Unless the Welsh Government gets a grip housing shortage crisis will not be solved

Here chief executive of Swansea-based Hygrove Homes, Huw Francis, argues that unless urgent action on planning and regulation is enacted then the Welsh Government’s aim of addressing the housing shortage will fail.

For some time both private developers and housing associations have warned Welsh Government that the planning and regulatory systems were causing difficulties to the house building sector which would inevitably result in far fewer houses being built than are needed.

The Covid-19 pandemic highlighted Wales’ chronic housing shortage, with demand far out-stripping supply. An example of this spike in demand was seen in April where 13 houses in Aberdare sold in less than three hours after dozens of people slept outside an estate agent’s office in an attempt to secure a new home.

The portfolio of responsibilities within Welsh Government’s recently-created Climate Change Ministry means that its minister, Julie James MS and deputy minister, Lee Waters MS, carry the responsibility of finding a solution to the housing problem.

Their acknowledgement in the first instance that there is a crisis is the first step they need to take if a solution is to be found; thereafter positive and urgent action is needed by the Ministers if a deepening of the crisis is to be avoided.

In particular, the ministers must address the issues affecting the following:

Phosphates control regulations

In January Natural Resources Wales (NRW) published the SAC (special areas of conservation) rivers in Wales phosphate compliance assessment report along with interim advice for planning applications that have the potential to increase phosphate levels in river SAC’s. NRW did not run a formal consultation before it published the documents.

The housebuilding industry has had no opportunity to prepare for this change and Welsh Water has not budgeted for the provision of phosphate-stripping mechanisms in its sewerage treatment plants (in certain areas) for a number of years despite the fact that the urgent need for such mechanisms was entirely foreseeable.

The impact of these newly-introduced NRW regulations has brought house construction in affected areas to an abrupt halt with devastating consequences for house buyers, house renters, jobs, apprenticeships and local council development plans.

As part of its new regulations, NRW has instructed Welsh Water to undertake a “source apportionment” exercise in order to determine the likely contributors of phosphate increases in river SACs. While it is widely-expected that agriculture (rather than development) will be found to be the overriding contributor, the exercise’s results, are yet to published.

Industry stakeholders are concerned that the delay is potentially due to political reticence in identifying farming as the overriding source of this contamination given the inevitable fall out with the sector that will follow.

Hygrove has been in discussion with NRW and Welsh Water for approximately eight months on this issue; discussions with Welsh Water indicate that potential solutions to the issue cannot be found without “buy-in” from NRW, while similar conversations with NRW suggest that support is required from Welsh Water. In short, both bodies blame each other for the delay in finding a solution.

We understand that Welsh Water has recently offered to amend its business plan in order to bring investment for new pumping stations forward and have also offered to introduce temporary measures to tackle the problem.

The ministers have responsibility for both organisations and therefore could and should intervene. Their inactivity has forced our business to refer the matter to the Public Services Ombudsman as far as NRW are concerned and the water regulator in relation to Welsh Water. We argue that the consequences of political failure to intervene are:

  • No new housing being constructed in the affected areas.
  • No affordable homes being provided in the affected areas.
  • No education/ecological/recreational financial contributions forthcoming in the affected areas.
  • No highway improvements being made in the affected areas.
  • No construction jobs being created.
  • No apprenticeships being offered.

Further significant increases in house prices are being experienced as fewer new houses are available in the affected areas.

Planning system in Wales

The function of the planning system in Wales is key to the provision of new homes but the system has become overly complicated, bureaucratic and expensive with lengthy delays inevitable as a consequence “

It is clear that despite an increase in planning fees in Wales in August 2020, there has not been a like for-like increase in the standard of service delivered by Wales’ planning authorities.

The ministers are responsible for planning policy in Wales. Accordingly the ministers need to carry out an immediate investigation and assessment of Wales’ planning authorities, particularly in circumstances where Neath Port Talbot Council is attributing work related to major capital projects like the Global Centre of Rail Excellence and Afan Valley Adventure Resort as impacting day-to-day planning services over the next two years, and Brecon Beacons National Park is attributing the recent phosphate guidance relating to SAC rivers as impacting the functionality of its department. If the ministers fail to take action the chances of implementing Welsh Government policies like Future Wales successfully will be impacted adversely.

Welsh Government’s continued introduction of new planning regulations without considering either developers’ or local authorities’ capacity for dealing with the changes is leading to an overly bureaucratic, complex and very expensive system which is causing many small businesses to leave the industry, is causing significant delays and increased cost in the planning process and is adding significantly to the existing barriers developers are expected to overcome to obtain a planning consent.

Delays and cost associated with the sustainable Drainage Approval Body (SABS)

It is already clear that this new system is challenging for all developers and local councils alike. Its introduction was chaotic, its implementation costly and its consequence will again hit first time purchasers disproportionately. We understand that the SABS system was due to be reviewed this year (to coincide with the second anniversary of the introduction of the regulations), although this does not appear to have happened as yet.

It is very much hoped that Welsh Government will acknowledge that the complexities of the current system when coupled with the issues encountered with the planning system has reduced the number of houses built in Wales significantly. It is vital therefore that these issues are considered by Welsh Government before yet further regulation is introduced.

NRW’s new flood risk provisions

As a consequence of the mounting pressure from developers and councils, the minister was forced to write a letter to industry stakeholders in November to confirm that “I am suspending the coming into force of the new TAN 15 and Flood Map for Planning until 1st June 2023.” However, it came with a warning that: “There will be no further extension to the coming into force date for the TAN beyond June 2023 and, to be clear the new Flood Map for Planning will form the basis of the TAN at that time”.

Given the number of complaints regarding the accuracy of the flood plans to date, it is concerning that the minister still appears to be prepared to proceed with plans in 2023. Industry stakeholders will therefore want assurances that Welsh Government has agreed and established an accelerated appeals procedure with NRW in order to ensure that accurate plans are in place when the new TAN 15 comes into effect.

To conclude Welsh Government, local councils, NRW and Welsh Water are all responsible for this crisis and it is time they faced up to their responsibilities and engaged with the house building sector in a meaningful way to try and find a way forward.

Failure to act will inevitably result in an increase in house prices and consequential increase in rental costs which we are already experiencing now. As always the main effects will be felt by those who can least afford it – first time purchasers who are unable to get onto the property ladder and those who cannot afford to purchase their own property and are forced to rent.

Unless issues are addressed the creation of a national construction company by the Welsh Government to tackle the housing crisis will be futile and claims that 20,000 low carbon houses for rent will be built by 2026 will have little, if any, chance of being achieved.

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