Emma noted the need for individual companies to have their own set of standards, as well as be regulated by an outside authority.

"Like any company, you'd have to have a statement of ethics and responsibility and make sure that you track them."

Steve Larkin, head of development finance at LendInvest, was also open to the idea of privatising the planning sector, especially if it proves to work more efficiently.

“I think it would get things moving quicker, there's no doubt, because at the moment there's a lot of deals which can't go forward . . . going back to a few years ago, a planning application would take 12 weeks to get approved, and I think now we're probably talking about at least six, nine or 12 months.”

Like Emma, Steve understands the need for efficient regulation: “That ensures these deals, when they are getting submitted and approved by an outside firm, are not being done for the wrong reasons, and are still being done with the intention of getting the right housing in the right areas.”

Overall, Steve is open to the idea of a private and public split of the planning system. However, to him, privatisation is a means to an end, rather than a goal the industry should aim for. 

“If there are consultants out there that can help and can assist, then it must be something that could be considered in order to try and get some of these deals through quicker,” he concluded.

The July/Aug issue of the B&C Magazine took an in-depth look at the state of the planning system and the latest proposals for a new National Planning Policy Framework — read the cover story here.

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