Planning reforms: can the UK replicate Nordic success?

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Planning reforms: can the UK replicate Nordic success?

On Tuesday the Queen officially reopened parliament and outlined her government’s priorities for the year ahead, including the biggest shake-up of Britain’s planning system in a generation.

The current planning system has seen little change since 1947, and the government proposes to replace it with the Planning Bill, which is expected to be brought before parliament in the Autumn. The Bill is part of the government’s ‘build back better’ scheme, which plans to support economic growth through significant investment in infrastructure, skills and innovation. If the Bill passes – which is highly likely given the government’s significant parliamentary majority – planning will be simplified, enabling the delivery of housing and infrastructure to be accelerated.

The Bill includes the introduction of a new traffic light system, with the UK divided up by local councils into areas designated for ‘growth’, ‘protection’ or ‘renewal’. In growth areas the current planning restrictions will be replaced by automatic online planning permission, which will be granted for new homes, hospitals, schools, shops, and offices if applications meet local planning regulations. However, development in protection and renewal areas will be more limited – this is to reflect the government’s ‘levelling-up’ campaign.

The government has acknowledged that the simplification of the system will substantially decrease the possibility of existing homeowners blocking new housing schemes. However, ministers hope that by moving the system online, residents will be more engaged in the development of their local area, as currently only 3% of local residents partake in planning applications.

Other key features of the Bill include a new design code to ensure the quality of new homes and a new infrastructure levy to replace the current, and somewhat complex, ‘section 106 system’.

When analysing the UK government’s approach to planning, parallels can be drawn to systems in the Nordic countries, specifically Norway and Sweden. These states emphasise the importance of efficiency and the links between regional economic development to physical and spatial planning at the regional level.

As a result of the structural stability these systems and large-scale government and central bank interventions provide, real estate markets in Norway and Sweden have shown considerable resilience during the pandemic. The stability these policies provide have given investors – domestic and international – confidence to deploy more capital in the Norwegian and Swedish real estate markets, although they will of course be aligned more towards defensive asset types and locations. The residential sector was the largest investment sector in the Nordics last year and is forecast further growth post-pandemic. The states’ simplified approach to planning and emphasis on regional development has enabled rapidly growing city populations and urbanisation which are somewhat resistant to economic decline.

The proposed overhaul of the UK planning system illustrates that the UK wishes to replicate the success of Norway and Sweden. Complete with a comprehensive economic recovery program, the new Bill has the ability to encourage investment, regional growth and economic resilience in the domestic real estate market.

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