Introduction
In England we have a housing problem. Prices and rents are too high for young people. Halving them and mortgage debt over a generation (by 2050/2060) will boost their future prosperity. But worry today’s generation of home owners. Will their equity, for example dry up if supply matches demand?
Conflicting priorities blocks progress. Locally residents fear unexpected change. For them it seems invariable bad. It is also true; lots of new homes are needed. In the long term a pragmatic spatial solution is the way forward. In the short term (merely 10/20 years ahead) power to run local housing markets must be shifted back to local communities from land owners and developers. Placing spatial and delivery control of housing supply in local areas in private hands has failed on a grand scale.
Councils blocking land supply over many several decades is the consequence. It is the regulatory response to market chaos. Doing so is a failed policy. It leads to unaffordable homes. Locally the spatially haphazard, stop start flow of new homes ensures corrosion of much loved rural areas, the urban threat of unwanted densification with alien high rise blocks, strained local services, congested roads and angry residents. To overcome chronic policy failure political parties must now work together. Intervention can then add value. But abdicating local leadership in housing land supply guarantees homes will remain unaffordable.
We face a spatial paradox. There is plenty of undeveloped land. Around 90% of all the land in England is undeveloped. This decent heritage offers spatial choices. What is more, in many areas but not all, much of this land is unprotected by planning policy. It is generally privately owned open countryside (woodland and fields), with restricted or no public access. On the other hand we have 26,256 ha of brownfield land (CPRE November 2021 report) and a land area in England of 13,046,000ha (gov.uk Official Statistics). Government’s housing policy gives spatial priority to brownfield land. Relying on 0.2% of the total land available as it is brownfield land is not a serious minded spatial policy for future housing. Remember building on top of railway stations or road junctions is expensive and hard work. The airspace above Kensington Underground Station, ie. brownfield land in a prime residential location remains untouched. In the 70’s I made unsuccessful attempts to buy it for housing for clients.
Broken Delivery System
The planning system is reactive. It rations new homes supply. The attendant outcomes, the houses, are often unloved. Recent decisions by government to focus attention on beauty are wise. House building which fails the beauty test, also fails to create value; put simply, we do not want to go there. This is second class planning control. We deserve better.
Planning controls inflate the price of building land, sometimes massively in popular areas; fuel increasing layers of regulatory compliance; produce sub-optimal homes in a haphazard, spatially incoherent scatter. Local residents are conditioned to view the prospect of change near them as bad: reactions of horror, often with good reason, are in the genes. Locally confidence in the planning system has gone.
Within Westminster all political parties want to make homes affordable, encourage economic growth and achieve a better distribution of prosperity between the north and the south. These aspirations all make good sense. But central government intervention in not wanted by local communities in local plans. At local level intervention is divisive. The result is clashing priorities.
Ex-Prime Minister Gordon Brown’s recent report (Renewing our Democracy and Rebuilding our Economy, 2022) advocates a mechanism within the planning system which balances local wishes with national priorities. Finding the right balance, able to win widespread support for such a mechanism is urgent. Some back bench Conservative MP’s like Simon Clarke, a former levelling up secretary see the risks of the government withdrawing target housing numbers for local areas, in the face of opposition from Theresa Villiers MP and her 50+ rebels. Their opposition to housing targets will not mend the broken system.
Why is it broken?
Understanding precisely why the system is broken is crucial. Is it divisions within Westminster? Is there any common ground? Or is it understanding the whys and wherefores of local resistance to new housing in their areas? Opposition starts on the ground. It is spatially driven. In my experience the answers must be found locally. After all local residents live with the results for the remainder of their lives. MP’s do not.
Locally those who block change use different labels. Conservationists sincerely seeking to protect their own environments. Equally sincere climate warming prophets. Existing residents fearing change in their neighbourhood. Local land owners with shrewd, long term land value maximisation agendas. And local leaders and MP’s horror struck by the rage many housing projects unleash. Each group has distinct, often clashing objectives. Winning local support means aligning these objectives. All will take time, years in reality. . One group, land owners are a special case. Their cooperation is important.
Next Steps
What is the objective? It is to turn community resistance to local change into local support. Spelling out the local wins, the local opportunities will start the process. What are they? To draw up the list needs local leadership, built up on a cross party basis. Sometimes cruelly writing this shopping list also means acknowledging individual property rights cannot override local duties and responsibilities. Recognition and resolution of this local v. national conflict lies at the heart of the rupture in English local governance. Local residents interests must take precedence. And local residents, and their leaders must take responsibility. It is called civic duty.
But in place of the current, ineffective system, how do we follow a different path. There are two successful English alternatives. Both offer lessons. One is pioneered over generations by the private sector. The other successfully introduced after WW2 by the public sector. Look first at the private sector place making successes of landed estates in rural and urban areas, shrewd promoters who create places people want to visit and live. What are the lessons? Look at the timescales they adopt, based on generations not 15 year local plan cycles. Look at their ability to create premium values by discreetly, consistently over generations following ‘place making principles’ (see P Canalas and M Rico:The work that place does:The London Landed Estates and a curatorial approach to estate management. European Urban and Regional Studies 2021, vol28(3);https:journals.sagepub.com/doi/full/10.1177/0969776421999764). Like is or not, in Poundbury near Dorchester the Crown Estate are selling new homes on its urban extension at premiums of 30%. It is bald market endorsement that beauty matters and pays dividends.
Look too at the track record of the Commission for New Towns in the decades after WW2. Some criticise their design solutions or dependancy on private cars. These queries are not the point until the masterplanning stage is reached. Most people have forgotten CNT’s financial successes. Their achievements followed the adoption of time delivery programmes that captured most or all the massive uplift in land value planning development control approval releases.
Explaining success
The foundation of successes in the private and public sectors was, and remains, land ownership by the promoter. Ownership at the very least means land ownership during the initial land assembly, creative and master planning and land resale phases plus long term of estate management powers, (implemented on place stewardship principles to preserve premium values). The positive outcomes of land ownership based policies reverses haphazard spatial scatter and enables local communities to achieve up to 100% land value capture.
Achieving Consensus Planning
This is a two stage process. The short term is realistically a 10/20 year period. This is the transition phase from the current call for sites system to the community led system. It sets in place the foundations for the region’s future. It leads to the objective, a new local community run spatial land policy. I call it local stewardship place. Some experts will call it a form of regional strategic planning. They are right. But the promoters following LSP policies have a fundamentally different role. It is the delivery of housing land. And this role is held by the local community. The time cycle will be one or two or more generations. What are the steps to achieve LSP?
The first step is to identify, map and agree the employment catchment zones which dominate economic activity in their area. Within these sub-regions land areas protected by statutory planning policies must be excluded, typically AONB’s and green belt. Local variations can also be identified, such as places of literary, heritage or ecological significance. All the remaining land, which is not excluded may be potential LSP. This decision will be for the discretion and judgement of local councils.
Implementing community land ownership or community purchase options may follow or precede adoption of the LSP policy. Community land jurisdiction, in whatever legal form, within LSP’s starts a radical policy change that requires local residents support. Just as important it requires acceptance from the local property industry that the local change in policy direction is inescapable and enduring. Coming to terms with this adjustment will take the market time. Critically local land market acceptance will decisively emerge when a clear political consensus is seen to exist locally. With local consensus achieved and an adopted LSP in place, land owners, option holders and developers will have no incentive to wait for a change in political control, a policy widely used in the past.
Correct sequencing through the transition phase matters to land owners. This is why they are a special case. It is essential to remove the threat, in fact the perception of the threat on which value shifts depend, of unfair treatment of local land owners. Their long term expectations, which may not match market reality, will then change. With their army of advisers, they are a powerful, well funded group. It is imperative their reasonable financial interests are treated equitably and seen to be so. Fortunately hope value, the symptom of potential of change of use of land to a higher value activity, is ultra sensitive to shifting expectations of land use change. Councils with planning control powers, an adopted LSP and strategic land options or actual land ownership will be in a position to stop hope value taking root too early. Councils who lead from the start will be in a powerful, well funded position. They will own land assets with hope value, but the asset is floating. The land to which the hope value attaches depends upon local decisions. Fortunately the RICS Red Book is the valuation bible. It sets the rules for open market based compensation. By acting early local communities can stop the formation of site specific hope value, the driver of the price of land. To reduce hope value to negligible amounts a 10/20 year transition will therefore be necessary to reflect future expectations, the foundations of hope value. With this timescale, and a leadership consensus local communities can take control of their areas in new way.
Governance
To introduce an LSP policy, which is based on economic catchments zones, not local authority boundaries appropriate neighbouring local councils must agree to establish some form of new town development corporations. Those who see themselves as host authorities for additional new housing may expect benefits from those authorities who, perhaps because of a lack of land, blanket statutory protection policies, or vociferous local opposition are the councils who are compelled to export some of their future housing needs,
The need for appropriate financial incentives and financial sanctions on councils who fail to meet their housing targets cannot be avoided. The cause of failure to win local support will be weak communication with local voters.This is why a 10/20 year transition phase will be needed. Achieving the settled long term objective will take longer. Each council must take local responsibility. One option may be that local residents whose homes grow more in value because local demand is exported pay local residents in host locations who face bigger changes. This seems fair in theory but will be contentious in reality. Alternatives may be worse.
All incentives and sanctions have the potential to be contentious. Introducing realistic incentives and sanctions will demand political consensus within Westminster. The current policy positions of both main parties will fail to deliver the homes needed in the short term, and will unnecessarily erode the urban and rural fabric in the long term. To make headway in the future; to build sound foundations for levelling up policies; and to drive domestic economic growth, political Westminster consensus in these sectors will remove the current stalemate
Land Banking
It is unclear how widespread frequent claims of land banking are in reality. But experience shows that those who have control of land in their gift are able to adopt long term policies, intended to ensure their land is released for building at times that suit them best. This is a right and proper agenda for commercial organisations. Local councils have far broader agenda. It is in local communities best interests that their agendas take priority in the medium and long term.
One of the biggest benefits for local communities that decide to run their own areas will be the changes in the hearts and minds of local land owners and their partners who control land already earmarked for housing. Land owners faced with a new, community led LSP and land buying policy will accelerate the release of these housing land areas. The prospect that in local areas, local communities will take over the future supply of house building land means attitudes of local builders and land owners must respond to market changes. Their ability to manage the supply of new housing in local market areas will reduce. This change will release pent up land supply .
Summary
Local communities must take back control of future development land in their areas.Doing so ensures new homes go where local residents prefer, reduces speculation in land, and by capturing the added value planning consent releases local communities will be able to fulfill many more of their local needs with less Treasury support.
Introducing an LSP policy requires local political consensus. Realistically introducing community led or LSP based planning will take 10/20 years to replace the existing broken system.
Ian Campbell
29 March 2023
