In the current state of the housing market, developers often prioritise maximising their profits over the needs and well-being of local communities. This approach is not beneficial for the region. It drains resources from certain locations, putting undue pressure on local infrastructure and services. Communities are left to deal with increased traffic congestion, inadequate public services, and environmental degradation. The rapid population growth in Medstead, for example, has resulted in an over 40% increase in the period from 2011-2021 due to piecemeal developments, exacerbating these issues.
The Need for a Balanced Approach
Developers are primarily focused on achieving the highest possible returns on their investments, often at the expense of the local communities they are building in. This has led to a scenario where the competition is not for creating the best living environments but for maximising profits. This imbalance needs to be addressed to ensure sustainable development that benefits everyone involved.
The Role of Section 106
Section 106 of the Town and Country Planning Act 1990 is a powerful tool that local authorities can use to require developers to mitigate the impacts of their developments. These agreements, also known as planning obligations, can be used to secure contributions towards local infrastructure, affordable housing, and other community benefits.
Introducing a Profit Cap
One innovative approach to ensure fairness and reinvestment into local communities is to introduce a profit cap for developers. This cap would limit the profit developers can make on each property to a certain percentage above the average profit margin for similar properties in the region. Any excess profits would then be used to fund local infrastructure projects and the development of new settlements.
Benefits of a Profit Cap
- Fair Distribution of Wealth: By capping profits, we can ensure that the financial benefits of development are more evenly distributed, supporting community projects and infrastructure development.
- Incentivizing Sustainable Development: Developers would be encouraged to focus on the quality and sustainability of their developments rather than purely on profit maximisation.
- Reducing Overdevelopment: This approach would help control the pace and scale of development, preventing the overburdening of local infrastructure and services.
Implementation at EHDC
For East Hampshire District Council, implementing a profit cap could be a game-changer. It would require a policy change, potentially through the local development plan, to ensure that developers adhere to these new rules. This policy could be enforced during Section 106 negotiations, particularly for developments outside settlement boundaries and not included in the local development plan.
Challenges and Considerations
- Legal and Regulatory Framework: Introducing a profit cap would require careful navigation of existing legal frameworks and potential resistance from developers.
- Accurate Profit Assessment: Determining and enforcing a fair profit cap would require transparent and accurate accounting methods.
- Stakeholder Engagement: Engaging with developers, community groups, and other stakeholders would be crucial to ensure broad support and effective implementation.
Conclusion
The current planning application process needs a thorough audit to ensure it serves the best interests of the community. Developers have been exploiting the loopholes and using policies like Paragraph 11 of the National Planning Policy Framework to push through developments that prioritise profits over sustainable and equitable growth. By introducing a profit cap and leveraging Section 106 agreements, we can create a more balanced and fair development process that benefits all stakeholders, particularly the local communities that bear the brunt of unchecked development.
By taking these steps, East Hampshire District Council can lead the way in creating a more sustainable and equitable housing market, ensuring that development contributes positively to the community rather than simply draining its resources.