Hammond to Raise Housebuilding Target to 300k a year in Budget – but puts off Measures to Hit Target

Sunday Times

300k is getting there

My own MOAN model shows we need around 294,0000 a year if we are to get an affordability increase of 20% (the old NHPAU target) though this falls to around 264,000 if labour market gaps from increased house building are not filled from abroad (at a consequent blow to GDP).

But precious little here about how to double housebuilding, all announcements around the edges.

Housebuilder need a 3 year surplus of land banks over annual completions to navigate through the planning process, since the NPPF came in however their typical land bank are 5 years –  too much.  Also there is a much bigger problem with land owners and land promoters holding back land, especially in London.  His delay till Spring however is a cop out to cover cabinet disagreements.  What will it show – the big problem is the failure of the duty to cooperate to fill the gap left by strategic planning?   We know that already the authors of the NPPF in the LPEG report acknowledge that – so lets do something about it by driving the first obvious step – the Oxford-MK-Cambridge Strategy forward.

 

Why @sajidjavid , Hammonds & @GarvinBarwell Green Belt Plan would have very little impact

From yesterday in the Sun

Theresa May has been resistant to the kind of planning reform that would mean enough houses get built where people actually want to live.

I am told she has even knocked on the head a plan that would see houses allowed to be built within half a mile of train stations in the green belt in areas of high demand.

This small change would have led to tens of thousands of much-needed new homes in London and the South East. But even this was too much for No10. May’s own caution on this issue is being reinforced by the whip’s office, who are warning that Tory MPs in leafy seats won’t like any changes to the planning regime

But it would not be a major source of supply.

Look at the map below.

It uses the Planet Planagon method I have hinted at on this website several times and soon to be launched as an open course research technique.  It divides the globe into hexagons inscribing 800m walking distance – 10 mins walk and area of a neighbourhood.  It is designed for rapid high order modelling of options and scenarios for rapid urbanisation,  the major environmental and economic challenge we face as a planet.  It has already achieved remarkable results – such as where to best site 16,000 new schools in Saudi Arabia, and potential options for growth in the Oxford-MK-Cambridge Corridoe.

For the UK we have a database if every major planning constraint and whether already developed or mainly green field.  We have screened out already built up areas, then in The London Green Belt those covered by planning constraints which the NPPF would generally rule out major urbanisation – SSSI, AONB, Flood Risk Areas etc.

This leaves unconstrained and developable areas in the Green Belt.  So how many of these have a station within them? We should say this method is designed for strategic scale analysis.  If you look at a small area this level of generalisation wont wash.  A station might be just outside a planagon, or not all of a planagon may be unavailable.  But the important point is that for a large enough area the law of large numbers kicks in and the local inaccuracies cancel out at a strategic scale.

The answer is 25 (highlighetd with a yellow border on the map).  In the Oxford Green Belt just three (two of which are already proposed for release) and in Cambridgeshire just one.    The reason being that so many parts of the Green belt around London are constrained for non Green Belt reasons, especially AONB and Flood risk, meaning that Green Belt is only a serious constraint to the North and East of London.  Also the vast majority of stations in the Metropolitan Green Belt are fully developed around them.  The policy shift could make a proportionately bigger (though still relatively small) contributions around great northern cities.

How large an area is this and what potential number of houses?

Each planagon is 2.01 sq km so that is 50.25sqkm for the Metropolitan Green Belt, already a far larger area than this is proposed for release from the Green Belt – though mostly in the North of England.  for typical two storey dwellings that’s only  52,000 dwellings.  For four storey twice that.  That’s two towns the size of Brentwood.  Or put another way 11 weeks housing supply.  Many of the stations, such as around Theydon Bois in Essex, are already proposed for release.  Some of the stations make sense (like Watton at Stone) some none at all – like Apsley Guide which to the South provides the Green Sand Ridge which marks the natural boundary to Milton Keynes expansion southwards.  Ongar is a heritage only station with no passenger service (it shouldnt be on the OS maps) .  Two of the areas are metropolitan open land – the Within London equivalent of Green Belt – like Mill Hill East.  Another is Ascot Racecourse – the Queen would be pleased at that one.  So only around 18 are available and new – around 37,400 dwellings or 2 months supply.  So a huge political pain for very little housing gain.  It is also very likely, as RTPI research underlines, that unless part of a wider planning strategy the vast majority of households in these locations will commute by car.

Many of these areas will come through the local plan process anyway (slowly) and should come forward because they are good sites. However we need by around 2050 7.94 million dwellings.

There is a big take away from this.  The housing need of the UK is so great the release of key Green Belt sites can only make a small contribution to it in the South East. Indeed it is so great we need to build large new Garden  cities, of Milton Keynes scale (by use of this methodology around three in the Oxford Mk Cambridge Corridor, two in Kent, One in East Anglia , two between Swindon and Bristol, two in the Midlands (one East one West) one in the North West and One in Yorkshire)   as well as Garden Towns and Garden Suburbs of every scale.  I’ll be blogging on the results of this – with suggested sites, soon.   If the budget wants a magic bullet on housing announce this.

Beds is Sheds Don’t Have to Be Terrible

Its better to design a well designed two bedroom house in a back yard than a badly designed big shed.  Accessory dwelling units – and yes even permitted development rights rules – should allow for this.  Who care if you have to enter through a house if the back yard is wide and deep enough.  They can be used as granny annexes. Airbnbs avoiding loss of the main house to Airbnb, houses for members of the extended family, avoiding kitchen and bathroom sharing.  As long as they are no more than 5m high, have a footprint no more than 2 sqm and are at least 15m from the nearest habitable room window of another house they should be allowed under ADU zoning rules or PD (subject to prior approval rules).

 

Seattle ADU by Microhouse

Seattle ADu by SHKS

The Sun – May Blocks Plan to Relax Green Belt around Stations in South East

James Forysth – The Sun – essentially the same proposal that May blocked from the Housing Green Paper

“Building the homes our country needs so everyone can afford a place to call their own,” is the Tories’ new policy priority according to No10.

But Theresa May has been resistant to the kind of planning reform that would mean enough houses get built where people actually want to live.

I am told she has even knocked on the head a plan that would see houses allowed to be built within half a mile of train stations in the green belt in areas of high demand.

This small change would have led to tens of thousands of much-needed new homes in London and the South East. But even this was too much for No10. May’s own caution on this issue is being reinforced by the whip’s office, who are warning that Tory MPs in leafy seats won’t like any changes to the planning regime

The budget is another problem because there isn’t a Tory majority in the Commons

This is the Budget’s other problem: Hammond isn’t just constrained by the financial limits on the Government.

It now takes only a handful of Tory rebels to kill a policy as there is no Tory majority in the Commons.

As one minister who sympathises with Hammond’s position puts it: “This is why doing anything bold is impossible. If you do bold stuff, you p*** people off.”

This actually is pretty crude – many of these stations will be in AONB, or flood plains, many have poor access, or are barely halts on branch lines with poor capacity, and where building 5,000 homes with limited spare public transport capacity would see country lanes clogged with traffic.  In many cases it would be more sustainable to release land next to a large town served by BRT.  This is why its crude stupid planning to release land through a crude sweep of the pen change without planning.  Bad schoolboy politics is no substitute to good planning.  What national policy should say is the ability to service a site with sustainable transport is a material consideration im considering whether exceptional circumstances exist as to whether a site should be released from Green Belt; that is all it needs to say.  Creating big holes in Green Belt around stations is the worst kind of unthinking ‘planning reform’

Courts Clarify what is ‘isolated’ under #NPPF

Ballilaw  Braintree and SOS v Granville

1. 1. The Claimant submitted that NPPF 55 had to be interpreted in the context of national policy on rural development which enjoined decision takers to support the rural economy by supporting local services and facilities within it: see NPPF 28 and 55, and the PPG. According to the PPG, housing had an “essential” role to play in ensuring the vitality of those facilities and services. Housing should therefore be located where it would “enhance or maintain” them. Housing which did not enhance or maintain those facilities or services by reason of being “isolated” from them should be avoided unless there are “special circumstances”. Thus, in applying NPPF 55, and considering whether proposed development amounted to “new isolated homes in the countryside”, it was irrelevant that the development was located proximate to other residential dwellings. The key question was whether it was proximate to services and facilities so as to maintain or enhance the vitality of the rural community.

   2. In my judgment, the Claimant’s submission was incorrect. The sentence in NPPF 55 guiding local authorities to avoid granting planning permission for “new isolated homes in the countryside unless there are special circumstances” should be “interpreted objectively in accordance with the language used, read … in its proper context” (per Lord Reed in Tesco Homes at [18]).

   3. The word “isolated” is not defined in the NPPF. I agree with the Defendants’ submission that “isolated” should be given its ordinary objective meaning of “far away from other places, buildings or people; remote” (Oxford Concise English Dictionary).

   4. The immediate context is the distinction in NPPF 55 between “rural communities”, “settlements” and “villages” on the one hand, and “the countryside” on the other. This suggests that “isolated homes in the countryside” are not in communities and settlements and so the distinction between the two is primarily spatial/physical.

   5. As to the broader context, in my judgment, NPPF 55 seeks to promote the economic, social and environmental dimensions of sustainable development, and to strike a balance between the core planning principles of “recognising the intrinsic character and beauty of the countryside” and “supporting thriving rural communities within it” (NPPF 17). The Claimant’s analysis of the policy context is far too narrow in scope.

   6. The policy in favour of locating housing where it will “enhance or maintain the vitality of rural communities” is not limited to economic benefits. The word “vitality” is broad in scope and includes the social role of sustainable development, described in NPPF 7 as “supporting strong, vibrant and healthy communities, by providing the supply of housing required to meet the needs of present and future generations”. The Claimant’s restriction of an “isolated home” to one that is isolated from services and facilities would deny policy support to a rural home that could contribute to social sustainability because of its proximity to other homes.

   7. NPPF 55 cannot be read as a policy against development in settlements without facilities and services since it expressly recognises that development in a small village may enhance and maintain services in a neighbouring village, as people travel to use them. The PPG advises that “all settlements can play a role in delivering sustainable development in rural areas”, cross-referencing to NPPF 55, “and so blanket policies restricting housing development in some settlements and preventing other settlements from expanding should be avoided….”. Moreover, in rural areas, where public transport is limited, people may have to travel by car to a village or town to access services. NPPF 17 penultimate bullet point identifies as a core planning principle to “actively manage patterns of growth to make the fullest possible use of public transport, walking and cycling, and focus significant development in locations which are or can be made sustainable”. But as the PPG states, NPPF 29 and 34 recognise that the general policy in favour of locating development where travel is minimised, and use of public transport is maximised, has to be sufficiently flexible to take account of the differences between urban and rural areas. The scale of the proposed development may also be a relevant factor when considering transport and accessibility. As Mr Dagg rightly pointed out, the policy in NPPF 17 in favour of focusing development in locations which are or can be made sustainable applies in particular to “significant development”.

   8. For these reasons, I agree with the Defendants that the Claimant was seeking to add an impermissible gloss to NPPF 55 in order to give it a meaning not found in its wording and not justified by its context.

   9. The First Defendant drew my attention to Dartford Borough Council v Secretary of State for Communities and Local Government [2017] EWCA Civ 141 in which Lewison LJ said, at [15], in relation to para. 55 of the NPPF:

“… the definition of previously developed land, in the context of the present case, takes as its starting point that the proposed development is within the curtilage of an existing permanent structure. It follows that a new dwelling within that curtilage will not be an ‘isolated’ home.”

1. 1. Although the context in that case was quite different, my conclusion is consistent with Lewison LJ’s observations.
   2. In AD 8 & 9, the Inspector correctly applied NPPF 55 by concluding that, since the proposed new homes would be located on a road in a village where there were a number of dwellings nearby, it would not result in “new isolated homes in the countryside”.
   3. The undisputed evidence before the Inspector was that Blackmore End was a village, which had linear development extending along several roads. There was a dispersed pattern of development along Lower Green Road (the location of the appeal site). Lower Green Road was a road leading out of the village, heading north. There were dwellings immediately to the south and north of the appeal site. There was also a dwelling to the west, on the other side of the road.
   4. It was common ground that the appeal site was to be treated as outside any village envelope, and therefore within the countryside. Until 2014, no settlement boundary existed for Blackmore End, in common with some other villages in this rural district. A settlement boundary was introduced in 2014 in the Site Allocations and Development Management Policies document, which was an interim measure whilst the new Local Plan was prepared, but it was never formally adopted as part of the development plan. In June 2016, a draft Local Plan was published for consultation, which included the same or very similar settlement boundary, but it only had the status of an emerging plan. In both documents, the settlement boundary (referred to as a “village envelope”) was drawn around the two main clusters of housing in the centre of the village, excluding development, such as Lower Green Road, located on the edge of the village. This was a material consideration for planning purposes.
   5. It was agreed that the village of Blackmore End had very limited facilities and amenities, comprising a village hall, public house and playing field. Blackmore End was within the parish of Wethersfield. Wethersfield village was about 2 miles away, and it had a post office, village store, public house, a nursery and pre-school. The village of Sible Hedingham, identified as one of five “Key Service Villages” in the draft Local Plan was about 4 miles away. In assessing accessibility, the Inspector concluded, at AD 14:

“It is likely that those occupying the dwellings would rely heavily on the private car to access everyday services, community facilities and employment. While this weighs against the development, it is consistent with the Framework that sustainable transport opportunities are likely to be more limited in rural areas.”

1. 1. Under the sub-heading “The Overall Balance and Sustainable Development”, the Inspector said:

“16. Accessibility to services, facilities and employment from the site other than by car would be poor. On the other hand, the development would make a modest contribution to meeting housing need. In addition, subject to appropriate conditions, there would not be material harm to the character and appearance of the surrounding area or to the setting of listed buildings. A minor economic benefit would arise from developing the site and the economic activity of those occupying the buildings. There would be conflict with policies CS5 and RLP2 but those policies are out-of-date and are worthy of limited weight. Applying the tests set out in Framework paragraph 14, I find that there are not adverse impacts of granting permission which would significantly and demonstrably outweigh the benefits, when assessed against Framework policies as a whole. Nor are there specific policies in the Framework which indicate that the development should be restricted. The proposal would amount to sustainable development. Permission should be granted in accordance with the Framework’s presumption in favour of sustainable development.”

1. When the Inspector referred to “the minor economic benefit … from developing the site and the economic activity of those occupying the dwellings”, he was referring, first, to the economic benefit of providing local builders etc. with work at the appeal site, and, second, to the economic benefit of two new households who would be likely to use businesses in the surrounding area (e.g. for services to their homes and shopping etc.). This was a point expressly raised in the Appellant’s case, which the Inspector was entitled to accept. In my view, it was obvious that households would be likely to use services in the surrounding area to some extent. I cannot agree with the Claimant’s submission that the Inspector made no finding on this point or that there was insufficient evidence of such use to enable him to do so.

2. In conclusion, I consider that the Inspector correctly interpreted NPPF 55, and applied it properly to the facts and matters which arose in this appeal. Therefore the Claimant’s application is dismissed.

The Mistakes made by Academics Around the World who say we have too Much Housing

In the UK, Australia and Canada you occasionally get Academics who look at raw housing supply and demographic data and (without properly understanding it) claim we have a ‘surplus of housing’. Ian Mulherne of Oxford Economics for example in the UK – and LF economics in Aus.

Another example  from Canada Globe and Mail

… what one academic is calling “the housing supply myth,” which is the belief that we need more housing in order to lower costs. It’s an argument commonly used by politicians, industry, and some academics and citizen activists.

“There is an intuitive appeal to that argument,” says Dr. John Rose, who spent the last year on education leave, researching the popular belief that Vancouver has a lack of housing supply. “We understand this idea of supply and demand, intuitively, even if you haven’t taken an economics course.”

However, he has concluded that Vancouver does not have a shortage of housing units. In fact, we have a surplus. And, as anybody in Metro Vancouver knows, prices have not plummeted as a result.

“If we are looking back at the last 15 to 20 years, we have been providing more than enough units of housing – and it’s still unaffordable.

 …

Dr. Rose is an instructor in the department of geography and environment at Kwantlen Polytechnic University. He’s been teaching there since 2002. He calls his report The Housing Supply Myth, based on data from the Statistics Canada censuses and the Demographia Survey House Price Data. He also looked at supply in housing markets elsewhere in Canada, the United States and Australia.

“As a resident of Metro Vancouver and observing all this construction around me, I thought: ‘How do we have a housing shortage?’ Maybe I’m missing something, but this doesn’t seem to stick. And this data supports that idea.”

In order to ensure his findings weren’t just a blip, Dr. Rose went back to the 2001 census, covering a 15-year span. He found that for each household added during this period, the region added 1.19 net units of housing. Put another way, for every 100 households that came along, Metro Vancouver added 119 net units of housing. According to census data, there are also 66,719 unoccupied dwellings in Metro Vancouver.

And despite a surplus of housing stock, affordability has significantly worsened – a contradiction to the supply mantra.

“It’s quite the surplus,” he says. …

“The role of the supply argument is, to a large extent, to distract the public and policy makers from action on the demand side, specifically in terms of foreign capital.”

Dr. Rose says the pro-supply camps tend to be divided into those who blame land use constraints, such as the Agricultural Land Reserve (ALR), as limiting outward expansion, and those that argue for upward density, such as towers. Both camps blame government regulations on stifling development and consequently standing in the way of affordable housing.

Demographia, which puts out the Housing Affordability Survey of cities each year, attributes high prices to constraints such as the ALR. In the other camp is industry spokesman and condo marketer Bob Rennie, who has said: “If you have a ‘no tower’ sign on your front lawn, you have no right to speak to your children about affordability … We can’t have low density and low prices … We just don’t have the supply.”

“What they’re implicating is citizen resistance,” says Dr. Rose. “Bob Rennie is very aware he’s advancing an argument that benefits him economically. He acknowledges that. But it’s interesting that it’s an argument picked up by generally well-meaning academics that support the idea of smart growth. I’m sympathetic to that, too. But I’m leery of attributing our high housing costs and the escalation we’ve seen over the last 15 years to an inadequate densification.”

…”Bring it,” he says. “Here’s the data. If you want to argue against it, go ahead. It’s publicly available. And when I did this research, I had my independence. Nobody owns this. I get no sponsorship from any industry, any sector. I’m a free agent.

“I think that’s a benefit of this research. It’s not coming from a school of business that is being funded by the real estate industry, or somebody who’s passionate about densification and smart growth. I think there’s some romanticizing going on, about what the ideal city should look like, and unfortunately it gets sucked into this debate about affordability.

“I’m just saying look at the numbers, and we see Vancouver has plenty of supply.

In the West the rate of increase of new housing supply has to be in excess of the rate of increase in households for demand and supply to be in balance.

For a start there will always be frictional vacancies, houses in testate, constructed but not sold, in the course of sale, second homes , air bnb lets used as hotels etc.

This is important but small (typically around 2-3%, larger in great cities).

However there are bigger factors.  What matters for the housing market is the rate of change of houses coming onto the market, as it is housing coming onto the market, not existing houses not on the market, compared with newly formed and existing households entering the market that constitute supply and demand respectively. Where you have an aging population occupying the existing stock longer, or forced to stay in the existing stock because they are looking to downsize and there is nothing suitable to move into then we have a throttle on newly available supply.  It is the first derivative of these two factors that govern the changes to supply and demand and drive price.  An aging population, and unsuitability of stock for that population is precisely what we have in western countries.

What is more there are many people who wish to form households but who cannot because prices are too high (so called concealed households).  A price is always set by the highest underbidder, someone who would have paid (most transparently at an auction) but just failed to secure the highest price.  These are households who want to enter the market but can’t.  Rising house prices are a signal that large numbers of concealed households exist.

For this reason the rate of increase of housing stock must always be considerably greater than the rate of increase in households.  So even though here the academic has concluded 19% constitutes a surplus it is likely that it constitutes a shortage and the rate of increase needed to balance supply and demand needs to be far higher.

For example is Dubai real estate professionals look at key signals such as the number of newly build condos that remain vacant 6 months after completions.  Getting down to around 20% there is a shortage and prices shoot up, around 60% there is a glut and the bubble will pop – a healthy figure is around 40%.

Another unique factor about the housing market is that existing households in a housing market area buying a new house will sell or let their old one.  This means that even if a new house is high end someone may sell a medium end house to move into it.  You then get an affordability effect rippling through the whole market,  In housing market areas though with a critical shortage of supply you can get people entering the market simply because of the rising prices and buying them as speculative assets, and builders targeting this very high end speculative market.  This produces a perverse effect of high end condos standing half empty often owned by absentee landlords.  This doesn’t mean we have a surplus of supply, rather a shortage and the wrong kind of supply being provided,  It also means you have to overbuild, control absentee ownership and get the right mix of housing in markets to control prices in such markets.

The housebuilding industry doesn’t stand apart from the rest of the economy.  When you have an increase in housebuilding you get a multiplier second order effect from spending by builders, supply chain effects and so on.  I call this the housing accelerator.   It is one of the reasons why the historical trend in England of building more housing but never enough has made matters worse not better.  Cambridge Econometrics from empirical data estimates this effect adds around 10.5% to housing need in England.  So also ask when you see houses being built where the builders live.  Probably here in Leicester where I live Lithuanian and Slovakian builders living two or three to a room.  Try telling them there is a surplus of housing.

The problem we have is you cant pick up a text book and find a rounded treatment of demographic, real estate and economic factors that  determine housing demand and supply.  Hence you get a lot of one hand clapping arguments that only look at demand or only look at supply.  Of course speculation and foreign ownership are important but you only ever get speculation in markets where there is a shortage of supply.  Similarly the availability of credit is important but none will ever lend you money for a hugely expensive asset in a market where a surplus of supply is seeing prices collapsing.

So please academics don’t look at the raw household numbers and the raw housing supply numbers.  Look at what rate of increase of supply is necessary to keep prices in check compared to the rate of increase in households that wish to form; please don’t look at the raw numbers.  If you want to understand how you have to adjust them look for articles on this blog on the MOAN model (Model for Objective Assessment of Need).