Government to Borrow to Directly Commission Housebuilding

Some questions

  1. On what land?
  2. Small sites good, but 10s of thousands of them – from government?   Very bureaucratic.   The most efficient model – the continental model is for the government to buy large sites at existing use value and split them into smaller sites and plots for a more competitive housing market.  This could be the opposite – the government pitching in for the same sites as everyone else.  Driving up prices or getting the duff left over plots the big housebuilders don’t want.
  3. Wont the oligopoly of land ownership remain, and owners pushing for higher rent seeking knowing the state will act as a developer of last resort
  4. The state acting as a developer of last resort is a good idea, in macro terms, as a means of preventing underbuildings and property crashes and recovering from recession in bad times.  Danny Alexander pressed for this at the Treasury using large government owned sites.  A revised version of this offers the best model – ultimately wont work without value capture.

 

Telegraph

The Government will borrow billions of pounds at record low-interest rates to invest in hundreds of thousands of new homes under plans being considered by ministers.

Sajid Javid, the Communities Secretary, said that the housing crisis represents the “biggest barrier to social progress in our country today”.

He said that ministers are examining plans to “invest for the future” and that the Government wants to ensure it is “using everything we have available” to deal with the housing crisis.

The Daily Telegraph understands ministers are examining plans which would see the Government directly commission small and medium-sized developers.

It would effectively make the Government one of the nation’s most significant housebuilders and break the monopoly of the biggest developers.

Ministers said that the plans would ultimately be “fiscally neutral” because the Government would recoup any investment…

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Andrew Rawnsley on Why Nudge Doesn’t Work in Planning

Guardian

Experience has shown that nudge is not the miracle cure for every political challenge. Some problems are just too big to be fixed by adjusting the “choice architecture”. Britain’s housing crisis is not solvable with a few tweaks to the tax system and the planning regime. That won’t be cracked without bolder and stronger measures. Not a gentle hand on the elbow, but a muscular kick up the arse. Nudge has some proved beneficial uses for governing, but it is not the answer to everything. Some things need the push and the shove.

Revised London Plan Housing Target will Increase London Overspill to the South East to nearly 1 Million

Barely a week after we reported on the likely overspill from London we get a revised figure for the target in the revised London Plan.  66,000 per annum. Far higher than the 50,000/annum the Mayor has stated it would be in speeches and way higher than the current (higher than estimated capacity) figure of 42,000/annum.  In the last London plan examination in public the panel criticised the Mayor for arguing the shortfall would somehow magically turn up.  This time they will need a far stronger justification –  such as increasing London Density Matrix figures  by 64% (a typical overshoot these days anyway) or loss of large areas of strategic employment sites.or MOL etc. etc.

This increases our calculation of the likely London Overspill – as follows.

All of the calculations are updated to reflect the new target.

London Annual Shortfall
Target
OAN per year to 2052 Annualised Current London Plan Target Employment led (Oxford E) Revised London Plan Target Total  2016-2032 Total  2016-2052
Shortfall Completions 45,185 42,000 50,000 66,000
Typical 25,000 20,185 17,000 25,000 41,000 1,025,000 1,435,000
Typical +20% 30,000 7,185 12,000 20,000 36,000 900,000 1,260,000
Highpoint 38,000 7,185 4,000 12,000 28,000 700,000 980,000
Highpoint +20% 45,600 -415 -3,600 4,400 20,400 510,000 714,000
  • 1,260,000 dwellings = 10,500 40 Storey Tower Blocks
    Hong Kong Worlds Tallest urban agglomeration has 1,303 = up to
    7.9 Hong Kongs of Tower Blocks
    Do we want to see this Asian Style Vertical Sprawl?
  • Evidence strongly that at these densities diseconomies of congestion strongly outweigh positive urban agglomeration effects (Rappaport 2008)
  • Mayor of London – Post Grenfell – looking at alternative to tower blocks in
    Revised London Plan.
  • At 10 Storey Olympic Village Density – 335 DPH needs 1,791 Ha – 112.5 Olympic Villages, 131.8 Aylesbury Estates – 14.5 sq miles – Westminster=8.29 Sq miles
  • Much greater than All Large Scale Housing Estates in London Capable of Demolition 1,750 HA (Complete Streets/Savills for Cabinet Office 2015)
  • At Least £5 billion cost of demolition plus cost of rehousing – we know post Grenfell nowhere to decant to.
  • At Complete Streets favoured mansion block density 135 dph only capable of 1/5 this number
  • Equivalent to 18 Park Royals at Complete Streets Densities
  • So at Complete Streets densities need to knock down all of London’s Large Estates, All its Strategic Employment Sites and then start knocking down large parts of semi detached London
  • Every City that has tried development on this scale and density in recent years – e.g. Moscow, Harare, Seoul has seen mass protest, mass corruption, failure of developers after mass demolitions, overcrowding from decants and political climbdowns. Unlikely to be possible in a democracy.

If the density matrix is changed wont completions change.  Arguable and uncertain as to extent as most schemes in London are well above the density matrix standards anyway.  Detailed work is needed on the London Development Database to determine how much if any new upliftthere would be.  Most likley completions will remain at between 25-45,000 units per annum they have been either side of the great recession.  The only effect therefore of raising the target will be to increase the heightto which London tries to jump over and fails, exporting then the problem to the wider wiuth east as overspill.

How to Turn Around a 20% poll deficit In 7 Weeks and Become Prime Minister – By promising to relax the Green Belt @GavinBarwell

New Zealand

Heres the plan – during the debates the incumbent Bill English was slaughtered on this issue which largely led to the massive poll turnaround.  Uk parties take note.  100,000 houses is equivalent of 1 million in the UK.  Part of the problem was though very large areas of land around Auckland have been rezoned for housing in the last 5 years completions were slow and landbanking increased.  

A promise to make tertiary education free helped as well.

Build 100,000 affordable homes across the country

Labour’s KiwiBuild programme will build 100,000 high quality, affordable homes over 10 years, with 50% of them in Auckland. Standalone houses in Auckland will cost $500,000 to $600,000, with apartments and townhouses under $500,000. Outside Auckland, houses will range from $300,000 to $500,000.

Create an Affordable Housing Authority to fast-track development in our cities

Labour will establish an Affordable Housing Authority to work with the private sector to cut through red tape and get new homes built fast. It will partner with private developers, councils and iwi to undertake major greenfields and revitalisation projects, building affordable homes with KiwiBuild and the private market. These homes will be part of great communities built around parks, shopping centres and transport links.

Growing the building workforce

Increased house-building will require a larger workforce. Labour’s Dole for Apprenticeships policy will subsidise employers to take on around 4,000 young people for on the job training in fields including building and construction. Labour’s policy of three years free post-school education will see tens of thousands more people study in all fields, including building and construction. KiwiBuild is projected to create 5,000 new jobs at its peak.

Remove barriers that are stopping Auckland growing up and out

Labour will remove the Auckland urban growth boundary and free up density controls. This will give Auckland more options to grow, as well as stopping landbankers profiteering and holding up development. New developments, both in Auckland and the rest of New Zealand, will be funded through innovative infrastructure bonds.

A 10,000 lorry park needed on top of White Cliffs of Dover in No Deal Brexit

They’ll be concrete over the white cliffs of Dover….

put in the planning application now, after all David Davis has budgeted for it, and no deal is better than bad deal is government policy.  Grant without dealy.   To hell with the AONB

Business Insider

LONDON – Crashing out of the European Union with no deal would unleash “disorganisation and chaos” on the Port of Dover, deputy chief executive of Britain’s Freight Transport Association has said.

Speaking to the Financial Times, James Hookham warned that a no-deal Brexit would leave the Dover border crossing in a state of disarray, as significantly increased customs checks would create queues of lorries reaching over 5o miles.

“If you add an average of two minutes to customs processing, you get a 17-mile queue [from Dover] almost back to Ashford,” Hookham explained to the FT. “Another four minutes takes the queue back to Maidstone, six minutes back to the M25, eight minutes and you are up to the Dartford crossing and Essex.”

Brexit Secretary David Davis and Trade Secretary Liam Fox have both this week refused to rule out Britain walking away from Brexit talks without a deal in March 2019, despite the concerns of businesses and fellow MPs.

Davis told MPs that it was “sensible” to prepare for the possibility that there is no deal at the end of Brexit negotiations, while Fox told the BBC that no-deal would “not be the Armageddon that some people project.”

A no-deal Brexit would have a number of significant implications for Britain, not least dropping out of the EU’s customs union without a replacement UK-EU customs arrangement ready to be implemented.

“Dover is set up for what you might call ‘zero friction’ and the introduction of EU customs checks could prove a real headache,” the Institute for Government’s Joe Owen told the FT.

The UK Border Force is faced with a “real headache” as the number of non-EU lorries it must check coming into Britain through Dover would rise massively if British negotiators are unable to agree on a customs arrangement.

The number of lorries needing customs checks could rise from 500 a day to 10,000, Dover worker Tim Dixon told the FT claims. “I don’t know how we — or Dover itself — could cope with an increase on that scale,”

“Catastrophic is the word I would use,” Dixon said when asked what a no-deal Brexit would mean for Dover border checks. “It puts the shivers up you. It would devastate the local community.”

Home Secretary Amber Rudd this week described a no-deal Brexit as “unthinkable” and Dover’s MP, Charlie Elphicke, has insisted that “with proper planning we cannot only be ready on day one.”

However, various businesses and trade experts are concerned that the two-year time limit on a transitional period outlined in May’s Florence speech will not provide enough time for new customs arrangements to be prepared.

“A transition period should be at least three years,” Anastassia Beliakova, head of trade policy at the British Chambers of Commerce, told the FT.

“This is important not just for businesses to prepare, but also for new IT systems to be put in place, for [HM Revenue & Customs] to hire and train new staff, for new infrastructure to be built.”

This was echoed by UK Trade Facilitation Expert Panel chair Mark Corby, who added: “It will be very tight indeed to get in place the customs systems we need by March 2021, even on the most benign scenario.

“You need three to five years, taking the transition up to 2025, to put in place the untried, streamlined systems ultimately envisaged.”

Rethinking Midlands Strategic Planning

You have heard a lot and will hear a lot concerning strategic planning for Greater Manchester, London and the Cambridge-MK-Oxford, corridor on this blog, but lets not neglect the Midlands.

In simple terms the problem.

Birmingham, the Black Country and Coventry cannot meet their needs within their boundaries.

They are seeking other nearby authorities to take this overspill.

Some areas are resisting bitterly.

Thereis of course not yet any agreed mechanism to agree the sharing of this overspill, and the institutional arrangements for LEPs, joint planning, MoUs etc. in the region are so complex and byzantine they arnt even worth explaining.  It is a good example of institutional dysfunction.

In the past age of strategic planning the focus was to study major towns spread around the region as the focus for overspill as they were the ‘most sustainable’,.  You might call this the ‘constellation’ approach. some weight in this but mispecifies the main problem.  In terms of overspill from the Black Country and Brum. say, how can development 3 miles from the edge of Stafford and from its railway station but more sustainable then say a new garden village next to Penkridge station or net to Bromsgrove Station?  In the long term we know that commuter focussed developments become much more self contained over time (take Reddich for example), but this is an argument for allocating housing in large amounts in defined locations, with their own high quality public transport systems, and large amount of employment alongside.  Developments of a scale such as Telford, Reddich or Daventry (an expansion town to a very small market town not a new town) for example.

In seems to me the Midlands needs to make the seem kind of paradigm shift we are seeing elsewhere in the country from constellation planning to corridor planning , where we plan in an integrated way innovation cluster as nodes along high frequency high capacity public transport corridors.

Seen in this way – where are the corridiors?

Of course around Birmingham they span the clockface and each will have a role, but we are missing the main chance, the main economic corridor in the country runs between the east and west midlands along the M6, the M1, the WCML and the Midlands Mainline and soon HS2.  Along this corridor has been the major jobs growth, especially in logistics and modern manufacturing.

Seen in this way the historic split between west midlands and east midlands regional planning is a mistake, an historical anachronism.  The major strategic planning problem in the area is a structural one.  Access to jobs in the ‘Trent Triangle’ is almost entirely car orientated (with the notable exception of Hams Hall).  And there are major employment clusters such as Magna Park where there are closed rail lines (more than one) adjoining.

It seems to me the Midlands needs the same kind of bold thinking on transport corridors and growth locations that Transport for the North is putting together.  The focus should be on the Trent Triangle between Brum,  Rugby/Cobentry, Leicester and Burton on Trent /Derby.   An area which is in many ways the lyncpin of England.   Here there is huge potential for joined up thinking and focused investment on very high capacity/high frequency rail services (London Overground /East West Rail style) and a few new strategic rail links- especially for railfreight.  The vast increase in WCML capacity brought on by HS2  relly unlocks the potential of this area. There is also need for bold thinking on whether a strategic road network designed to encourage junction hopping is fit for purpose.

Much of the pressure to find a solution to the Brum overspill issue will focus around Birmingham /Solihull arguments, especially around growth around the NEC with the coming of HS2 to Birmingham International.  The truth is though that the NEC area has excellent national transport connections but terrible local ones.  And growth, for example, south of the A45, could be just car oriented sprawl encouraging junction hopping along the M42.  Their is potential for growth here but it needs to be carefully though through, for example growth in a high density  transit orientated corridor between Solihul town centre, Land Rover and the NEC/Birmingham Business Park along the Damson Parkway (with dedicated lanes for a BRT), protecting the vast majority of the Green Belt within the M42 as a result.

Not to neglect the ‘Northern Gateway’ area between Crewe and Stoke on Trent, but really this is and should be considered as part of Northern Powerhouse strategic planning. Again lets not be hidebound by old regional planning divisions.

No need to Panic – Around 5.3% of Housing in the South East Needs to come from Green Belt @CPRE @ASI

Ill be publishing an analysis soon of housing needs in the quadrant NW of London running from the Greater London Edge all the way to Rugby – broadly speaking the Cambridge MK Oxford Corridor , the London Fringe in this area and the London Stansted Cambridge Corridor.

This will be the most important area for taking overspill from London and Birmingham as it is the least constrained – say compared to Kent and Sussex, and by my claculations will need to take around 50% of London’s overspill (ill explain the methodology in a forthcoming series).

The method we used shows a need for 1.5 (appox) million homes to 2052.  For the whole of Engalnd South of the Midlands the figure is closer to 5 million.  At high density assumptions (2/rds of houses being at least double current tight two storey densities) this equates to an area similar to the West Yorkshire Conurbation; dont get alarmed because of the higher densities it is actually a slowing of the rate of urbanization in the ‘when we last built mass housing’ era 1945-1979 because of the increased densities and smart growth locations. This assumption includes very generous allowances for brownfield development and uplifts of housing completions in London by 20% due to tougher pro density policies in the revised London Plan.

How much of this needs to be in the Green Belt –  16 sqkm, 5.2 sqkm already in draft local plans – for strategic sites (those over around 1,000 dwellings), you can probably double that for slight growth around tightly constrained by GB villages and small towns (that is local growth rather than strategic  growth).  32 sqkm being 5.3% of the optimum urbanisation.  This optimisation placing every single strategic site around a station or Busway/light rail /BRT corridor able to accommodate the majority of trips.

Why so low – well because

  1. so many sites  around staations are already built on by housing
  2. Around London vast areas of the Green belt is AONB, flood Plain, Common land, SSSI etc. etc.

Those (like ASI) who have estimated potential in the GB have often failed to estimate land that is unconstrained for other reasons or explain how rail and other capacity will be expanded to cope.

So why not just make it zero and drop the Green Belt altogether?

Because around some key economically important towns, Oxford, Cambridge, St Lbans, Hemel Hempsted there simply isnt much choice than to develop some Green belt sites, though even in these places the potential is limited, they need to stay walkable, cyclable, compact, transit orientated, with views of key landmarks and essential green space settings and recreation areas.

So lets not panic.  The obsession with the Green Belt (its inviolability or otherwise)  is a distraction from the real task, how and where we find sites for 5 millions new homes, mostly outside the Green belt.

Treasury Research Showed Stamp Duty Cuts were ineffective – so what is Hammond Now Proposing @GavinBarwell

Standard

A big cut in stamp duty for first-time buyers is being considered for next month’s Budget, the Standard has learned.

The plan is worth thousands of pounds to hard-working young people struggling to get on the property ladder. It is among “bold measures” being studied by Chancellor Philip Hammond for a Budget that will aim to help people in their twenties and thirties and restore “intergenerational fairness” to the system.

Stamp duty is a massive extra cost for people trying to buy their first home, especially in London.

It means a tax bill of £11,427 for the average first-time buyer in the capital, according to the Land Registry, which recorded the average price paid by new entrants to the London property market as £428,546. Even a starter flat costing £250,000 attracts a stamp duty bill of £2,500.

 

Making this one big change to stamp duty could help first-time buyers

Mr Hammond is looking for ways to restore young people’s faith in the system at a time when senior ministers fear the link between working hard and getting on has been badly weakened.

Ministers say even young professionals on good money in London feel they are missing out on things their parents took for granted, including buying a home.

Cutting stamp duty is among ideas put forward by backbenchers that are being considered in detail. At the same time, No 10 is pressing Transport for London and other public bodies to release unused land for homes to be built on.

“The Budget is a good opportunity to seize the political initiative domestically through bold measures on issues like housing,” said a Tory source.

“A stamp duty cut for first-time buyers would help all those in London whose starter homes are above the threshold of £125,000.”

However, without an increase in new homes, a stamp duty cut could backfire by driving up prices. A stamp duty holiday was used by John Major to revive the market in 1992, and big cuts for young families were advocated by the Tories and picked up by Gordon Brown in 2005. However, Treasury studies have cast doubt on the benefits of cuts unless supply is also boosted.

Tory former minister David Willetts told BBC Radio 4’s Today programme: “If you are 30 now you are probably earning less than someone who was aged 30 10 years ago. Anything that rebalances and helps young people, I’d be in favour of.”

But he said tight public finances meant taxes would have to rise on older people if the young received help: “Any help you give to one part of the population does have to be offset by increases on others.”

Other Budget measures could include a boost for the AI and biotech industries, seen as sectors that can thrive after Brexit.

Mr Hammond believes that the economy is set for a “super-surge of investment” once a deal is struck with the European Union to secure a transitional period after the UK leaves in March 2019.

A number of firms have postponed investment decisions while they wait for the dust to settle on negotiations between Britain and the EU. Once the deal is done, even if it is only a transitional arrangement, they are likely to go ahead with the investment in new plants or equipment and take on staff.

Stamp duty is charged on all homes over £125,000, which means it hits hardest in London. It is charged at two per cent on the value between £125,000 and £250,000, rising to a marginal rate of five per cent above £250,001, then 10 per cent above £925,001 and 12 per cent after £1.5 million.

That means the average purchase in London costing £490,000 results in a £14,000 bill. For £1 million homes, the bill is £43,000.

Government to Consider Mass Release of Public Land in Green Belt for Housing

Daily Mail

-What difference does it make to Green belt Purposes if it is publicly or privately owned.  With land value capture as proposed in the manifesto zero difference.

-Some publicly owned sites in the Green Belt are inaccessible and terrible places for new Housing – conflict of interest

-If a site needs to be released and meets the exceptional circumstances test it should be whether or not publicly or privately owned.  Dropping the test for publcily owned land would make no difference, as the test is met for suitable sites as the need is acknowledged.  Dropping the test would have one effect only.  To prioritse unsuitable government owned sites.

-Under the NPPF brownfield sites in theGreen Belt can go for housing anyway – most publicly owned sites are brownfield – so it is an announcement for show more than anything else.

-Some Green Belt Land is Needed – but from my GIS based analysis the vast majority will need to be outside the Green Belt – as so much of the Green Bet around London is protected as AONB etc. and most accessible sites near stations are already developed.  I will be published an analysis of this soon.  An Analysis showing that around 7 times more Green Belt should be created for every area of Green Belt lost

Large swathes of protected green belt land could be bulldozed for housing under plans being considered by the Treasury.

Ministers and officials are examining radical proposals to release public land in the green belt to help ease the housing crisis.

Officials believe the scheme could be self-financing, as land can jump in value more than 100-fold if it is re-designated for housing.

Under one proposal, the government would use the increase in the value of the land to pay for new housing and supporting infrastructure.

The Treasury could also try to divert part of the windfall gain currently enjoyed by private developers when they are granted planning permission.

The scheme is being considered for possible inclusion in next month’s Budget and could be discussed at a housing summit due to be convened by Theresa May in Downing Street tomorrow.

Large swathes of green belt land across the UK could be bulldozed and used to build homes, to ease pressure on the housing crisis

But it will face fierce opposition on the Tory benches, with several cabinet ministers bitterly opposed to any move that would weaken protection for the green belt.

Earlier this month, the Prime Minister pledged to dedicate her premiership to tackling the housing crisis.

Senior Tories believe it is their best hope of winning back the support of the under-40s.

Mrs May will host a major housing summit in No 10 tomorrow, with developers, councils and housing associations asked to come up with ideas to boost house building.

England’s 14 designated areas of green belt land cover about one-eighth of the country and were designed to prevent urban sprawl. Despite the name, only part of the land consists of green fields.

The Campaign to Protect Rural England says the green belt ‘provides a breath of fresh air for 30 million people’.

But critics argue that much of the land has little landscape value. Using just a small part of it could release land for hundreds of thousands of new homes close to existing towns and cities.

A study by the government’s former housing tsar Kate Barker found that agricultural land in some parts of the country could rocket by up to 150 times its value if it was granted planning permission for housing.

Chancellor Phillip Hammond (pictured) could include the radical proposal's in next month's budget

Chancellor Phillip Hammond (pictured) could include the radical proposal’s in next month’s budget

She called on ministers to find a way to ‘capture’ some of the windfall gain for use by the state.

The idea is one of a string of eye-catching proposals being considered for next month’s Budget.

Ministers are also examining whether to allow local authorities to borrow more money to build a new generation of council houses.

Chancellor Philip Hammond is under pressure to intervene to ease the financial pressure on students, with some ministers calling for existing student debts to be written off and replaced by a graduate tax.

And, in a bid to tackle so-called ‘intergenerational fairness’, Mr Hammond has investigated the possibility of cutting income tax rates for the under-30s to make it easier for young people to save a deposit for a house.

One government source yesterday said the Chancellor wanted to unveil a ‘radical Budget – something that is a big offer to the nation’.

The source added: ‘It means memorable stuff that changes thinking and changes people’s futures.’

Communities Secretary Sajid Javid, who is in charge of housing policy, and Work and Pensions Secretary David Gauke are among those urging the Chancellor to be bold.

However, others are urging caution and warning the Chancellor that he could be out of a job if he makes a mis-step.