Why CPRE thinks it is a developers’ charter (again):
“A cabinet minister faced a furious backlash yesterday after saying the Tories must build homes in the countryside – or they will hand power to Jeremy Corbyn.
Liz Truss, Chief Secretary to the Treasury, said planning laws should be ripped up as she complained about the number of Nimbys in Britain.
The outspoken minister said ‘a lot more’ sites needed to be opened up. She also called for those living in cities to be allowed to add extra floors to their homes without needing permission. Miss Truss argued the house-building overhaul was needed to keep Mr Corbyn out of Downing Street at the next election.
Liz Truss argued the house-building overhaul was needed to keep Jeremy Corbyn (pictured) out of Downing Street at the next election
But Tory colleagues warned the party would be ‘run out of office’ if it went ahead with ‘catastrophic’ proposals that fail to protect rural Britain and the green belts around London and other major cities.
The row comes a day after campaigners warned the green belt is already being ‘gobbled up at an alarming rate’ to build thousands of homes.
A report from the Campaign to Protect Rural England, published yesterday, showed plans for almost 460,000 homes have been pencilled in for green belt land since 2013 as councils lift planning protections, opening the way for developers.
Asked in an interview whether she would you be happy to ‘start paving over our green and pleasant land’, Miss Truss replied: ‘I do think we need to open up more land for building, a lot more. There are a lot Nimbys in Britain.’
Questioned on whether there are many ‘not in my backyard’ objectors in her own party, she said: ‘There are, but I think it is a dwindling number.
‘People recognise the choice is building on more greenfield sites and making sure there are enough homes for next generation or losing the election and ending up with Jeremy Corbyn, whose policy appears to be appropriating property.
Liz Truss, Chief Secretary to the Treasury, said planning laws should be ripped up as she complained about the number of Nimbys in Britain
‘So I know which one I’d choose – it’s having more homes available on the open market for people of whatever generation to afford.’ The minister added: ‘I also think we need to make it easier to build up in cities. I quite like the Japanese system where essentially you can build up on top of your house without having to get extra planning permission. I think we need to be more liberal about these policies.’
Miss Truss, who was appointed second-in-command at the Treasury last June after previously serving as justice secretary and environment secretary, said in the interview with the Financial Times’ politics podcast that she would one day like to be the country’s first female chancellor. ‘Well, who would say no to that?’ she said.
But when asked if she would like to be prime minister, Miss Truss, who is MP for South West Norfolk, replied: ‘I’m not sure about that one.’
Tory former minister Crispin Blunt last night warned the party it would suffer an electoral ‘catastrophe’ if it does not protect the green belt. The MP for Reigate, who is co-chairman of the all-party parliamentary group for London’s green belt, said Conservative local councillors already faced being ‘run out of office’ in areas where ministers had raised housebuilding targets.
‘Residents’ associations are going off their rocket,’ he said.
Mr Blunt said trying to meet demand in the South East was ‘sucking the best and brightest out of the North’. Hindering development in the South-East would encourage growith in the North, he added.
Tom Fyans of the CPRE said: ‘We agree that there is a severe lack of affordable homes available for people to buy and rent.
‘However, what Liz Truss fails to recognise is that, opening up the green belt will not solve this issue.
Tory former minister Crispin Blunt (pictured) last night warned the party it would suffer an electoral ‘catastrophe’ if it does not protect the green belt
‘Almost three quarters of the homes built on green belt land last year were unaffordable.’ He said the ‘perfect solution’ to ‘this barbaric assault on the green belt’ was to use brownfield land to its full capacity.
The CPRE’s report showed there are plans for almost 460,000 homes on green belt land. Green belt areas can be built on if councils grant planning permission directly or remove the land’s official status. Both methods have been used.
Only 70 houses or flats were built in the green belt in 2009/10 compared with 8,143 in 2017/18.
Miss Truss has become one of the most prominent advocates in the Cabinet for free market liberalism. Earlier this year, she attracted attention for a speech in which she appeared to ridicule the Prime Minister’s plan to ban plastic straws.”
Answer to a Freedom of Information request:
1. The total amount of land (in acres) currently owned by your Council – 2302 acres
2. The total amount of land (in acres) currently owned by your Council that has been identified as surplus to requirements – 0 acres
3. The total amount of land (in acres) currently owned by your Council that is scheduled to be sold – 0.3 acres
4. The total amount of land (in acres) currently owned by your Council scheduled for joint venture housing development or where such development is already taking place – 0 acres
Date responded: 20 June 2018
Thomas Aubrey of the Centre for Progressive Policy:
“Our system favours landlords over communities. The PM must side with the many, not the few.
Theresa May is right. Britain’s housing market is broken and needs fixing. Homelessness and rough sleeping are rising and owner-occupation levels for the young have collapsed because homes have become unaffordable.
The average private rent in London accounts for more than a third of household income. The bill for housing benefit has risen eight-fold since the early 1980s after inflation is taken into account. House building has risen since the lows reached during the financial crisis of a decade ago but needs to almost double to hit the government’s target of 300,000 new homes a year by the middle of the next decade.
Yes, the housing market is broken all right and for the Conservatives, a party that sees itself as the party of the homeowner, it is a serious political headache.
A crisis has been brewing for decades – and left unattended the problem can only get worse. Britain has a rising population and the trend is for smaller households, both of which mean demand for housing will keep on rising. The weak growth figures for the first three months of 2018 will keep borrowing costs on hold for now but sooner or later the Bank of England will raise interest rates. That will make it still harder for people in their 20s to get a foot on the housing ladder.
Yet sketching out the problem is one thing. Coming up with solutions is trickier.
Replace a regressive council tax with a land value tax? Labour is thinking about a LVT but there is no chance the Conservatives will introduce what they have dubbed a “garden tax” that would hit millions.
How about giving some of the anonymous farmland in the green belt over to housing development? The thin end of a wedge that will result in the south-east being turned into one big urban sprawl.
Make prime residences eligible for capital gains tax? Are you kidding? Politicians know that Britain’s housing market is broken but mess with it at their peril.
The problem is so big, however, that changes have to come. London’s mayor, Sadiq Khan, wants to increase the supply of lower-cost homes in the capital, so under City Hall guidelines private development proposals where affordable units make up at least 35% of the total will be fast-tracked through the planning process. Under 35%, and developers can expect a much tougher time.
But as Daniel Bentley argues in a new pamphlet for the thinktank Civitas, the problem goes deeper than the planning system. Forcing councils to grant more planning permissions in high-demand areas doesn’t guarantee that the supply of new homes will markedly increase.
The reason for that, Bentley says, goes back to the 1961 Land Compensation Act passed by Harold Macmillan’s government. This enshrined in law the right of landowners, in the event of compulsory purchase, to be reimbursed not only for the value of their land as it stood but for its potential value if it were used for something else in the future.
A system so heavily weighted in favour of landowners had two consequences. First, it provided them with an incentive to wait, often for years, before selling their land for development because they would get a higher price. Second, house-builders had to recoup the costs of buying the land and did so by building more expensive properties that were drip-fed into the market to keep selling prices high.
If the aim is to build more affordable homes, this makes no sense. A site with planning permission for housing is worth more than a brownfield industrial site and 100 times more than agricultural land. Research by Thomas Aubrey of the Centre for Progressive Policy found that landowners made windfall profits of more than £9bn in 2014-15 on the sale of land. That meant for every home built that year, an average of £60,000 went to the landowner.
Bentley says the entitlement of landowners to this “hope value”, the prospect that it will be worth a lot more if used for something else, means public authorities are powerless to enforce development priorities that are in the interests of the community.
“This was not always the case. The new towns that were initiated before the 1961 act, and much of the local-authority output of the late 1940s and 1950s, was underpinned by a land values policy that meant landowners were compensated at values reflecting the existing use of the site,” he said.
“This meant land for new homes could be acquired at or close to its much lower agricultural or industrial use values. It also doused speculation and prevented the withholding of land.”
Reforming the 1961 act so that public-sector bodies can purchase land at less than its prospective residential use value makes sense because it would enable developers to get hold of land more cheaply and so build more affordable homes. Nor would it be an especially controversial move politically.
Judging by their 2017 manifestos, Labour and the Conservatives think the current system is weighted too heavily in favour of landowners, who see the value of their holdings increase not through their own efforts but through those of others.
Adam Smith and David Ricardo, darlings of the free-market right were critical of the “unearned increment” that landowners enjoyed. So was Henry George, who the left laud for coming up with the LVT.
May should seek bipartisan support for a rethink of the 1961 act. Sure, Conservative-supporting landowners would object but if the prime minister is to make good on her pledge to fix the housing market she has to side with the many not the few.”
Parkhurst Road Limited v Secretary of State for Housing Communities and Local Government & London Borough of Islington. Case No: CO/3528/2017, in the High Court of Justice, Queen’s Bench Division, Planning Court, 27 April 2018.
“A High Court judge has backed Islington Council in a long-standing battle between the council and developer First Base (Parkhurst Road Limited), who refused to provide affordable homes on a former Territorial Army site in line with the council’s planning rules.
The developer bought the site on Parkhurst Road in 2013 and has attempted to secure planning permission for a residential development with little or no affordable housing, ignoring the long-standing planning requirements on the provision of affordable homes set by the council.
An initial planning application was submitted in 2013 by the developer who were assisted by Gerald Eve as viability consultants. The council refused planning permission for this development twice on the grounds of not providing enough affordable housing, as well as other matters.
The case centres around the viability assessment of development and, in particular, how the price of land should be determined in planning, which is a tool increasingly used by developers and their viability consultants in recent years, to avoid complying with councils’ planning requirements on affordable housing.
Two lengthy public inquiries were held, both of which were won by Islington Council. Each time the low level of affordable housing provided on the scheme was being justified by the developer on factors such as the purchase price paid for the site, and land transactions of other schemes. Following the second public inquiry held in early 2017, an Independent Planning Inspector appointed by the Secretary of State, upheld Islington’s refusal of planning permission in his decision of 19 June 2017.
The developer then mounted a legal challenge against the Planning Inspector’s decision at the High Court. The Planning Inspector’s decision was defended in court jointly by Islington’s legal team and the lawyers representing the Ministry of Housing Communities and Local Government (MHCLG).
Normally, the role of the courts in planning disputes is very limited and restricted to legal technicalities only. However, in this case the Judge Justice Mr David Holgate allowed a fairly detailed examination of planning issues and the development viability evidence in particular.
Today (Friday, 27 April) he dismissed the legal challenge on all three grounds put forward by the developer, and concluded that he was satisfied with the Planning Inspector’s decision to dismiss the developer’s appeal and uphold the council’s decision to refuse the planning application.
Responding to the judgement, an Islington Council spokesperson said:
“We are delighted by the High Court judgement. This decision reinforces Islington Council’s long standing position that developers should abide by the councils’ planning guidelines – rather than overpaying for land and then trying to bypass our affordable housing requirements.
“There is a shortage of good quality, genuinely affordable housing in Islington and a significant unmet housing need. The council is doing everything it can to address this, because we believe that everyone should have somewhere to live that is affordable, decent and secure – and developers must respect these important priorities when they purchase sites in Islington.”
In a highly unusual move, in a postscript to the judgment, Judge Mr Justice Holgate also recommended that the current, widely used, guidance on viability assessments by the Royal Institute of Chartered Surveyors (RICS) should be revised “in order to address any misunderstandings about market valuation concepts and techniques, the “circularity” issue and any other problems encountered in practice over the last 6 years, so as to help avoid protracted disputes of the kind we have seen in the present case and achieve more efficient decision-making.”
This is something that the council has been calling for over the last couple of years, due to serious concerns about how the RICS Financial Viability in Planning (2012) guidance note was being applied in practice.
Islington Council’s planning guidance on Development Viability is very clear and specifically cautions developers against overpaying for land and using the purchase price as a justification for providing little or no affordable housing. This landmark judgment reinforces what Islington (and many other councils) have been arguing for years that affordable housing requirements cannot be bypassed by using the “dark art” of viability assessments to ignore planning policy requirements.”
“A Government-commissioned report has blamed delays in the house-building process on builders concerns about future sale prices.
In the Autumn Budget the Chancellor set up an independent review to look at the delays between planning permission being granted, and houses being built. This review is being led by Sir Oliver Letwin.
The Treasury has now published the commission’s interim report alongside the Spring Statement:
These initial findings suggest that house-builders concerns about sale prices are a major factor in slow “build out” of homes on many of these larger developments.
Letwin says this review had initially focused on larger housing developments and major housebuilders. Further analysis may look at smaller scale models.
In a letter to the Chancellor and Sajid Javid – the secretary of state for housing communities and local government – Letwin says housebuilders have cited a number of “limitations”, including a shortage of available skilled labour, the availability of capital, provision of local transport infrastructure and the slow speed of installations by utility companies.
But in the interim report Letwin says: “I am not persuaded that these limitations are in fact the primary determinants of the speed of build out on large permitted sites at present.”
He goes on to say the fundamental driver of build out rates, once detailed planning permission is granted, appears to be the “absorption rate” – that is the rate at which newly constructed homes can be sold into the local market without materially disturbing the market price.
This rate, he says appears to be largely determined at present by the type of home being constructed and the pricing of the new homes built.
The interim report goes onto say this problem can be exacerbated by many larger development having a style of size of home that is fairly homogeneous.
The next stage of this review will look at whether build-out rates could be improved, either by reducing the reliance on large builders, or by encouraging them to offer more variety in terms of the type and price of property offered.
The report adds: “We have seen ample evidence from our site visits that the rate and completion of the ‘affordable ‘ and social rented’ homes is constrained by the requirement for cross-subsidy from the open market housing on the site.” This can delay the build out of these homes, the report adds.
Letwin says he plans to publish more detailed draft analysis by the end of June, which will contain a more detailed description of the problem and its causes.
The independent review will then seek comments from interested parties before a final analysis which will include a list of recommendations to improve the situation.”
“Theresa May is saying builders need to open up their land banks and develop more sites, while Berkeley is unwilling to aggressively ramp up production. With conditions in the capital starting to look more precarious, it’s easy to see why Berkeley has reservations. After all, adopting overly ambitious strategies just before the market turns has caught out many a builder over the years.
Its comments on the complexity of getting work started is a clear signal to the government that it believes the best way to move forward is not to churn through the land on its books, but to remove the red tape around the development process.
Property Week agree, saying that:
Berkeley Homes has positioned itself directly against prime minister Theresa May, by refusing to increase the number of homes it builds despite government threats to housebuilders to either build homes on their land or face planning blocks.
Sarah Gatehouse, real estate tax director at Grant Thornton, tweets that the ball is back in the PM’s court:
“Berkeley announces in trading update it won’t build more homes than forecast, citing high transaction costs, the 4.5 times income multiple limit on mortgage borrowing and prevailing economic uncertainty. What’s Theresa’s next move? #housing”