The Redhill Aerodrome Green Belt Case – Must Read

Here

‘Green Belt harms of a lesser effect than those which would warrant refusal on an individual basis cannot be considered as part of a cumulative impact of a development proposal’

So for example traffic impacts would have to be severe before being weighed up as part of theTesco appraisal of Green Belt Harm and Other Harm. A big win for KitKat and a major weakening of Green Belt policy.

 

Can Sprawl Prevent Housing Bubbles?

There is a debate in the blogosphere regarding Soos and Egans new ebook about Australian housing bubbles.  Quite apart from their overall charting of housing bubbles back over nearly two centuries and the economic theory they use to understand it in one chapter they criticise the assumptions used by free market urban theorists  such as Edmund Glaser, Ryan Avent and Matt Yglesias and  known as the ‘Urban Containment Hypothesis’  (page 657 onwards). Note I hesitate to use the term ‘market urbanism’ as sometimes used to describe this concept, as this often covers those who believe that cities would and should be denser without planning controls, no I am using the term here specifically to cover the ‘urban containment hypothesis’ that controls on city size make housing costs/urban containment policies push house prices above levels to which they otherwise would be, and hence fuel bubbles.  The solution, propagated in several market urbanist books in the last few years is simply to let cities grow, upwards and outwards, and this would prevent housing bubbles forming. Soos and Egan criticise this position noting that bubbles formed in housing markets well before contemporary planning controls.  They note however that then there was

“….an inability to build homes outside the immediate city centre given limited transport options; travelling by foot, horse, or carriage….”

Soos and Egaan are criticising the sole focus on the supply side of the urban containment thesis, wanting greater focus on credit creation.  Cettinly the empirical evidence is that credit gropwth is much more importaant than supply conatrsints (see this recent study by the OBR), however there are valid criticisms to the potential conclusion that this does not ultimately arise because of supply constrants, some of which are picked up by Phil Best who states

‘the paradigm shift in land markets that occurred with automobile based development, which for the first time brought sufficient land within transport system reach, in the process diminishing economic land rent.’

He quotes Robert Murray Haig’s much cited  (1926) “Towards an Understanding of the Metropolis” which first theorized that the growth in automobile use would push down land rent and suppress bubbles.

Here I wish to focus on this very specific point.  If  physical supply constraints can create bubbles and their removal can postpone or remove them should we be removing urban containment policies?

Lets start with the hypothetical but unrealistic position of no supply side constraints on housebuilding at all. There are no inventory constraints, no regulatory constraints, no finance constraints for developers, so any increase in demand is immediately reflected in an increase in demand. If this situation persisted and everyone expected it to persist there would be no scope for any speculation, save from the effects of a natural disaster.  In the real world supply does not react instantly to demand, building work takes a long time.  Homer Hoyt and Henry George both suggested it was this friction in the supply of land which creates the conditions for land price speculation.

There are two kinds of frictions.  One is the demand elasticity of supply, the slope of the supply curve, which restricts the flow of new housing services.   Only a small part of the stock of housing in any year relates to newly produced stock, what is mostly traded is existing assets.   The second is absolute physical constraints, such as where a city hits the sea or shortages of construction materials which pose an absolute restriction on supply.  Beyond this point the supply curve is flat, increases in supply does not result in an increased demand.  This kinked nature of the supply curve for new housing is rarely remarked on.  It is important though because it means that bubbles can both by created by rigidities in supply and be burst by expected shortages in supply or there removal.  Lets take a case where a speculator assumes that supply will be fixed, and hence all increases on demand go to economic rent on a block of existing land.  This gets fed into future options price on that land, speculation.  Then if there is an unexpected new boost to supply that option price will be too high, people may have borrowed too much, the bubble may pop.  Another example; there is an expectation there will be a steady new flow of land, but there is an expected supply constraints, of the kind experienced in Florida in the 1920s where a sink ship prevented building materials  coming to Miami, that also burst a bubble as those who has borrowed to buy land could not build out sell houses and service their loans.  So we can see that if supply is greater or less than that to which speculators expected in taking out loans can burst a bubble.

The hypothesis that the long post war period of steady growth without housing bubbles was in part due to the automobile, which significantly shifted the point at which the housing supply curve hits the vertical is probably correct.  Here we are taking about bid rent curves, where people trade the generalised cost of time commuting against lower housing costs.  The problem is transport networks have limits so beyond a certain physical line people will not commute.  The day has only so many hour, you cant commute for 25 hours in a day, people need to eat and sleep etc. Beyond a certain point travel costs will exceed savings.  This physical limit of expansion will be much larger in a city that opts for transit and high density around transit nodes as the benefits of lower rents will not be eroded by traffic congestion lengthening commutes.  It will also be increased if there is state funded low income housing increasing supply.  With the collapse of state funded affordable housing and less funding for infrastructure the social safety net against housing bubbles has been removed,  there appears to be no direction left for public policy to prevent housing bubbles other than to deliberately promote sprawl, as has been the case in the recent neo-liberal shift in housing and planning policy in the England.

There is a problem however as sprawl dramatically changes the balance between the urban economies and dis-economies of aggregation.   I have written about this in the past as ‘the broken city model’.  For cities undergoing rapid car orientated growth eventually congestion will vitiate any advantages of expansion.  New supply constraints will impose themselves.  So it may have been the case that the rapid urban expansion in the years after the Great Depression may have delayed the previous boom bust cycles but the length of this cycle and the length of the great moderation was also elongated by welfare urbanism, investment in public transport, new towns, urban renewal and and affordable housing, combined with policies of urban containment, that maximise the urban economies of scale whilst minisming the diseconomies caused by growth.  Now we are relaxing policies of containment whilst reducing transit investment, urban renewal and investment in affordable housing.  A very potent and dangerous combination as it increases the potential for severe supply constraints caused by unplanned growth to reassert themselves and so increasing the potential for boom and bust.  Contrast this for example with jurisdictions like Hong Kong, and Singapore, with have successfully introduced macroprudential controls on borrowing whilst at the same time investing in public housing and public transport.  Indeed as Bloomberg notes it is likely that these policies have only been successful because the publicly funded housing has provided an alternative to the foreclosed option of home ownership.  Sprawl simply replaces shorter smaller bubbles with more widely spaced and bigger ones of much greater systemic danger, that danger is increased when the sprawl is unplanned and not accompanied by public investment.

Soos and Egans are right to draw attention to the crude static  equilibrium assumptions of the Alonso/Muth bid rent curve urban models used in regional science.  What this draws attention to though is the need to replace these with a dynamic disequilibrium model of urban growth, credit expansion, city growth, bust and potentially city decline.  One which would owe more to Homer Hoyts sector theory aligned to his sadly almost forgotten model of real estate cycles which underlay it, one with a more sophisticated model of the urban economy not assuming equilibrium and accounting for both spatial economies and disceconomies, a private and public sector.

 

 

 

UAE – Too Many Megaprojects Too Quickly

The National

The unveiling of a raft of new projects in the UAE in recent months has raised questions about whether population and visitor growth is sufficient to soak up the extra supply.

From Mall of the World in Dubai, billed as the world’s largest retail destination, to Al Raha Beach East in Abu Dhabi, a mixed-use scheme to be built using reclaimed land, the number of new project announcements has reached its highest since before the 2009 financial crisis.

About US$212 billion in projects was under construction in the UAE, the research company Business Monitor International estimated in May.

Developers and officials argue the new schemes are needed to help meet surging demand from new residents and tourists, especially in Dubai. But economists worry about the risks attached to the scale of new development.

“We’ve seen a lot of new projects announced in Dubai over the past few months, but with very few details regarding timing and financing, so it is hard to tell how advanced the plans are and how likely they are to come to light,” said Farouk Soussa, the chief economist for the Middle East and North Africa at Citigroup. “Assuming they all do, then we consider the risk of oversupply in the market to be significant.”

A glut of projects was unveiled before 2009, but once the global downturn hit a credit freeze a loss of investor confidence led to many either being delayed or cancelled altogether. The ensuing meltdown prompted a debt crisis that slowed the economy.

This time, the government says the delivery of new projects will be closely monitored to match supply to demand. In Dubai, officials said in March the Dubai Urban Plan 2020 would be reviewed in light of the winning bid to host the World Expo 2020. The current plan envisages for the population to grow to between 2.8 and 3.2 million. The population reached 2.2 million people last year. It is also forecasting 25 million visitors, 70 per cent of which would be from abroad, over the course of the six-month event.

In Abu Dhabi, the Economic Vision 2030 and Urban Planning Vision 2030 report, compiled jointly by the Abu Dhabi Council for Economic Development and the Abu Dhabi Urban Planning Council, forecasts the emirate’s population to more than double to 2 million by 2020 from 930,000 in 2007. Tourist numbers will reach 4.9 million by 2020, more than double the 1.8 million level of 2007. But the population forecasts could change as officials review the estimates for the city of Abu Dhabi for the next five years, according to a person familiar with the matter. Nobody was available to comment from either Dubai Municipality, which is responsible for the Dubai Urban Plan 2020, or the Abu Dhabi Urban Planning Council.

Fitch Ratings, the credit ratings agency, is forecasting a population growth for the whole of the UAE of 6 per cent per year between now and 2016.

“There was a rapid growth up to 2009 and then population growth fell off quite dramatically for a few years. The population growth we are forecasting is up on previous years but we’re not at the same level as the pre-crisis era,” said Paul Gamble, the director of the sovereign group at Fitch.

Mr Gamble is also unsure about the positive effect on visitor numbers of the expo event.

“It’s unlikely to generate a massive new influx of tourists as the event may displace regular tourists,” he said. “There may be a modest gain in visitor numbers, but not huge.”

The IMF has repeatedly warned Dubai of the risks attached to building too many megaprojects too quickly. If not delivered prudently, these projects could exacerbate the risk of a real estate bubble, it warned in January. Residential prices in some areas of Dubai have already surpassed their previous peak reached in 2008. The pace of growth in prices slowed in the first quarter, partly as a result of government measures to try to curb speculation in the market. But concerns remain.

“The future direction of prices hinges on the level and pace of new supply coming to the market, which is significant in Dubai and less so in Abu Dhabi,” said Trevor Cullinan, the director of sovereign ratings at Standard & Poor’s, another credit rating agency.

There is also the risk of developers becoming saddled with fresh debt after only recently resolving debt burdens amassed in the aftermath of the 2009 crisis. Dubai’s government-related entities have about US$60bn in debt falling due between 2013 and 2017, estimated the IMF.

 

Boris Wont Ban Poor Doors

Guardian

Even Westmonster banned them many years ago by ensuring the social housing did not bear cost of hgher service charges.

Boris Johnson has ruled out a ban on so-called “poor doors”, which give social housing tenants separate entrances in new housing developments, but said he would discourage their use whenever possible.

The Guardian reported last week on the segregation in newbuild blocks that have affordable homes as well as apartments sold at much higher open-market prices.

Separate doors mean that housing associations offering the cheaper homes can avoid the high service charges paid for plush communal areas, but reports about the split entrances have underlined concerns about the capital’s increasingly polarised property market.

All London developments of 150 or more homes must be approved by the mayor, who said on Monday h he was not keen on separate entrances and had taken steps to prevent them in some developments. He told BBC Radio London: “I don’t like them and they are something that I try to get out of the planning application if I can.”

Unlike his New York counterpart, Bill de Blasio, Johnson did not commit himself to banning the practice, which he said had been going on for “a very, very long time”.

“The difficulty is, and this is what the developers will say, is that the high charges, the concierge charges, the charges for all the services in the building, cannot always be met in a uniform way by all the tenants, and that’s why they make this case for dual access.”

Sir Edward Lister, Johnson’s chief-of-staff and the deputy mayor for planning, said his boss’s priority was to increase the number of low-cost homes for Londoners, and that since 2008 more than 76,000 affordable homes had been built in the city. More affordable homes were expected to be built in 2014 than in any year since 1980, he said.

He said: “When coming to a view on any planning decision, the mayor or relevant borough has to balance a wide range of factors and policy concerns, not least the need to maximise overall housing output and the number of affordable homes.

“The mayor is committed to creating mixed communities for Londoners on a range of incomes. While he discourages dual access doors in planning applications, in some cases, this is not possible without incurring unaffordable service charges for people on a tight budget.”

Labour’s shadow housing minister, Emma Reynolds, said she was against the separation of affordable and private homes in a single building. “There shouldn’t be separate doors for people living in affordable housing,” she said. “Many of the developments that I have been to haven’t had this distinction but I am deeply concerned that it is something happening in the UK.”

David Lammy, Labour MP for Tottenham, who has shown interest in standing for London mayor in 2016, called on Johnson to consider banning the practice. It belonged “more in a Dickens novel than in a 21st-century global city,” he said. “This is a case of Londoners living side by side, but completely divided by bricks, mortar and money. We cannot allow London to become a city of haves and have nots. The capital’s sweeping economic success must benefit all Londoners, not just those who can afford to pay for luxury living.”

Cuts to Planning Staff Will Slow Down Housebuilding – FT

FT

The Home Builders Federation’s latest housing pipeline report showed initial, “outline” planning permissions at the highest level since 2008.

But the number of sites “consented” – cleared for development – in the first quarter of this year fell sharply. The trade body estimates that as many as 150,000 plots could be caught in between outline and detailed planning permission.

Ministers sought to tilt the planning system towards development in 2011 by rewriting the National Planning Policy Framework.

This has had some success in speeding up initial “outline” planning permission, according to experts, but the time taken to achieve the detailed permission needed to build has grown because of budget cuts in local councils.

“When I started in this industry, in the early 1980s, you would be able to get from outline planning permission to being on site in six weeks,” says Steve Morgan, founder and chairman of builder Redrow. “Today, you’re very lucky if you can do it in 18 months.”

 

Fracking to be Restricted in National Parks and AONB

Telegraph - Though touted as a change of policy it simply highlights the normal ‘dower test’ the absence of any real previous guidance of its application to Fracking having led to much uncertainty whether or not the government intended a free for all.  It appears though this is spin to deflect attention away from the massive expansion of licences to be announced today, and the implied threat of Eric Pickles to grant special development orders for exploration wells.

National parks and other areas of important countryside will be protected from fracking, ministers will announce today in a move that will head off anger in the Tory heartlands ahead of the election.

While stopping short of a total ban, the Government will unveil new planning guidance to make it harder to drill fracking wells in national parks and areas of outstanding natural beauty.

In a significant concession, the new rules state that fracking should only be allowed in the most precious areas of British countryside in “exceptional circumstances”.

Matthew Hancock, the new business and energy minister, said that the new measures “will protect Britain’s great national parks and outstanding landscapes”.

It will be seen as a major victory for countryside campaigners, who have repeatedly called for a total ban on shale exploration in the rocks beneath national parks to protect rare wildlife and fragile habitats.

Senior Conservatives had voiced concerns that the push for fracking in key Tory areas in the South East would result in a repeat of the protests seen last year in Balcombe, West Sussex, which resulted in dozens of arrests.

A number of Tory MPs have also pledged to oppose any shale gas exploration in their constituencies.

Sources close to Mr Hancock last night insisted that the new planning guidance does not represent a climb-down.

But one Conservative source described the measures as “tantamount to a ban” on fracking in national parks.

Under the new rules fracking in protected areas will only be approved by ministers if the gas and oil reserves are so large that they are deemed to be of “exceptional” national significance and any impact on the environment can be kept to a minimum.

It raises the prospect of Britain’s fracking industry being focused in the north of England, as fewer potential shale reserves there are situated in national parks.

A spokesman for the National Trust, who have opposed the Government on its planning reforms and expressed concerns over the spread of fracking around the countryside, said: “It’s right that the Government have recognised the concerns about fracking in special places like national parks and AONBs.

“We welcome the new planning guidance which will makes clear that applications should be refused in these areas other than in exceptional circumstances.

“But it’s not just national parks and AONBs that could be at risk but other special places too, which is why we’d like to see this approach extended to nature reserves and other wildlife sites like Sites of Special Scientific Interest as well.”

The Government will today [MONDAY] announce plans to offer up vast swathes of Britain for fracking.

The so-called “14th onshore licensing round”, which will invite companies to bid for the rights to explore in as-yet untouched parts of the country, could lead to thousands of new fracking wells, it is understood.

Fracking involves pumping water, sand and chemicals into the ground at high pressure to hydraulically fracture shale rocks and extract oil and gas trapped within them.

Campaigners had warned that fracking could lead to water contamination and the destruction of important wildlife habitats.

“The new guidance published today will protect Britain’s great national parks and outstanding landscapes. Building on the existing rules that ensure operational best practices are implemented and robustly enforced,” Mr Hancock said.

Mr Hancock wants to speed up the time it takes for companies to get approval to drill for shale gas.

At present firms have to wait around 15 months for permission to drill but Mr Hancock wants to half that ahead of the election.

He added: “Ultimately, done right, speeding up shale will mean more jobs and opportunities for people and help ensure long-term economic and energy security for our country.”

As part of the new planning rules, Eric Pickles, the Communities Secretary, will intervene if a fracking company appeals against a decision by a local authority not to grant a shale gas exploration application.

It means companies will be less likely to bully local communities into granting applications using the threat of legal action.

Lord Ahmad of Wimbledon, a minister in the communities department, said: “Effective exploration and testing of the UK’s unconventional gas resources is key to understanding the potential for this industry – so the Government is creating the right framework to accelerate unconventional oil and gas development in a responsible and sustainable way.

“We recognise there are areas of outstanding landscape and scenic beauty where the environmental and heritage qualities need to be carefully balanced against the benefits of oil and gas from unconventional hydrocarbons.”

He said that any proposals for fracking wells in valuable countryside “must recognise the importance of these sites”.

A previous government-commissioned report said as many as 2,880 wells could be drilled in the new licence areas, generating up to a fifth of the country’s annual gas demand at peak and creating as many as 32,000 jobs.

However, the report warned that communities close to drilling sites could see a large increase in traffic. Residents could face as many as 51 lorry journeys each day for three years, the study said.

It also warned of potential strain on facilities for handling the waste water generated by hydraulic fracturing.

There were also concerns over the potential environmental impact on the countryside.

Death of Nimbyism Cartoon – Sunday Telegraph

PINS gives 52 Pages of Pre-application Advice – and Still get it Wrong

I previously blogged on here that Gladmans ‘needed their heads examined’ for using the special measures procedure to apply for a site with an up to date local plan on BMV agricultural land where they were subsequently refised with no second chance.

Martyn Twigg of Gladmans provided me with the 52 pages of pre-app advice that PINS gave which explains why they submitted.

52 Pages! and they still got it wrong.  A warning if ever there was one that you should always be cautious about pre-app advice and there is no substitute for local expertise and knowledge.

The key section (I have uploaded it on dropbox) is  section 3.2.  Despite having an up to date local plan and that plan being used as the basis for calculating the backlog at two appeals the advice is that it should revisit whether to use the residual approach in favor of the Sedgefield approach on the basis of the recent NPPG.  What bad advice.

Firstly you only ever vary from an residual approach when a plan is out of date and there is a backlog.  A recently adopted plan is unlikely to have a backlog if you calculate the trajectory on the basis on which it was adopted.  So the guidance simply does not come into play.

Secondly the oddly undated pre-app note does not take into account the case of Bloor Homes V SoS issued on March 2014 relating to a nearby district in the same circumstance (possibly after the pre-app note was issued) clarifying that it is perfectly acceptable for an inspector to adopt a residual approach as in the two previous Blaby appeals.

What Gladmans should have done was to withdraw the application after the Bloor Homes decision had come in.  If this was a S78 appeal Balby could legitimately asked for a partial award of costs if they carried on.

Which illustrates again how inefficient the special measures regime is. Everyone time is wasted by an applicant submitting an application which on the basis of recent appeals, caselaw and a recently adopted plan stood no realistic chance of success.  In the non-special measures system there is an in built incentive in the system against such timewasting. Not so in the special measures system.

 

Come Freindly Bombs and Fall on Scranton

Poor Scranton Pennsylvania.

Not only the setting of Americas version of the Office it now has been voted America’s least happy city.  Perhaps a visit to the Anthracite Heritage Museuam will cheer everyone up.

Has Nimbyism had its Day?

Telegraph – More likley an expression of despair on lack of house-building – which government reforms had led to a collapse – than vote of confidence in the failed NPPF.

Local communities that once opposed new housing developments now support them because of the Coalition’s controversial planning reforms, the Government’s new planning minister has claimed.

In an article for The Telegraph, Brandon Lewis appeared to suggest that Nimbyism was on the wane as he said there had been a “dramatic swing” in public opinion – with almost half of people now in favour of new housing in their area.

He claimed the Government’s reforms, which introduced a presumption in favour of sustainable development, were responsible for this transformation because people now had a greater say in where new housing goes.

However the comments risk causing anger in the countryside where the Coalition’s reforms have triggered a huge surge in planning applications for new house building – often in the face of significant local opposition. Many communities across the country are fighting plans for new housing estates imposed by councils that have to meet new five year housing targets under the reforms.

The Government has published the results of a British Social Attitudes survey which found that the proportion of people in favour of house building in their area had risen from 28 per cent to 47 per cent between 2010 and 2013. By contrast, the proportion of people opposed to the construction of new homes in their communities fell from 46 per cent to 31 per cent in that time.

In his article, Mr Lewis, who was promoted to new Housing and Planning minister in last week’s reshuffle, hailed the survey as evidence that the Coalition’s planning reforms had made house building more acceptable.

“Since 2010 there has been a dramatic swing in public opinion about house building,” he said. “Now that local people have a bigger say over where new housing goes they are much happier to support housing building in their area.”

Writing on the Telegraph’s website, he said that this “changing mind-set” could be seen in an increase in new homes with planning permission after the introduction of the National Planning Policy Framework in March 2012.

He said: “This changing mind-set can now be seen in the pipeline of projects coming through the reformed planning system. Last year successful applications for major housing schemes were up 23 per cent, and planning permissions were granted for 216,000 new homes.

“The new planning system puts local people in control, so if they want to build more homes, they will.”

The Coalition has faced significant controversy over its decision to rip up 1,200 pages of planning protections and replace them with a new planning rulebook, known as the National Planning Policy Framework (NPPF), with a new bias in favour of sustainable development. Some claimed the reforms amounted to the greatest threat to the countryside since the Second World War.

In 2011, Greg Clark, the then planning minister, caused anger after saying that critics of the changes were behaving with “nihilistic selfishness”. His remarks prompted protests from groups such as the National Trust. The Telegraph launched a campaign against the changes, called ‘Hands Off Our Land’. The Coalition was ultimately forced to make changes to the framework because it became law in 2012.

In his article, Mr Lewis praised the Coalition’s two previous Planning ministers – Mr Clark and Nick Boles, who drew up and then drove through the reforms, ripping up protections that dated back to the 1940s.

Mr Lewis, who was given the job of both housing and planning minister in last week’s ministerial reshuffle, said: “It’s a job that has been brilliantly executed over the last four years by my predecessors Greg Clark and Nick Boles.

“Regional Strategies have been scrapped, thousands of pages of Government ‘guidance’ have been streamlined, and local communities have been put back in control.

“Those reforms are now complete. That’s why the Prime Minister has decided to reunite the housing and planning portfolios, and I am delighted to have been appointed the new Minister of State for both.”

But campaigners warned that many communities, particularly in rural areas, were battling unsuitable development from builders who were taking advantage of a bias in favour of sustainable development in the NPPF.

Shaun Spiers, chief executive of the Campaign to Protect Rural England, dismissed the report as a “propaganda bulletin” for the Government’s planning reforms.

He said: “The new minister suggests Nimbyism is dead but we know lots of communities are very concerned about poorly-sited housing on their doorsteps.

“It is very good news if more people are in favour of house building, but I think it is a bit hopeful to suggest that this is down to the Government’s planning reforms.”

Clive Betts MP, the chairman of the Communities and Local Government committee which is investigating the planning reforms, said: “It shows is that there is an increase in the understanding that we are short of housing and need to built more.

“Even if people have got a home, they have worries about their children getting one – getting a home for the next generation. There is evidence that the planning reforms are working in some places and not in others.

Steve Turner, from the Home Builders Federation, said the findings of the survey were “extremely positive” and pointed to a “growing acceptance of the need for more homes”. However, he said: “I am not sure it is accurate to link the planning reforms in 2012 to a sign change in public attitudes between 2010 and 2013.”

The British Social Attitudes study surveyed 3,000 people in 2010, and then 1,000 in 2013. The study also found that opposition to housing has fallen most among those aged 65 and over, from 52 per cent in 2010 to 30 per cent in 2013.

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