Political and Environmental Restrictions Could Drive Housing Supply to New Lows: Report

Recently constructed show homes are illuminated for potential buyers on a new housing estate in Knutsford, United Kingdom, on Feb. 3, 2022. Christopher Furlong/Getty Images

Party politics and rules imposed by the government’s adviser for the natural environment in England could lead to a considerable decrease in net housing supply, the Home Builders Federation (HBF) has warned.

The housing supply could drop by up to 122,000 homes per year, HBF said in its March report (pdf), adding that in 2021/22 net housing supply stood at 233,000.

The outlook for the homebuilding industry in the coming years looks less positive owing to a number of factors, one of which is the rules imposed by Natural England, the agency within the Department for Environment, Food and Rural Affairs (Defra) responsible for protecting the landscape.

The nutrient neutrality requirements, which originated from a 2018 European Court of Justice ruling, caused Natural England to revise its guidance to local authorities. Nutrient neutrality is a means of ensuring that a development project does not add to the amount of nitrates entering the water system in an area.

The number of housing projects granted planning permission during the last quarter of 2022 was down 12 percent on a year ago. The number of projects approved in England in the whole of 2022 fell to under 12,500, the lowest since the data set was started in 2006.

HBF attributed the low numbers to the “free rein afforded to Natural England to impose new requirements on development,” among other factors, including “a hostile political attitude towards building.”

The National Planning Policy Framework (pdf), introduced in 2012, was a growth-oriented set of policies. HBF commended the framework, but suggested it was offset by the government’s latest restrictive agenda.

Conservative Party members haven’t expressed support for national housebuilding targets, according to Prime Minister Rishi Sunak. In an interview with the ConservativeHome website in April he said that during the summer Tory leadership contest to replace Boris Johnson he had spoken to Tory party members, councillors, and activists.

Sunak acknowledged that the Conservatives “continue to be incredibly supportive of” the people’s want “to own a new home” but added: “In fact everywhere I went across the summer, people wanted to talk to me about the planning system and how it was working. I don’t think there was any support for a system which imposed top-down targets on local areas without any recourse or understanding of the local circumstances.”

The combination of politically underpinned policies and restrictions by Natural England had “the potential to see net housing supply drop as low as 111,000 per year, around 10% lower than the previous the lowest ever annual net supply during peacetime,” HBF warned.

Defra issued a statement on May 23 saying that “work is underway with developers and local authorities to ensure that housebuilding can take place while protecting nature.”

Defra also added that 242,700 homes were delivered in 2019/20, a 32-year high.

Water Pollution

Natural England has suggested that “building the homes the country needs while also protecting and restoring nature” is something that “we need to be able to do both for a sustainable green recovery.”

Increased levels of nutrients, such as nitrogen and phosphorus, in freshwater habitats and estuaries, can speed up the growth of certain plants, disrupting natural processes and impacting wildlife, Natural England warned.

“Algal blooms and excessive vegetation growth can kill fish and prevent birds from feeding. These effects also reduce people’s enjoyment of these special places,” it added.

Edel McGurk, regional operations director at Natural England, said in a statement, “The quality of our rivers and wetlands is a concern for people across England and we have been working with local authorities, developers, farmers and other landowners in a number of areas to make sure much needed housing can go ahead without causing damage to nature.”

Some conservative politicians, however, suggest that the farming industry is partly to blame for water pollution.

Sir James Bevan, chief executive of the Environment Agency, said in a speech on Feb. 22, 2022: “Farming and rural land management impacts a higher proportion of our water bodies—45 percent—than any other source, mostly through what is called diffuse pollution: chemicals from fertiliser and other things put onto land which then run off into watercourses. This is harder to see and to tackle than the sewage spills caused by water companies.

“But the damage is just as or more significant, because the main chemicals that leach into our watercourses from farming, nitrogen, and phosphorus, starve the water of oxygen and kill a lot of the wildlife.”

Simon Clarke, the former secretary of state for levelling up, housing, and communities, has argued that the “real causes of the water pollution problems are poor farming practices and our Victorian sewage system.”

“Housebuilding is a peripheral contributor . . . We should legislate to exclude new homes from the regulations, get the water companies to up their game,” he told The Times of London.