Govt unveils plans for 35% planning fee increase

Funds raised by the rising cost of submitting applications would go towards improving the capacity of local authority planning departments.

The government published a consultation on changes to planning fees yesterday. The proposed changes can be broken down to three categories: increases, new fees, and local authority support and other benefits.

Increases

• The fees for major applications would increase by 35%
• Non-major applications would see their price increase by 25%.
• Planning fees would be adjusted in relation to inflation once a year
• Fees for retrospective applications would double
• Repeat applications would no longer benefit from a ‘free go’, meaning they would have to pay fees again

New fees

• Additional fees would be introduced for ‘fast track’ services
• A prior approval fee would be brought on for the permitted development right that allows the Crown to develop sites within a closed defence site perimeter

Local authority support and other benefits

• Additional planning fee income would be ring-fenced
• Money would go towards building planning capacity and capability within local authorities – and address issues around recruitment and retention
• The planning guarantee would reduce from 26 weeks to 16 weeks for non-major applications
• Increasing monitoring of performance measures to improve quality of the local authority planning service

A consultation on the proposals runs until 25 April and can be accessed at gov.uk/government/consultations/increasing-planning-fees-and-performance-technical-consultation.

Industry reaction

“The planning system is definitely crying out for serious changes but is this the right step?” wondered Thomas Pearson, partner and head of real estate commercial at JMW Solicitors.

“We are seeing across various sectors increased costs – if it leads to a much slicker planning system and resolves the delays faced and further recruitment by LPAs to properly service the work this should be seen as a positive,” he said.

“But given so many increased costs including construction and materials does this not just add to the pressure on developers and will the current market trends allow this to be offset or risk making schemes unviable?” Pearson queried.

We’ll pay, if there are results

Matt Claxton, planning director at developer Tritax Symmetry, acknowledged that on the face of it, the fee increase felt like an additional burden on an already expensive process that does not have a guarantee of success.

Despite that, he expressed cautious optimism about the plans.

“We have, as an industry, repeatedly highlighted the planning system as being a major hurdle to delivering development, a result of the many onerous requirements that must be addressed to secure planning permission, but also more recently a result of the lack of resource, experience and training within planning departments,” Claxton said.

He described the impact under-resourcing has already had, often leading to significant delays in project delivery.

“In that context, the proposed increase to fees is supported if it directly benefits planning service budgets,” he said.

“Creating additional funds to train, recruit and retain enough skilled and experienced planners and other technical specialists to deliver an effective planning service is essential if the planning system as a whole is going to improve,” Claxton continued.

“Providing a high quality and timely service that enables the right developments to come forward in the right locations without delay is essential to the growth of the UK economy,” he said.

“If a planning fee increase can assist this process, then the government’s proposals should be supported.”

Darren Muir, director at Pegasus Group, echoed Claxton’s sentiment.

“We have all witnessed how government cuts to local planning authorities have stymied development across the region, and our clients often tell us that they would happily pay higher application fees – for a better service,” Muir said.

“Pegasus Group would like to see the proposed changes go further: all planning fees should be protected and re-invested in our region’s planning and regeneration departments – not just ringfencing fees from the proposed ‘fast track’ service, which sounds all too similar to existing Planning Performance Agreements,” he continued.

“The consultation lacks detail on exactly how the government intends to improve recruitment, retention and capability,” Muir said. “The positive news is that the conversation has begun.”

Cautious optimism

David Diggle, a senior director in Turley’s Northern planning team, was also supportive of the government’s ideas.

“The industry has been calling for some time for more resources for LPAs to rebuild capacity, so this consultation is welcomed,” he said.

“The proposal to make an annual inflation-related adjustment to planning fees sounds like a good idea – this will provide certainty to both developers and LPAs and will avoid a continuous cycle of review,” he continued.

“I hope this is the first stage of a real discussion on delivering the necessary capital resources to fund planning departments properly.”

George Smith, planning manager at developer Cole Waterhouse, echoed Diggle’s thoughts.

“We broadly welcome the proposals to increase fees as we recognise under-resourcing is an ever-present drag on decision making and ultimately delivery of schemes,” he said.

Smith added later: “The idea to ring-fence fee increases to ensure that they are spent within planning departments, rather than being used to cross-subsidise other council functions is a very welcome proposal.”

Smith did caveat his optimism with some scepticism.

“This should, however, be coupled with better service levels from LPAs and unfortunately it will likely do little to address slow response times from many statutory consultees which is a wider issue that can cause significant delays,” he said.

What about the little guy?

For Bill Davidson, managing director at P4 Planning, the planning application hike will spell bad news for smaller businesses.

“The reality is that application fee increases will hit SMEs – who the government is meant to be encouraging – the hardest,” Davidson said.

“Adding costs to an already expensive and lengthy service will be a hard pill to swallow, particularly if the added funding is soaked up by helping to retain existing staff which, whilst also a key aspect of the solution, won’t actually bring about a faster, more reliable service,” he continued.

“The right balance must be struck: some level of fee increases is necessary, but if it simply becomes too expensive it will risk putting developers off.”

JMW’s Pearson expressed similar concerns, especially when factoring in the option to pay to fast-track a project.

“Some developers may find this attractive and see merit in progressing certain schemes down this route but the approach risks alienating some particularly in the SME market as it will be cost prohibitive,” he said.

Look beyond the pound signs

While the increase in fees may be the attention-grabbing part of the consultation, Jeremy Hinds focused on how the money would be used.

Hinds, the director of Savills’ national retail and North planning teams, said that planning fee hikes are absorbable since they are a small part of a development’s budget.

The main issue, for Hinds, is connecting that increase in fees with improved performance from the local planning authority.

“I think there will be hostility towards a fee hike if performance levels continue to decline,” he said. “So if fees can be geared towards increasing resources and enhancing performance rates, then I think as a general rule the property industry would welcome that and support a reasonable increase in the fee.”

But Hinds remained sceptical that this would introduce real change.

“The government is acknowledging that the system is not performing well and giving the right words to soften the blow – but it is not providing the mechanisms for local authorities to properly resource themselves,” he said.

Hinds concluded: “This will end up as a fee hike with no performance increases.”