Using LDOs to Boost Brownfield Sites is Using a Loaf of Bread to Drive in a Nail

Im a fan of LDOs, indeed they were my idea, having strongly lobbied for them in 2003 before the 2004 act.  But they are the wrong tool for the job – they are like trying to hammer in a nail with a loaf of bread, much wasted cost and damage for little effect.

The consultation published today. Building More Homes on Brownfield Land threatens to place LPAs in special measures unless they have them in place.  I.E. applications will be made to PINs.

The chancellors objective announced at his July 2014 Mansion House speech was for an Urban Planing Revolution – the  Government’s objective of having local development orders in place on more than 90% of suitable brownfield land by 2020 is reconfirmed in today’s consultation, which only took six months to draft and by the look of it could easily have been cobbled up in a couple of days.

It has a bizarre set of criteria similar but different to the familiar and longstanding deliverable, available, viable tests for allocating land.  For example it excludes sites in use, which would remove all temporary uses and all sites which are majorly unoccupied.  One wonders why?

An exceptionally low target is set of 5 or more units.

There is an even more bizarre ‘plan b’

A second option would be to amend the National Planning Policy Framework. The policy change would mean that local planning authorities that had failed to make sufficient progress against the brownfield objective would be unable to claim the existence of an up-to-date five year housing land supply when considering applications for brownfield development, and therefore the presumption in favour of sustainable development would apply.

This would mean more greenfield development – have they really thought this one through?

The document shows all the signs of a war between the head in the sky juveniles in the Treasury and the DCLG officials stating this just wont work.  So DCLG puts out something that just wont work to prove the Treasury wrong.  In the meantime with the Chancellor’s attention distracted Pickles has been promoting a presumption against development for developments against which he holds a personal prejudice.

The fact is LDOs have not been widely used. Certainly not for the last Osborne initiative which was where they were supposed to be Enterprize Zones.

LDOs have a place.  They were modeled on what internationally is known as a DCP (Development Control Plan) indeed several  of my staff do nothing but prepare these across several countries every day of the week.  These set out the regulations for building height, build to, acceptable uses etc.  They are design codes put in law.  They are especially useful where jurisdictions have few if any DM staff. The onus is on developers to draw them up, following an approved schematic masterplan and then a zoning and subdivision plan and get them approved under what is the equivalent of a PUD (planned urban development) clause on the local zoning code.

This proposal seems to have been cobbled together without any research, evidence or international precedent. There is no regulatory impact assessment, always a sign of a train wreck policy.

LDOs only work well after a site has a masterplan, has been zoned and subdivided in international parlance.  They also need to be funded and use specialist expertise which the British Planning System has disgracefully spent all it efforts not teaching for two generations.

What this proposal misses out is the intermediate step – the masterplanning.  The bit that Osborne in his Mansion House speech wrongly referred  to as ‘red tape’ and ‘planning regulations’ when it is masterplanning that makes great cities even when there are no regulations.

LDOs are not a good tool for this. A single stage system for approving the principle of development is a good idea.  That will enable investors to get finance for development.  This can then be combined with a LDO like system for gaining detailed design approval without endless small applications, or not as suits.  It is the principle of the height, volume and mass that matters to investors as this is what sets GFA and value.  The focus on LDOs then is missing the point.

I have previously suggested a system which would act more like a hammer and not a load of bread, the Irish Special Development Zones Regime which is well tested.

The suggested punitive regime  will simply grind Development Management and housing delivery in pressure cities like London to a halt.  The few remaining planning staff will be diverted from fee earning income to none fee earning income (indeed requiring a treasury grant).  Developers will give up masterplanning and writing codes leaving it to LPAs now threatened with special measures.  the LDOs will be knocked out cheaply and quickly, especially given the ridiculous 5 units threshold, with nothing brave done re heights or layout to avoid controversy.  This will in the medium term depress delivery, developers might simply ignore them  and apply anyway for more defeating the object.  Perverse incentives leading to bad tools.

The tragedy is for this policy botch, which I think is even more of a botch than the NPPF, is that it was easily avoided.  Their clearly has been a shift in England towards a zoning and subdivision system. Our unique discretional planning system being matched by its unique failure to deliver enough implementable zoning for new homes.   By looking at research, other jurisdictions, and tapping into the expertise of professional at home and abroad who know about how single consent systems and masterplan type consents work we could have had a decent set of easily implemented reforms that would have seen a proper share of risk and costs between local planning authorities and applicants.

Instead we will have a furious response to the consultation, it either being driven through and failing or more likely being abandoned with the DCLG being blamed, and being used as a pretext after the election for Osborne to privitise this function, given the DCLG’s ‘failure’

Safe Deposit Box Housing – A Simple Legal Solution

A question is a dwellinghouse never lived in bought by an investor with no intention of living in it really C3.

All of the sub categories of C3 refer to people actually ‘living’ there.

The question is pertinent because of the blight of what Peter Rees memorably calls ‘safe deposit box’ housing.   Such units are effectively removed from the housing stock, and unable to meet need. People must cram into the remaining dwelling stock.  It is the same as  if it didnt exist.  How then can it meet a supply and how then can the presumption on favour of housing apply?

Unfortunately the law is not on the side of such simple verbal logic.  The courts have held in Moore v. SSCLG [2012] that

there is no requirement that before a building can be described as a dwellinghouse it must be occupied as a permanent home.

This begs the question – can a condition precedent be used?

This has difficulties as these normally state cannot commence until or cannot be occupied until.

But guidance is very clear.

Such conditions should only be used where the local planning authority is satisfied that the requirements of the condition (including the timing of compliance) are so fundamental to the development permitted that it would have been otherwise necessary to refuse the whole permission.

And here it would be to ensure it is lived in to meet the need for places to live, not for empty safety deposit boxes, which are collectibles and serve no need.

I suggest a simple condition precedent.

The development shall not commence or continue in a state of non permanent occupancy for a continuous period of six calender months or greater.  In which case this consent will not commence or will cease (as appropriate).  A state of non-permanent occupancy is defined as a condition where no-one is living at the property as their main place of residence.  This condition shall not apply during a period of mortagee in possession until the property is then sold on or let by a mortgagee in possession.

Reason:  To ensure the property is lived in to meet the need for places to live as set out in the development plan, the London Plan and National Planning Policy.

This avoids I think the very complicated S106 based approach of Islington – Lawyers?

Note Boris’s defense that this is needed for regeneration is preposterous as all it does is push land prices up to bubble levels which will wreck regeneration.

Safe Deposit Box Housing in London Running at 14x demand – Money Week

Dominic Frisby in Money Week

I read a stat in the FT yesterday that absolutely blew my mind.

There are now 54,000 homes planned or under construction “in the priciest areas of the capital”. Most will cost “close to or above the £1m mark” and most are two-bed flats.

Here’s the mind-blowing bit: in the same areas last year, just 3,900 homes were sold for more than £1m.

That would put potential supply at almost 14 times annual demand.

Welcome to the train crash about to happen that is high-end, new-build property in London…

 Who’s going to buy these flats?

I should say, not all of the 54,000 properties planned will necessarily be built, and not all will come to market in 2015. (The statistic comes from data company Lonres, researchers Dataloft and buying agents PropertyVision, by the way.)

But there is still a surfeit of supply. What’s more, many of the 3,900 places that sold in 2014 for £1m or more were houses or had more than three bedrooms. What’s coming to market are two-bed flats.

I’ve been wrong on London property before. In 2007, I thought it would take a much bigger hit than it did. So I’m cautious when it comes to making bearish pronouncements.

But as I said in my New Year predictions piece, “high-end, new-build flats in London” – and I stress new builds, I’m not talking period properties – “have got bubble and pop written all over them.”

In fact, I can see so many things going wrong here that keeping my thoughts organised made this Money Morning one of the most difficult I’ve ever had to write.

Who is going to buy these properties, and who is going to live in them?

Families don’t want two-bed flats. ‘Normal’ people can’t afford £1m-plus properties. Even buy-to-let won’t work – factoring in service charges, you’d have to be taking in £40,000 a year in rent to make a £1m property worthwhile. That’s a lot for a two-bedder.

So you’re left with very successful, upwardly mobile young people in their 20s or 30s. But will that sort of person want to buy some bland new build that feels like living in a hotel? Of course not. He or she will want somewhere groovy in Shoreditch.

And like most British people, Londoners prefer period properties. They’ll buy new builds if the price is right. But it isn’t. In many areas, new builds are at least as expensive as period homes per square foot – and they come with higher service charges.

There’s only so much naive ‘foreign’ money to be had

So who’s buying? Well, as Charlie Ellingworth of Property Vision puts it, many new builds are marketed at “unsophisticated” foreign investors.

We all know how estate agents might describe a house as “spacious” (if you happen to be a mouse), or “conveniently located for the area’s boutique eateries” (above a kebab shop).

So it is with ‘prime central London’ (PCL). What those familiar with the capital see as PCL and what an agent marketing a flat to Asian buyers, who’ve never been to the UK, sells as PCL, are two very different things.

We’re talking about places like Old Oak Common on the Acton-Willesden borders, Vauxhall-Nine Elms and Stratford. These areas may have a lot going for them – but they are not PCL. Vauxhall is a convenient area – for getting to somewhere else. There are some groovy nightclubs under the railway arches, but it is not a place you go to – it is a place you go through.

Yet flats are being marketed (and, in some cases, sold) there for millions and millions of pounds.

Sorry if I’ve seemed a bit London-centric, but this is really no different to the pre-2008 buy-to-let bubbles we saw in Manchester, Birmingham and Leeds. For the most part, those ‘trendy’ city centre tower block flats weren’t bought by locals, but from investors elsewhere in the UK.

The same happened in Dubai, Spain and even parts of the US. Locals weren’t buying, foreign investors were. They didn’t have the ‘sophisticated’ knowledge that locals do – so they bought the BS. And when the crash came, they paid the price.

Forget ‘Occupy’ – this is ‘Unoccupied’

I’ve lived in London most of my life. I can remember Arabs in the 1970s buying huge swathes of South Kensington, Bayswater and Paddington. In the 1980s the Japanese came, in the 1990s the Americans. In the 2000s it was the Russians and then the Chinese.

I don’t know who’ll be next, but someone will come along. There are a lot of people in the world.

But in most cases, they actually lived in the houses they bought! That’s the big disconnect we have today. And it can’t last.

Take the recently completed Vauxhall Tower by Vauxhall Bridge. It is Britain’s tallest residential building – 50 storeys high – and it holds 223 flats. But drive past at night and there are absolutely no lights on.

This is becoming a big social problem. London property is already unaffordable for most locals. The average wage in London is just above £40,000. The average London house price is £580,000. Anger about this is mounting every day – and it only increases when people see so many flats sitting there unoccupied.

So the idea that 54,000 new-build flats are going to be flogged off to foreigners, then allowed to sit empty is just absurd.

Whoever wins the next election will have to find new ways of increasing the tax take. Some kind of property tax looks inevitable. Mansion tax or no, an easy and politically expedient target will be to tax homes that are left vacant – Islington council is already talking about it.

I’m not suggesting foreign buyers in London will disappear. They won’t. And the overseas market is affected by all sorts of factors beyond anyone’s control – the currency markets (think of the rouble), capital controls, capital flight, capital repatriation and so on.

But markets ebb and flow. The equivalent new-build-for-foreigners market in Manhattan is already seeing a marked slowdown. And the main problem is that even by the standards of London property, these flats are hugely overpriced.

The mis-selling scandals, the eventual revelations about poor build quality, the outrage at high service charges and the ‘who’s carrying the can?’ moments are all coming.

As Monty Python used to say, “Run away!”

As for the knock-on impact – new-build was something of a canary in the coalmine, anticipating the wider property crash in 2008. I’m not saying we’ll see something similar happen this time. But it can hardly be positive for pricing power or sentiment if thousands of unwanted flats end up hitting the market.

Two Herts Mps Claim its Time to Build a Garden City

Herts Mercury

A search should be launched for a new garden city in Hertfordshire, according to two Tory MPs.

Both Sir Oliver Heald and Peter Lilley believe it is the best way to protect the countryside, after Conservative-led North Herts District Council (NHDC) put forth plans for more than 14,000 homes until 2031 – mostly in the green belt.

In his response to NHDC’s local plan, Sir Oliver proposes building around 3,450 homes, up until 2021, on “brownfield, non-contentious and mainly non-green belt” land.

As permission has been granted for 2,600 homes, this would free up 2021-2031 to establish a “garden city-style development” of 6,000 homes to meet the government’s 12,100 housing target for NHDC’s needs.

The remaining 2,100 homes are for nearby Luton.
The North East Hertfordshire MP wrote: “Some argue that north Herts district should simply give up on growth, but this would be against the interests of my constituents and the strong businesses which have developed in north Hertfordshire over recent years.

“I therefore hope it will be possible to change the plan to deal with the first ten years and then try to find a suitable site for a garden city-style development to take up most of the remaining numbers.”

His Conservative colleague Peter Lilley, who represents Hitchin and Harpenden in Westminster, backs the hunt for a new settlement that follows Ebenezer Howard’s ideals.

He told the Mercury that senior Government figures are aware of the suggestion.

“I’m very interested in this, I raised it when we had a joint meeting with Eric Pickles,” he said.

“I have also raised it with north Hertfordshire district, and no one seems to be against it.

“The only problem is the timing and whether we can get a proposal up in time to get it through into consultation for inspection.

“Oliver’s approach to break it is a way to get round it.”

When quizzed if he had a preferred location for the development, Mr Lilley said: “That would be the task for the council to identify and then consult.”

The Mercury also understands Stevenage MP Stephen McPartland backs the idea, but he was unavailable for comment at the time of going to press.

NHDC’s elected planning chief, Councillor David Levett, revealed the new garden city idea has been mooted but was found to not be viable in the next 20 years.

“Longer term the idea should be pursued, but the problem is finding suitable locations for a full new settlement in North Hertfordshire so it would mean working with others to find the land, and that could be a lengthy process,” he said.

“There is also no guarantee that the site would be popular with local residents.”

He did, however, say larger developments should follow a “garden village” approach.


Hertsmere Conservative Cllr – Green Belt Loss is Inevitable

Borehamwood and Elstree Times

A senior councillor admitted houses could be belt on green belt land.

A residents’ forum gathered in Allum Hall in Elstree last night to hear Councillor Harvey Cohen, who is responsible for planning, respond to questions about the controversial Elstree Way Corridor.

The authority has been ordered to build 3,896 homes in the next 15 years– and 1,000 of these will be in the Elstree Way Corridor – an already built-up area earmarked for further development along the major road.

During a presentation by chairman Andrew Lewis, Cllr Cohen said that the core strategy was started 15 years ago, when residents of Hertsmere voted to keep the greenbelt land.

But Cllr Cohen said: “We cannot build anymore on brownfield sites so we will have to release green belt in Hertsmere.

“Residents in the whole of Hertsmere will have to decide on releasing more green belt land in Hertsmere for house building.

“I don’t think it is right to build any more in Borehamwood. In my personal opinion we have reached the end with this plan.

“Hertfordshire County Council experts say the traffic flow along Elstree Way will be maintained, and the changes they make will be paid for by the developers.”

Although a consultation on the matter ended today, objections will be considered until mid-March.