Tuesday, 24 September 2013

The Cheshire East Local Plan - The Cart & The Horse (Continued)

Further to my piece on the Cheshire East Local Plan, this appears on Place North West today:

http://www.placenorthwest.co.uk/news/archive/14411-cheshire-east-urged-to-reconsider-green-belt-strategy.html

Jonathan Vose at Walsingham Planning would also appear to have concerns about the evidence base underpinning the Council's proposed development strategy. 

"The proposals in Handforth are particularly interesting, in planning terms, given that a very large scale of development is proposed wholly within the green belt, without the council first having published a formal assessment of its green belt, or the quality and openness value of sites within it."

Land Banking - Myths & Misconceptions

Here we go again. Ed Miliband will warn again today of the evils of land banking. “Across our country”, he cautioned in June, “there are landowners with planning permission, sitting on land, waiting for it to accumulate in value and not building on it”.
 
Developers who sit on land banks, he will apparently say today, will be hit by a “use it or lose it” law and Councils will be given the right to impose escalating fees backed up by new compulsory purchase powers.
 
The same call has been made by Boris Johnson, who has criticised “pernicious land banking” for being “against London’s economic interests”.
 
Are these cross-party warnings evidence of a legitimate issue or do they reflect a soft and misunderstood target that fills speeches and generates headlines?
 
For the sake of this blog let us assume that applicants for planning permission break down into three categories: the private landowner (let’s say a farmer), the volume PLC housebuilder, and the land investment company. Let us also assume that securing the principle of development through an allocation in the local plan costs, say, £50,000, and that a planning permission for a development that might make a significant contribution to a Borough’s housing requirement, say 250 homes, costs £200,000.
 
A private landowner who had spent £250,000 promoting my land through a development plan and securing an outline planning permission would, I would be suggest, be keen to sell that land to a housebuilder and go on holiday with the proceeds as soon as possible. 
 
The housebuilder, who is more risk averse than, say, 5-10 years ago because of the financial control being exerted by shareholders and funders, is less likely in the current climate to fund promotion through the planning system and more likely instead to pay a premium for a site with a planning permission. Having paid for the site, including that premium for it being ‘risk-free’, the housebuilder would be looking to minimise as much as possible the time between outlay and return.
 
There is a role for the third party, the land investment company, because the promotion of land through the planning system is often prohibitively expensive for private landowners and prohibitively risky for housebuilders. A land investment company will promote land on behalf of another party and share in the uplift in value when that land is sold for development. Having invested, let’s say, £250,000 to secure a promotion, though, that company will also be keen to secure a return as soon as possible.
 
In a continued climate of low housing completions, the claim that development land is being hoarded unnecessarily as landowners wait for values to increase is an easy one for politicians to make. It ignores though the need for a return on investment and assumes at the same time that values will rise sufficiently to compensate for holding costs. House prices in the North West, for example, the key driver of land value, remain well below the 2007 peak and only modest year-on-year growth is predicted. This, in the regions at least, is the new normal.
 
Research from Savills suggests that, far from hoarding, the number of unbuilt plots with planning permissions held by the top eight housebuilders fell by around 100,000 between 2007 and 2012, as land buying slowed and existing stocks were built out. Relative to recovering build rates, the supply of land held by housebuilders is in fact falling. In 2009 the volume of permissions held by the top eight peaked at 7.5 years (based on prevailing build rates), as the rate of delivery slowed. In 2012, permissions declined to 5.3 years.
 
If a landowner with planning permission sits on that land and waits for it to accumulate in value then that landowner might reasonably be said to be landbanking. This is fundamentally different though to a housebuilder holding a sensible land supply to account for supply constraints and sites in weaker markets that become vulnerable to prevailing conditions.
 
Both Kate Barker’s 2004 report  (Delivering Stability: Securing Our Future Housing Needs) and the OFT’s 2008 report (Home Building In The UK - A Study) both found no evidence of housebuilders land banking. A better question then might be not what to do to reduce land banking, but what can be done to increase the housing supply pipeline. I have ignored the role of the public sector as a landowner here, but the accusation that “there are landowners with planning permission, sitting on land, waiting for it to accumulate in value and not building on it” must equally apply.
 
In this author’s humble opinion the housing supply pipeline will not increase for as long as it is too expensive for private landowners and too risky for housebuilders to promote land through the planning system. The attention of Messers Miliband, Johnson, et al would be better directed in this direction.

Monday, 23 September 2013

Does more approvals have to mean more conditions..?

The HBF has published it's latest Housing Pipeline report this morning.
 
 
The headlines are a 49% year-on-year increase in the number of planning approvals for new homes in England in the second quarter of 2013.
 
Whilst a fall on Q1, the figure still means there were 77,686 permissions granted in the first six months of the year, a 26% year-on-year increase.
 
The HBF also take the opportunity to warn though of overly onerous conditions that increase the time between a planning approval and work commencing on-site.
 
A high number of conditions is often an indication that details that might otherwise have been agreed during the application process have not been agreed. This might suit some applicants because often at attitude prevails that pre-application discussions can be abortive where the principle of development is not readily established. By the same token, a high number of conditions can be trade-off that applicants are willing to accept in exchange for an earlier approval.
 
Another reason for effectively postponing the approval of matters of details though is the resources available to LPAs, either internally or at statutory consultees. The absence, for example, of specialist ecological or conservation staff makes it more likely that discussions will have to continue with third parties.
 
Interestingly, the New Statesman has published an article in which policy makers offer solutions to the housing crisis.
 
 
All of the suggestions have merit, but the majority are at the level of national politics and policy making. Behind the concerns of the HBF about the use of conditions is the practical reality of development control (sorry, management...) planning. If LPAs had the time and resources to engage in meaningful pre-application discussions and to resolve issues at the pre-approval rather than the pre-development stage then not only would more approvals be forthcoming, but those approvals would better assist with getting houses coming out of the ground.


(Update. According to DCLG figures on Local Authority revenue expenditure and financing, planning and development services have seen the highest decrease in net current expenditure, 24.8%, in 2011/12.)

 

 

Friday, 20 September 2013

The Cheshire East Local Plan - The Cart & The Horse

Cheshire East's Strategic Planning Board will be told next week that the Green Belt Study being undertaken to support the emerging Local Plan is "soon-to-be-finalised".
 
 
One wonders then upon what basis the Leader of Council, Michael Jones, was able to tell the BBC's North West Tonight programme this week that the Green Belt land proposed for the North Cheshire Growth Village east of Handforth was of "low quality"?
 
To be considered 'sound' the NPPF requires a Local Plan to be 'justified', which is defined as being "the most appropriate strategy, when considered against the reasonable alternatives, based on proportionate evidence."
 
A LPA's evidence base will obviously evolve in parallel to the evolution of the local plan process, and it may well be that the Green Belt Study supports the assertion that the North Cheshire Growth Village is the most appropriate strategy when considered against reasonable alternatives, but by not undertaking such a key plank of the evidence base earlier in the process the Council must be vulnerable to the accusation that a cart is being put before a horse.