Author Archives: andrew lainton

Eric Gets Muscular on Parking – Again

Buried in yesterdays consultation.

The Government supports the motorist and wants to see adequate parking provision for them. For this reason, we removed the previous administration’s restrictions on the number of parking spaces for new developments. And in March this year we published new planning guidance, which encourages local authorities to improve the quality of parking in town centres and, where it is necessary to ensure their vitality, the quantity too. Parking standards are now matters for local authorities.

We are aware that some local authorities appear to have adopted a more flexible approach, and this is to be welcomed, but the Government now wishes to understand whether more action is needed to tackle on-street parking problems.
We want to understand whether local authorities are stopping builders from  providing sufficient parking space to meet market demand. We also want to ensure that local authorities in their Local Plans have properly reviewed their
parking policies and brought them up to date.

Question 2.16: Do you agree that parking policy should be strengthened to tackle on-street parking problems by restricting powers to set maximum parking standards?

 

So its not a matter for local authorities then after all.  Even when as required by the NPPF it is backed by evidence and is the best plan in the circumstances?  The best way to tackle on street parking problems, on street parking constrols and better public transport, walking and cycling facilities.  Does the government back walkers and cyclists?

Why is there congestion on roads?  Because there is sufficient parking spaces at the end of journeys to meet market demand but not enough road space.  The shortage of parking spaces to meet market demand is not a problem it is an advantage.  This is a formula for worsening conbgestion everywhere and anywhere where there is congestion.

 

Partial Government Crackdown on Office to Resi Conversions

Announced Today for consultation.

additionally prior approval will now consider the potential impact of the significant loss of the most strategically important office accommodation. To ensure that the ability of the policy to deliver much needed new housing is not undermined, this will be a tightly defined prior approval, and we would welcome suggestions about the specific wording

Keith Holland on Blended Headship Rates and Recessionary Underestimation #Planorak

From Derbyshire Dales EIP

With the recovering economic situation it would be prudent to assume that the low 2011 headship rates are unlikely to remain in place over the whole plan period. It would be sensible to work on the basis that the household formation rate will gradually return to higher levels as the economy recovers. I therefore consider that a “blended” rate that assumes the 2011 rate until 2020 and the higher 2008 rate thereafter is appropriate. Whilst this may be a relatively unsophisticated approach, it is a practical one in the light of the uncertainties about future household formation rates.

Note the stinging criticisms that the council did not consult on its OAN pre submission and hence did not meet the statutory SCI requirement.

A Sad Goodbye to Professor Sir Peter Hall

I hear with great sadness of the death of Sir Peter Hall.  He never really slowed down and arguably his best book was the one he published last year.  No planning academic has ever had the influence of Sir Peter.

Having lived such a long time he was allowed and had the intellectual flexibility to change his mind.  In his youth he was pretty anti-planning and public transport, but his ideas developed.  He was always aware though of the tensions between state actions and anarchic freedoms as in his unmatched history of planning – Cities of Tommorrow.  His great strength was in popularising great thinkers and great practice rather than getting bogged down in rather minor self indulgant research as so many planning and geography academics do.  Hence his relentless popularisation of Howard, Schumpeter and Mumford amongst many others.

He creates a great void that will not be easy to fill.

Talk will turn to how planning should memorialise his contributions.  An award for good journalism by a planning academic, or good research into best practice in international urban planning would be ideas.

Office to Homes Conversions Choking Economic Recovery – FT

FT

Britain’s strong housing market threatens to choke its economic recovery as developers convert an increasing number of offices into homes, reducing the amount of space available for businesses to expand.

Commercial space in the UK has declined at its fastest rate since the Royal Institution of Chartered Surveyors (RICS) began its data series in 1998, figures published on Tuesday showed.

 The government eased planning rules to make it easier to convert offices to homes last year, in an attempt to get rid of older, poor-quality offices which are not suitable for modern business use.

But the new rules are disproportionately affecting economically successful areas such as London and the south east where house prices far outpace the value of even high-quality office stock, RICS found.

In the south of England a third of those surveyed by RICS said that conversions to housing were having a substantial impact on the availability of commercial stock in their area. Nationally, the figure was 18 per cent.

UK house prices rose by 10.5 per cent in the year to May according to data from the Office for National Statistics. Prices in London rose by more than 20 per cent.

Simon Rubinsohn, chief economist at RICS, said: “The pressure in the office sector is being exacerbated particularly in popular locations by the gradual conversion of some secondary space into residential. While making a much-needed contribution to the substantial shortfall of homes, there are understandable concerns that this could be creating a related problem for businesses looking to expand their footprint as economic confidence grows.”

Stuart Robinson, a director of property advisers CBRE, said that as the housing market heats up, the conversion of offices into homes was becoming an increasing problem.

“The mood of local authorities is really beginning to harden against the government’s measures to facilitate changes from offices to residential,” he said. Councils are “deeply concerned about the erosion of office stock and the way it is changing the economic fabric of their areas”, Mr Robinson said.

Westminster Council in London is particularly concerned about the impact on its local economy. House prices in Westminster are among the highest in the country, while the area forms the country’s largest concentration of economic activity.

As a result, the council is set to become one of the first nationally to introduce extra protections for office space for small and medium sized businesses.

Westminster will require developers seeking planning permission to convert offices into homes to replace any lost space that is particularly suitable for SMEs.

Robert Davis, deputy leader of Westminster Council, said: “Affordable office space is crucial in central London. So we must protect and provide wherever and whenever appropriate.”

 

Why Boris has a delayed a Strategic London Green Belt Review Till Next Year

The Mayor’s New Infrastructure Plan

“The plan suggests improving rail links to other urban areas in the South East but the mayor rules out building on the green belt as the large amounts of brownfield land within the capital should allow London to accommodate its growth, at least until 2025, within existing boundaries.”

Because that’s 10 years, and plans don’t have to identify land beyond that period according to NPPG. The issue is conveniently punted back till after the next election, just one yer though.  Of course this assumes a ‘liverpool’ approach of 20 years! to clear the backlog.  I don’t think this is applicable.  You can go with a liverpool approach if the panel accepts a large site driven policy, but its the size of deliverability of the sites that matters, it does not affect OAN which is determined prior to determining constraints.  The approach of the FLAP is contrary to the Hunstan Decision – assuming more realistic 10 years to clear the backlog the need requires 68.000 a year and meeting much of the Need outside London’s Boundaries in whatever form.

Thee press have not picked up on this.  The Mayor is not delaying a Green Belt review till 2025, all plan in London have to have a minimum 10 year land allocation.  What the Mayor is announcing is a Green Belt review in 2016 just after he hopes the FLP will be approved.  An entirely cynical time delaying tactic.  In the mean time every plan in ROSE is pout in stasis as they don’t yet know what their DTC OAN overspill is.  What London Boroughs and ROSE LPAs should be asking Boris is whether or not he will be carrying out this review in 2016, because if he is not if any of them adopt a plan this year it will have a shelf life of one year only.

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.”

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