Local councils will no longer be forced to set aside greenfield land to meet their future housing needs, under a new planning system to be announced by ministers.

Oliver Wright www.thetimes.co.uk

In a move that industry sources have claimed would be “disastrous”, Michael Gove will allow local authorities to reduce the number of houses to be built if development would significantly alter the character of their areas or impinge on the green belt.

Councils will also be given an exemption from building new homes on prime agricultural land.

The reforms, which could be announced as soon as Thursday, are designed to appease rebel Conservative MPs who have warned that opposition to housebuilding in their constituencies will cost them their seats at the next election.

But critics have warned that they amount to a “nimby’s charter” that will lead to a continuing shortage of housing in the areas of greatest need.

Under the previous system local authorities were required to set aside and designate enough land to meet their future housing needs for five years in a local plan even if the proposals were opposed by local residents.

Councils that failed to do so risked having new developments forced upon them by the planning inspectorate under a “presumption in favour of sustainable development”.

But under the changes councils will be able to set local plans with fewer homes if they can demonstrate to the planning inspectorate that meeting the target would damage the character of an existing area or require building on the green belt.

Ministers argue that the changes will, in the long run, allow more homes to be built because local councils will be incentivised to produce realistic plans for their areas that have broad democratic consent.

However, developers fear that the rules will be exploited by opponents of new housing to block sites from being built on, significantly reducing land supply in areas where demand is greatest.

“This will be disastrous,” said one senior industry source. “Under the old system there were strong incentives for councils to produce realistic plans to meet their future housing needs. Under this system there will be next to nothing to stop councils effectively imposing a moratorium on building the homes that we need.”

As part of the package of measures due to be announced by the government, Gove is expected to argue that the government will prioritise brownfield and higher-density development in inner-city areas. He will also make it harder for planning committees of local councillors to block developments that have been approved in principle by local planning officers.

A government source said: “We are reforming the planning system to put local plan-making at its heart. This will allow communities to take back control of housing in their area, while supporting much-needed development in brownfield and inner-city sites.

“We are on track to see a million new homes completed this parliament and are accelerating our plans in Cambridge, central London and the heart of Leeds.”

The government will also point to measures in the autumn statement designed to speed up the planning process. Under the new system local authorities will be able to charge an additional fee for accelerated planning decisions but would be forced to refund all planning charges if it failed to meet faster timelines.

Government sources said there had been more than 26,000 responses to a consultation on the proposed changes, which will form part of a new national policy planning framework (NPPF).

It follows weeks of negotiations with rebel Tory backbenchers, who last year forced ministers into a U-turn on plans for mandatory housing targets.

They said that the new plan would strike the “right balance” between the rights of existing residents with concerns about new development and the need to increase housing supply.

Labour is expected to condemn the proposals. “This is formal confirmation that this government prioritises party management over doing what it takes to get Britain building again,” said a Labour source.

The former Northern Ireland secretary Theresa Villiers, who led the backbench rebellion against the existing planning rules, said she hoped the new plan would respect “local democratic input”.

“The government has a longstanding commitment to ensure the voice of local communities continues to be heard in relation to what is built in their neighbourhood,” she said.

“We all recognise how important it is to build the homes we need. It is possible to do that whilst still respecting local democratic input, for example by focusing on high-density delivery in urban city centre sites. Once it is published, I’m sure the new NPPF will be carefully scrutinised by all sides of the debate.”