Home - Future Auctions > How Will the Localism Bill affect the Housing Market?

How Will the Localism Bill affect the Housing Market?

The Localism Bill that passed through the UK Parliament in 2011 was intended to give greater decision-making powers to Local Authorities in England. One of the key areas that the Localism Bill addressed was planning regulations, giving local communities a greater say in the planning process and putting a greater burden on planners and developers to consult with the those affected by planning decisions. Neighbour Development Plans and Neighbourhood Development Orders can now be granted by local Neighbourhood Forums, Parish Councils working with Borough and County council bodies to address housing and commercial property needs in each area.



The Abolition of Regional Planning

Another important aspect of the Bill was the abolition of many central government controls on town planning. The legislation abolished regional spatial strategies, which coordinated planning permission to meet national planning targets, and instead allows local councils to plan and build according to local needs. Rather than national government coordinating planning needs between local areas, there is now a statutory duty for local authorities to cooperate with each other on land use planning.

In London, the London Development Agency has been abolished and its main powers transferred to the Greater London Authority (GLA). Funding for housing in London has also been transferred to the GLA, and the Mayor now has the power to establish Mayoral Development Corporations for particular development projects.

So how does the Localism Bill affect housing development and planning in practice? And how are the new rules likely to affect the housing market?

Local Needs Are Everything

When it comes to obtaining planning permission for local housing and commercial developments, local needs are now paramount. The Localism Bill gives a key decision-making role to Parish Councils and the new concept of a Neighbourhood Forum, which consist of people who live and/or work in the local area, including residents, councillors and other interested parties. If no such organisation exists, residents and workers can create this body and apply to the Borough or County Council to delegate planning decisions on developments in their designated area.

Parish Councils and Neighbourhood Forums are now in a position to grant Neighbourhood Development Orders allowing the development of a particular property or the development of a particular class of property in the area. At the same time, these groups can order the Local Planning Authority to create a Neighbourhood Development Plan that sets out the policies relating the to local development and land use in their area.

Planning Decisions Will Depend on Local Groups

What this means in practice will depend on the membership of the individual Parish Council or Neighbourhood Forum and their views on the development needs of the local area. Developers now have a legal obligation to publicise any intention to develop a property or land in the area so that the majority of those affected know about plans before they are submitted for approval.

Developers will have to build strong links with the local community and make the case for developments in the chosen area. In addition, they must ensure that planning applications for their developments comply with all local regulations (which may vary from one area to another), as the Bill now provides legal penalties for those who submit misleading plans to local authorities. These rules will ensure that new housing and commercial properties match the needs of the local area.

Concerns About the New Planning Process

A note of concern has been expressed by the Chartered Institute of Housing. They comment that the abolition of regional spatial strategies in England means that housing development could be blocked in some affluent areas of the crowded South East. This region suffers from an acute housing shortage, and there are fears that some local groups will oppose housing developments in their area due to concerns about the impact of new residents on existing infrastructure.

While the Localism Bill does provide for local authorities to demand that developers pay for improvements to existing infrastructure in order to mitigate the effects of new housing and other developments, it may be the case that Parish Councils and Neighbourhood Forums block developments because it is felt that they would be better sited elsewhere.

In addition, once Neighbourhood Development Plans have been agreed they have a powerful legal status and assuming that all regulations have been complied with and supported by a local referendum, the Borough or County Councils have a duty to support them.

In addition, the Town and Country Planning Association have said that the Localism Bill does not address planning issues related to climate change, sustainable development, strategic planning and neighbourhood planning. They point out that because these factors are not given sufficient weight local groups may put financial considerations above them. This factor may help encourage house building through the New Homes Bonus, but it may also encourage building in areas where development is not sustainable and may pose a risk to residents due to flood risks or rising sea levels.

The Private Sector

Now that Parish Councils and Neighbourhood Forums have the power to create their own Neighbourhood Development Plan, they will have to consider how they cover the costs of making such plans. The legislation anticipates that the private sector will a key source of funding for neighbourhood planning, which may give companies greater influence in the planning process than they have had in the past.

Part of the Bill encourages developments that ‘promotes the carrying on in trades, professions or others businesses’, and so it may be that businesses that make the effort to engage with the local community may find that commercial developments are received favourably by local representatives.

Effects of the Localism Bill


If local groups block housing developments where there is a housing shortage, the effect will be to push up demand and prices for homes in the area. While this may benefit current residents and their families, it could mean that without access to social housing poorer sections of the community are priced out of the area completely, or are compelled to pay high rents in order to remain in the area.

There is a much greater burden on developers to persuade local communities of the benefits of their developments, which may raise the cost of building and may prevent smaller developers from competing with larger firms with greater resources. It is certain that those who make the effort to engage with the needs of the community are more likely to get planning permission.

Future Auctions Newsletter Sign-Up

"Receive FREE Updates
Of All Forthcoming Property Auctions"