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New Rules Could Reward Developers for Failure

Mon, 20th Aug 2018

Under new rules, developers will benefit from a presumption in favour of planning applications, should too few homes be built in a given local authority area. Councils are to be forced to pass a housing delivery test, if they wish to avoid being stripped of the right to decide where homes will be built.

The introduction of the test is a part of the national planning policy framework, and the new guidance could allow developers to benefit from their own failure to build homes that have already been approved.

Housebuilders appear to have benefited from the news of the plans, with share prices for the major housebuilders increasing by just under one percent during yesterday’s trading. The plans, however, have faced some criticism, with some saying that the chance to solve the rural housing crisis has been limited by the changes to the rules. Under the new framework, the rules for Entry Level Exception sites have been altered, meaning that less land is available for ‘much needed’ homes in the countryside. There is a desperate need for affordable homes in rural areas, but there is no incentive for land to be brought forward for developers to build on.

While the news of the new rules has benefited housing companies, Persimmon is facing anger from shareholders over pay rates. Earlier this month it was announced that a £300 million bonus would be shared between 130 staff, which investors feel is an unfairly large amount of renumeration through the Long Term Incentive Plan that the company’s bosses are on.

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