Permission in Principle and what it means for SMEs

Brian Berry – Chief Executive of the Federation of Master Builders (FMB)

Before the FMB, Brian worked at the Royal Institution of Chartered Surveyors (RICS) where he was Head of UK Public Policy. Brian regularly provides commentary on construction issues for TV, radio, national and trade press.

‘Permission in Principle’ (or PiP as it’s known for short) is a new route to planning permission introduced in June 2018. It is available for housing developments of fewer than 10 units and is designed to separate consideration of the ‘principle of development’ (i.e. is this site suitable for new housing?) from decisions around the technical detail of the development (i.e. are the specific details of a proposed development suitable for this site and in accordance with local policies?)

Why was it introduced?
We know that one of the greatest obstacles facing many house builders is the prohibitive risk involved in bringing forward planning applications, and that risk and cost are often hugely disproportionate on the smallest sites. Outline planning permission was originally meant to provide a means of managing these risks, but over time even obtaining an outline permission has come to involve the submission of large amounts of information and detailed pre-application discussions, creating significant upfront cost in return for an uncertain outcome.

Many smaller house builders are unable to spread these risks over a number of sites and different applications. SME house builders are likely to be financing applications through their own funds or private loans and so the risk of investing in a planning application and not receiving permission can be quite prohibitive. PiP is intended to address precisely these risks and is designed to be closer to the old fashioned ‘redline’ type application.

Did the Federation of Master Builders play a part in the introduction of PiP?
Yes it did and it’s something we’ve been talking about for a while. PiP has followed directly from the call by the FMB for a return to the principles of the redline application for outline permission. Indeed, discussions over what has become PiP started as far back as 2015, after the Government signalled its willingness to look at a ‘redline-type’ application. The FMB and others in the industry were involved in early stage discussions as to how this could work. What we have now differs somewhat from the idea originally discussed, a result of having been adapted to fit a number of
other purposes, including the Brownfield Register. However, it still largely accords with the key principle of reducing risk for smaller scale developers. There is even hope that over time, if PiP is shown to provide enough certainty, that lenders may be willing to lend on the basis of PiP, allowing the  applicant to invest in the more costly Technical Details stage.

So, although it has changed from the original proposition, it is still an improvement?
Yes indeed. We believe that for many house builders and developers undertaking smaller sites, PiP might prove to be one of the most beneficial changes to the planning system in recent years. It has been designed to reduce the upfront costs and hassle involved in getting an ‘in principle’ decision, thereby reducing some of the risks involved in planning and allowing greater investment in the technical details process, once the principle has been established. It is also available to be applied to any site on the Brownfield Register to encourage the development of those sites identified as suitable for housing. The Housing and Planning Act 2016 also allows for PiPs to be automatically placed on all eligible sites allocated within local and neighbourhood plans, although this element is yet to come into effect and has possibly been shelved for the time being.

How does it work?
In effect, it’s a two-stage process to full planning permission. A PiP application consists of a two-page form containing basic information about the site, a plan which identifies the site in question, and a fee. The statutory time limit for PiP applications to be determined is five weeks. The grant of PiP will last for three years, during which time a developer will need to apply for a ‘Technical Details Consent’ (TDC) to convert this into a full planning permission. The focus of PiP is strictly limited to location, land use and amount of development. All other matters are dealt with at the TDCstage.

Has it been welcomed by everyone?
In general yes, although some local authorities, perhaps not unexpectedly, have not been universally positive about the new application route, which is one reason why you might not yet have heard of it. In addition, there are bound to be some teething problems and its success will always be dependent to some extent on its being implemented roughly as intended.

How will you know if it’s working asintended?
We believe that this new PiP route, as set out, will prove to be a significant advantage to the industry and more particularly the SME housebuilding sector going forward. We will monitor this closely and we’d really like to hear from developers and other property professionals with their views on PiP and how it’s being implemented in their areas. At the FMB we see it as one of a number of steps which can help to encourage and reinvigorate the SME housebuilding sector for the good of the country.