Incorporating density bonuses into brownfield planning passports can unlock new supply and ensure more schemes meet affordable housing thresholds

Christopher Worrall is a housing columnist for LFF. He is on the Executive Committee of the Labour Housing Group, Co-Host of the Priced Out Podcast, and Chair of the Local Government and Housing Member Policy Group of the Fabian Society. 

With UK housing density lower than European averages, density bonuses could unlock the homes we desperately need. Brownfield Planning Passports paired with these incentives, can fast-track development, bypass local NIMBY opposition, and offer a future where rent burdened residents can finally look forward to real relief.

In the debate over solving the UK’s housing crisis, a reluctance to embrace higher density development is stifling potential solutions. While some local councils, like Wandsworth, are hiking up effective taxes on development, there are often no offsetting provisions.

Prime Minister Sir Keir Starmer announced ‘planning passports’, which will see development proposals have a default answer to suitable proposals being a straightforward ‘yes’ on brownfield sites where specific conditions are met. Some of the proposals put forward relate to the principle, the scale, and the form of development.

In addition, to the potential wider use of Local Development Orders to grant area-wide permission – all in a way that retains local oversight. One key proposal this could include is density bonuses. A US policy idea that has been a key tool used to enable more residential development achieve locally set mandatory and optional affordable housing requirements.

In the UK, rising rents have left one in three renters paying over 50 per cent of their income on housing. To ease this strain, density bonuses should be included in the governments new Brownfield Planning Passport regime, which can increase much needed supply while enabling more schemes to meet local affordable housing requirements.

So what is a density bonus? Density bonuses are a zoning tool that permits developers to build more housing units, taller buildings, or more floor space than normally allowed in exchange for providing a defined public benefit, such as including affordable units in the development.

Huge supply and demand imbalances are making renters more burdened than ever before

We have witnessed significant rental price increases driven by a complete misalignment of supply and demand in some of our most renter cost burdened areas. In London over 86 per cent of renters pay over 30 per cent of their salary on rent. In the South West and South East, 83 per cent and 82 per cent respectively. While one in three severely rent burdened are paying more than 50 per cent of their salary on rent, according to a report by Spare Room having surveyed 11,533 respondents.

Women are more affected by men, with 85 per cent citing they are rent burdened, compared to 77 per cent of men. When assessing those severely rent burdened this affects 39 per cent of women, compare to 28 per cent of men. Renters have continued to face the pinch with the Office for National Statistics (ONS) showing that average private rents increase by 9.0% in the year to February 2024. The fastest rate on record since comparable records began in 2015.

The cause is a complete misalignment of supply and demand. Two-bedroom rental homes are being listed on Zoopla for an average time of 25 days, which is 10 days less than the pre-pandemic average, according to Savills. Zoopla also has shown that the average letting agent currently lists just 12 properties for rent, down 28 per cent relative to the pre-pandemic average. Long-term vacancy rates also remain incredibly low in the most renter cost burdened areas, such as London. Suburbs such as Hillingdon have a vacancy rate as low as 0.4 per cent, with the average vacancy rate across the capital barely scraping 1 per cent.

The evident supply shortage is only expected to be exacerbated further. Savills suggest the outlook for housing delivery in 2024 and beyond as “extremely poor”, with new homes completions falling to just 160,000 in 2024/25. Big housing associations have all but shut up shop, with completions down 76 per cent in London following an open letter written to the Secretary of State by the G15 (now G11). London delivered only 62 per cent of its London Plan target of 52,287 in 2023/24. With this year expected to be even worse than the last.

New consents in London have dropped 20 per cent on the previous quarter, and 42 per cent compared to the same quarter last year. At 6,159 the quarterly total was lowest it has been since 2012, with the 12-month total expected to be the lowest since 2013. The pipeline for housing delivery is facing almost a complete drought. Construction by London housing associations have fallen 92 per cent. As construction has only begun on 150 homes in the capital in the second quarter of 2024.

While planning policies in rent burdened areas have set planning policies for minimum provision of affordable housing when granting new applications. Yet often viability concerns see these levels often hard to be met. We have seen studies in Baltimore, United States, assess Inclusionary Zoning policies, which work to the same effect. The findings show that places that have adopted such policies witnessed greater increases in their median house prices relative to what they could have expected without such programmes. This is because criticisms of mandatory inclusion of affordable housing is that it produces limited affordable housing and constrains housing supply. In turn, pushing up house prices. Expansion of mandatory affordable housing policies in London found that developers found a reduction of new developments in the target segment of projects with 10 to 14 units, and an increase in new developments in an unregulated alternative market segment of projects with 9 units or less.

Incorporating density bonuses into brownfield planning passports can unlock new supply and ensure more schemes meet affordable housing thresholds

Noting these findings, it found programmes were typically paired with density bonuses that are intended to full or partially offset the cost of providing income-restricted units. At present the UK has no provision in policy terms for offsetting what is effectively a tax on development. With new starts and construction levels so low, with such mandatory affordable housing requirements still a feature, the introduction of brownfield planning passports with density bonuses could help unlock brownfield site that meet affordable housing requirements.

Research from the UCLA found that density bonus policies have an expected effect on new building permits to increase, with an expected effect on market rate house prices to decrease. At present the Brownfield Planning Passport Working Paper is not considering the granting of automatic planning permission on suitable brownfield sits, nor is it considering the removal of appropriate local oversight of the development control process.

Therefore, in the absence of further rules that create by-right planning permission, density bonuses that can offset viability concerns in exchange for more lenient height maximums that achieve the stated London Plan (35 per cent affordable housing threshold to achieve fast track approval) should be granted a Brownfield Planning Passport. For example, the London Plan would require a minimum of 30 per cent low cost rent homes (i.e. social rent or London Affordable Rent), 30 per cent Intermediate Homes, with the remaining 40 per cent determined by the borough. Density bonuses could apply by-right in areas where data shows rent burdened residents are most prevalent. As I have argued in the Fabian Society Local Government and Housing Member Policy Group report,  Homes for London, sponsored by Concillio.

These can also be targeted around stations. In Washington DC planners engaged residents and developed a ‘bull’s eye’ plan for permitting dense development around five train stations. With a quarter mile radius of land located closet to the stations intended for the most density. Today, builds reach over 20 stories and stand within these narrow radiuses. The exact density is not spelled out in the zoning ordinances as developers can earn bonus density for providing income restricted units, often at greater density than what is permitted by-right.

Density bonuses can overcome issues created by supply-sceptics

Yet there are some supply-sceptics who do not believe building new homes will solve the housing crisis. In a recent Guardian article, Phineas Harper cited misleading statistics that we have more homes per capita now than we did 50 years ago, as a reason to prove there is no supply shortage. However, these claims have widely been debunked by Professor Paul Cheshire who pointed out that as people get older they demand more space, and as they get richer they demand more space. Yet houses to households have barely increased at all. HBF also published a study citing Britain has one of the lowest homes per capita in Europe. Again demonstrating the poor claims made against the need for new supply.

Another is Cllr Aydin Dikerdem, who despite attempting to lay claim to being a YIMBY, admonishes most policy proposals advocated by the movement. In a recent 50 Shades of Planning podcast, titled ‘The Yimby Crowd’, he said he viewed the planning system as something he feels councils can use to get as much as possible from development. This plays into the behaviour some local authorities take when applying their affordable housing policies. In particular, Wandsworth, who increased their affordable housing requirement up to 50 per cent.

But the council has been adverse to height. With even its council leader opposing a 34 storey tower that proposed 32 per cent affordable housing in Battersea. In a world where Brownfield Planning Passports existed, this site would be allowed to go higher if it could meet the London Plan’s fast track approval requirements of 35 per cent. In effect, circumventing local NIMBY opposition and local authority leadership.

With UK densities below European counterparts, density bonuses can help meet rent burdened areas achieve their full potential

As the Brownfield Planning Passport Working Paper suggests, the default answer to suitable proposals should be a straight forward yes. Where rent burdens are inextricably linked to low vacancy rates, qualifying density bonuses to obtain Brownfield Planning Passports could offset what is in effect a developer tax, which currently has no offset provisions. Given our cities and towns are developed at relatively low densities compared to our European counterparts, density bonuses can help enable effective Brownfield Planning Passports that deliver more homes of all tenures.

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