Berkeley sees 'traction' as Labour grapples with planning
Making sense of the latest trends in property and economics from around the globe
4 minutes to read
Residential developers should receive some clarity over how the UK's 'grey belt' policy will work tomorrow when the government publishes the updated National Planning Policy Framework.
Local authorities that are unable to meet their housing targets have been instructed to build on the grey belt, which policy makers define as "land in the green belt comprising Previously Developed Land and any other parcels and/or areas of Green Belt land that make a limited contribution to the five Green Belt purposes."
What "a limited contribution" really means is among the most contentious points. The updated NPPF will state that the definition covers land that “makes no or very little contribution to preventing neighbouring towns from merging into one another” or “contributes little to preserving the setting and special character of historic towns,” according to reporting in this morning's Times.
Planning consultancy Lichfields estimates that about 230,000 hectares, nearly 15% of the green belt, could meet the government’s definition of grey belt. Knight Frank has previously identified 11,000 previously developed sites within the green belt that could provide as many as 200,000 new family homes.
A process, not a thing
This will generate plenty of opposition. People understandably love the countryside and want rigid protections in place rather than subjective guardrails, but the latter should help councils protect green spaces while balancing other important needs.
"Recent changes to national policy have attempted to ‘freeze’ them in response to political pressure, and the first step to addressing this must be to open the political space that provides the wiggle room for policy change," Dr Daniel Slade, Head of Practice and Research at The Royal Town Planning Institute said in September. "The RTPI has long argued that the green belt has performed its core role – urban containment – relatively well for a long time. But the only way for the green belts across England to do this in a way that meets communities’ needs is for them to be dynamic."
Indeed, the new policy turns the grey belt into a process, rather than an object: "Whether green belt land is actually ‘grey’ depends on its relationship over time to other land uses and the rest of the ‘belt’ within which it lies," Slade added. "Assessing these relationships will be ongoing and essentially procedural."
Are you a landowner? My colleagues Jonathan Wish and Robert Mitchell shared some thoughts on what to consider here. You'll find their contact details at the bottom of that page.
A change of tone
Policy takes time to iron out, but the mere election of a new government has real effects.
"We have already experienced notable traction in the planning system in recent weeks brought about by the change in tone ushered in by the new Government," Berkeley said in its half year results last week. "This positive intent will lead to the delivery of more homes provided all levels of government now work with developers to deliver economically viable planning consents."
The company said transaction volumes remain about a third lower than the 2023 full year, and "a meaningful recovery will require a sustained improvement in consumer confidence and stability in the wider macroeconomic environment." Nevertheless, the company said it is on track to achieve its pre-tax profit guidance of £525 million for the full year and at least £450 million for FY26.
A sense of relief
In prime London markets, there was an immediate sense of relief the Budget was better than feared, Knight Frank's Tom Bill writes in the latest market update.
As a result, the number of exchanges in October was 30% higher than the five-year average, Knight Frank data shows. The figures were flattered by deals done ahead of a stamp duty increase on 31 October.
However, in November, there was a 19% decline, which suggests momentum isn’t building convincingly yet. In the same month, the number of new prospective buyers registering in London was 5% down on the five-year average while the number of offers made was 11% lower.
More sustainable momentum will only come if the economy starts heading in the right direction. Any upwards pressure on unemployment, borrowing costs or inflation would weaken demand and transaction volumes at all price points. We recently downgraded our forecasts to reflect those risks.
Prices in prime central London were flat in November, taking the annual change to -1.4%, which was the narrowest decline in 15 months. Meanwhile, there was a 1.1% increase in the year to November in prime outer London, with demand being supported to a greater extent by needs-driven buyers. You can read Tom's update on the lettings market here.
In other news...
Our team continues its research series on the outlook for UK Cities with pieces on obsolescence and how to refurbish, reposition or repurpose. Ryan Richards has an update on the resilient healthcare market and Jennifer Townsend has the latest on how AI is reshaping drug discovery.
Elsewhere - Trade war fallout could trigger deep Eurozone rate cuts, Pimco warns (FT), Canary Wharf borrows $777 mln from Apollo in refinancing deal (Reuters), US inflation data to show fourth consecutive month of firm gains (Bloomberg).