The changes come from the DLUHC

SME developers face planning fee hike in December, but could 'greatly benefit' from faster approvals

The Department for Levelling up and Housing Communities (DLUHC) has announced increases in planning applications fees by up to 35%, but with aims for planning departments to offer a better service.

The government has announced that planning fees for major developments will grow by 35% and 25% for all other applications, while also reducing the Planning Guarantee for non-major planning applications from 26 to 16 weeks.

The new regulations expect to bring “increased investment in the planning service”, as well as lead to an improved service.

The changes are set to come into force from 6th December 2023.

In the Labour Party conference in Liverpool this October , party leader Sir Keir Starmer also announced a commitment to speeding up planning permission, describing the system as, “an obstacle to the aspirations of millions – now and in the future – who deserve the security of homeownership”.

He continued: “A future hidden by our restrictive planning system — we must bulldoze through it.”

Considering planning permissions and delayed approvals have long been an issue for the property development industry, DFT asked members of the market whether the changes would be a hindrance or a benefit to SME developers.

Chris Gardner, joint CEO at Atelier, commented: “For applications of fewer than 10 dwellings, developers are being asked to pay 25% more on their fees but, in return, can expect a 10-week reduction to the Planning Guarantee.

“That seems like a reasonable deal on the face of it which could help speed up the planning process, however, for sites with 10 dwellings or more, the fees have increased by 35% but with no corresponding cut in the Planning Guarantee.

“I don’t think this particular fee hike will be welcomed by SME developers who are already facing unprecedented economic headwinds and planning delays.”

David Higson, head of property at Blackfinch, added: “The market will greatly benefit from, and warmly welcome, faster planning approvals.

“Across the Blackfinch Property loan book, we have experienced extensive planning matter delays, in one instance for as long as four years — this presents significant challenges for generating investor returns and progress in getting new construction underway, which in turn creates a drag effect on economic growth.

“So long as the increased revenue from the fees is properly invested back into the system, and planning times reduce meaningfully, the benefit will by far outweigh the fee increase compared to the long delays and costs the current planning delays cause.”

Emma Burke, head of origination at Maslow Capital, commented: “The increases are as a direct response to the DLUHC consultation ‘Stronger performance of local planning authorities supported through an increase in planning fees’.

“The fact that the government is taking proactive approach and implementing measures to speed up the planning process for developers is a step in the right direction.

“With the rise in interest rates,  continued inflation, and changes in building regulations affecting the profitability of development sites, planning must speed up — the time it takes to commence construction on sites is costly for all involved.

“It should be noted that the government is only prepared to introduce fee increases if planning performance improves, ensuring that all applicants experience a high quality and timely service.

“It’s also important to focus on other positive outcomes of this consultation: the government is engaging with the proptech sector to develop tools to allow a consistent, streamlined, and digitally enabled approach to the way planning applications are made and processed, as well as increase the opportunities for communities to engage.

“This is something that has been severely lacking in the planning sector, and I feel will help massively with the backlog of applications.”


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