The government has been branded “weak” after the threat of a Tory rebellion has sunk a major planning reform.
Rishi Sunak wanted to help make homes more affordable by introducing mandatory building targets that local councils would have to adhere to.
But long-standing Conservative opposition to new developments has won the day after it emerged the targets will now only be “advisory”.
It comes after more than 100 Tory backbenchers last week threatened to rebel over the government’s levelling up and regeneration bill.
The move was confirmed by communities secretary Michael Gove in a letter to MPs on Monday.
Gove said he recognises “there is no truly objective way of calculating how many new homes are needed in an area” but that the “plan making process for housing has to start with a number”.
The change would make the centrally determined target a “starting point”, with councils able to propose building fewer homes if they faced “genuine constraints” or would have to build at a density that would “significantly change the character” of their area.
The bill is expected to return to the Commons next week for day two of its report stage.
Gove’s letter represents a victory for a group of Tory backbenchers led by Conservative former cabinet minister Theresa Villiers and Conservative MP Bob Seely, who had proposed a series of amendments to the government’s flagship Bill that would have meant sweeping changes to the planning system.
Around 60 MPs had signed an amendment that would have scrapped mandatory housing targets and the requirement for councils to demonstrate a five-year supply of housing land.
Supporters of the proposal said this would protect the environment and ensure communities were not forced to accept unwelcome development.
But some Conservatives were critical of the proposal, with 2019 Tory manifesto co-author Robert Colville saying it would “enshrine ‘nimbyism’ as the governing principle of British society”.
Labour’s Lisa Nandy strongly criticised the government’s decision, describing it as “unconscionable in the middle of a housing crisis”.
The shadow communities secretary tweeted: “We offered Labour votes to defeat the rebels, but Rishi Sunak and Michael Gove seem to have chosen party before country.
“This is so weak. In office but not in power.”
Welcoming Gove’s announcement, Villiers said the government had “listened” and the reforms would “rebalance the planning system and give local communities a greater say over what is built in their neighbourhood”.
She added: “The compromise we have secured shows that positive change can be achieved through backbench scrutiny of legislation.”
Isle of Wight MP Seely said that “well over 100 Tory MPs” had supported the changes, which would make the government’s housing and planning agenda “more conservative than the one we currently have”.
He said: “The new language we’ve agreed will work with communities, speaking to the character of areas and celebrating the beauty of good design. It understands the need for farmland, will significantly emphasise brownfield over greenfield development and will help deliver homes for young people.”
Seely rejected accusations the Conservative Party has nothing to offer to young people, saying: “This is going to be much better for younger people.
“In places like the Isle of Wight, or places like the tip of Cornwall or Cumbria, this is really going to help young people because we can say you can dramatically increase your targets for local affordable housing, and that’s specifically for younger people.
“So, this is actually a really big win.
“If you’re a developer and you want to sit on property for years and years, this is not good news for you. But actually, if you’re a council that wants to get on and build and if you’re a community that wants to control more of its destiny, this is good news.
“This is good news for everybody.”
On whether Gove’s decision had been influenced by Labour leader Keir Starmer telling Sunak that Labour would lend him the votes he needed to pass the planning reforms, Seely said: “It had nothing to do with that.
“The government did not want to lose 30, 40, 50 colleagues on a vote on principle. We didn’t want to vote against the government on principle.
“So, it’s actually a win-win.”
Other changes agreed to by Gove include charging a higher infrastructure levy on greenfield development, taking action to prevent land banking, and ending the “duty to cooperate” which sees rural and suburban areas required to help meet the housing need of neighbouring cities.
In the letter, Gove said the government would be “investing more homes in the North and the Midlands to relieve pressure on the South.”
The government has also promised to consult on requiring planning permission before residential property can be let out on websites such as AirBnB.