Why the Budget is Only Half Land Value Capture

Only the land value capture from new infrastructure – not the value created by the community from existing infrastructure and the act of zoning.

That i’m sure is to come – New Town Development Corporations have little point without it.

Red Book

Land value uplift – In this year’s Housing White Paper, the government committed
to respond to the CIL Review. DCLG will launch a consultation with detailed proposals on the
following measures:
• removing restriction of Section 106 pooling towards a single piece of infrastructure
where the local authority has adopted CIL, in certain circumstances such as where the
authority is in a low viability area or where signifcant development is planned on several
large strategic sites.8
This will avoid the unnecessary complexity that pooling restrictions
can generate
• speeding up the process of setting and revising CIL to make it easier to respond to
changes to the market. This will include allowing a more proportionate approach than the
requirement for two stages of consultation and providing greater clarity on the appropriate
evidence base. This will enable areas to implement a CIL more quickly, making it easier to
set a higher ‘zonal CIL’ in areas of high land value uplift, for example around stations
• allowing authorities to set rates which better refect the uplift in land values
between a proposed and existing use. Rather than setting a fat rate for all
development of the same type (residential, commercial, etc.), local authorities will have
the option of a different rate for different changes in land use (agricultural to residential,
commercial to residential, industrial to residential). All the protections for viability from CIL,
such as the Examination in Public, will be retained
• changing indexation of CIL rates to house price infation, rather than build costs.
This will reduce the need for authorities to revise charging schedules. This will ensure
CIL rates keep up with general housing price infation and if prices fall, rates will fall too,
avoiding viability issues
8
Section 106 agreements are legal agreements between local authorities and developers. They are a mechanism which makes a development proposal
acceptable in planning terms, which would not otherwise be acceptable. Section 106 agreements provide site specific mitigations.
62
• giving Combined Authorities and planning joint committees with statutory
plan-making functions the option to levy a Strategic Infrastructure Tariff
(SIT) in future, in the same way that the London Mayoral CIL is providing funding
towards Crossrail. The SIT would be additional to CIL and viability would be examined in
public. DCLG will consult on whether it should be used to fund both strategic and local
infrastructure

 

Pickles You were Wrong all Along – The Return of Strategic Planning in the Budget

Red Book

Strategic planning in the South East – To ensure that this investment is well‑targeted and helps grow the economy, the government will support more strategic and zonal planning approaches through housing deals in the South East, where housing need is at its most acute.
As a first step, the government has agreed a housing deal with Oxfordshire, part of its wider strategic investment in the Cambridge‑Milton Keynes‑Oxford corridor. Oxfordshire has agreed to bring forward for adoption a joint statutory spatial plan and commit to a stretching target of 100,000 homes in the county by 2031, in return for a package of government support over the next five years, including £30 million a year for infrastructure and further support for affordable housing and local capacity. The government is also continuing housing deal negotiations with Greater Manchester, the West Midlands, Leeds and the West of England.

The Budget Red Book on the Oxford-MK-Cambridge Corridor

Here

Cambridge – Milton Keynes – Oxford corridor
4.65  The corridor between Cambridge and Oxford has the potential to be a globally
signifcant economy. Following the National Infrastructure Commission’s report, the Budget  sets out an ambitious integrated programme of infrastructure, housing, business investment and development.

4.66 Housing – The government recognises the need, highlighted by the NIC’s report, to build up to 1 million new homes in the area by 2050 to maximise its economic potential, starting with a housing deal with Oxfordshire for 100,000 homes by 2031, and working with Central and Eastern sections on commitments in 2018. The government will also consider significant new settlements and the potential role of development corporations to deliver these using private finance.

4.67 Rail – By 2024 the western section of East West Rail will be complete, allowing services between Oxford and Bedford, and Aylesbury and Milton Keynes. A new East West RailCompany is being established to accelerate delivery of the central section between Bedford and Cambridge, aiming for completion by the mid-2020s and leveraging private sector investment.

Working in partnership with local stakeholders, the government is committing £5 million to develop proposals for Cambridge South station, and is starting a study on the enhancements needed to accommodate future rail growth across Cambridgeshire. As a first step towards opening a station at Cowley, the government will also make available £300,000 to co-fund a study of opportunities for new stations, services and routes across the Oxfordshire rail corridor. (28)

4.68 Road – Construction will begin on key elements of the Expressway between Cambridge and Oxford in the second Roads Investment Strategy. The government will also accelerate work on the ‘missing link’ elements of the Expressway so that it is ready to open by 2030. The government is commissioning England’s Economic Heartland to analyse how communities not on the route of the ‘missing link’ will be able to beneft from it.  55

4.69 Land value uplift – The government expects authorities and delivery bodies in the
Cambridge – Milton Keynes – Oxford corridor to use existing mechanisms of land value capture and the new powers (subject to consultation) announced at the Budget to capture rising land values from the additional public investment. The government will also encourage authorities to explore the introduction of a Strategic Infrastructure Tariff, in addition to the Community Infrastructure Levy (CIL), supported by appropriate governance arrangements. These approaches will require developers to baseline their contributions towards infrastructure into the values they pay for land.

4.70 Governance – The government is setting out its vision for the future, and inviting local partners to contribute. The government has agreed with Oxfordshire that it will work toward the adoption of a new joint statutory plan (JSP), and will seek further JSPs in central and eastern sections.

Hammonds Announces 5 New Towns/Garden Town Development Corporations and Backs Oxford-MK-Cambridge Corridor – Here’s where they almost certainly are.

Of course those who have read the background papers on the Corridor – and our own detailed submission presented at a seminar to the NIC –  know there is strong consensus on 5 areas within the Corridor alone – Bassingbourne, Sandy/Biggleswade , Marston Vale , Calvert and Kindlington/Begbrooke/Yarnton.  More on this before the weekend.  There are many other good locations  (around Northampton, Grove etc.) its just the local planning and thinking hasn’t yet caught up

The Housing/Planning section of the budget speech.  Remarkable it seems Javid got 8/10s of what he was asking for at first glance – though much less when analysed as only around 5 billion is new money for house building.  He’s unsackable now.  As for Land Value Capture – read the red book – at last!

Speech

Mr Deputy Speaker.

I want to turn to the challenge of the Housing Market.

But before I do, I want to touch on the aftermath of the appalling events at Grenfell Tower.

We have provided financial support for the victims of this terrible tragedy.

And today I can announce we will provide Kensington and Chelsea Council with a further £28m for mental health services, regeneration support for the surrounding areas and to provide a new community space for Grenfell United community group.

This tragedy should never have happened, and we must ensure that nothing like it ever happens again.

All Local Authorities and Housing Associations must carry out any identified necessary safety works as soon as possible.

If any local authority cannot access funding to pay for essential fire safety work, they should contact us immediately.

As I have said before, we will not let financial constraints get in the way of essential safety work.

Mr Deputy Speaker.

I want to address the issue of empty properties:

It can’t be right to leave property empty when so many are desperate for a place to live.

So we will give Local Authorities the power to charge a 100% council tax premium on empty properties.

We will also launch a consultation on barriers to longer tenancies in the private rented sector, and how we might encourage landlords to offer them to those tenants who want the extra security.

And I want to say something about rough sleeping.

It is unacceptable that in 21st Century Britain there are people sleeping on the streets.

So we’ll invest £28 million in three new “Housing First” Pilots in the West Midlands, Manchester and Liverpool.

And establish a homelessness taskforce.

As part of our commitment to halving rough sleeping by 2022, and eliminating it by 2027.

Mr Deputy Speaker.

I’d like to thank the many colleagues who submitted ideas on how to tackle the challenge of the Housing Market.

Including Honourable Friends for North East Hampshire, Eastleigh, and Weston-Super-Mare.

By continuing to invest in Britain’s infrastructure, skills and R&D we will ensure the recovery in productivity growth that is the key to delivering our vision of a stronger, fairer, more balanced economy.

And the assurance to the next generation of their economic security.

But however successful we are in that endeavour, there is one area where young people today will, rightly, feel concern about their future prospects – and that is in the housing market.

House prices are increasingly out of reach for many.

It takes too long to save for a deposit.

And rents absorb too high a portion of monthly income.

So the number of 25-34 year olds owning their own home has dropped from 59% to just 38% over the last thirteen years.

Put simply, successive governments over decades, have failed to build enough homes to deliver the home-owning dream that this country has always been proud of.

Or, indeed, to meet the needs of those who rent.

In Manchester a few weeks ago, my Right Honourable Friend the Prime Minister made a pledge to Britain’s younger generation that she would “…dedicate [her] premiership to fixing this problem”.

Today we take the next steps to delivering on that pledge.

By choosing to build.

We send a message to the next generation that getting on the housing ladder is not just a dream of your parents’ past.

But a reality for your future.

We’ve made a start with schemes like Help to Buy, which has helped over 320,000 people buy a home.

We’ve increased the supply of homes by more than 1.1 million since 2010.

Including nearly 350,000 affordable homes.

Housebuilding stands at its highest level since the crash, with the latest figures showing that over 217,000 net additional homes were added to the stock last year.

That is a remarkable achievement.

But we need to do better still if we are to see affordability improve.

This is a complex challenge.

There is no single magic bullet.

If we don’t increase supply of land for new homes, more money will inflate prices, and make matters worse.

If we don’t do more to support the growth of the SME housebuilding sector.

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We will remain dependent on the major national housebuilders that dominate the industry.

And if we don’t train the construction workers of tomorrow.

We may generate planning permissions, but we will not turn them into homes.

Solving this challenge will require money, planning reform and intervention.

So today we set out an ambitious plan to tackle the housing challenge.

Over the next five years we will commit a total of at least £44 billion of capital funding, loans and guarantees to support our housing market.

To boost the supply of skills, resources, and building land.

And to create the financial incentives necessary to deliver 300,000 net additional homes a year on average by the mid-2020s.

The biggest annual increase in housing supply since 1970.

New money for the Home Builders Fund to get SME housebuilders building again.

A £630 million small sites fund to unstick the delivery of 40,000 homes.

A further £2.7 billion to more than double the Housing Infrastructure Fund.

£400 million for estate regeneration.

A £1.1 billion fund to unlock strategic sites, including new settlements and urban regeneration schemes.

A lifting of HRA caps for councils in high demand areas to get them building again.

And £8 billion of new financial guarantees to support private housebuilding and the purpose-built private rented sector.

And because we need a workforce to build these new homes.

We are providing an additional £34m to develop construction skills across the country.

Mr Deputy Speaker.

Solving the housing challenge takes more than money.

It takes planning reform.

We will focus on the urban areas where people want to live and where most jobs are created.

Making best use of our urban land, and continuing the strong protection of our green belt.

In particular, building high quality, high density homes in city centres and around transport hubs.

And to put the needs of our young people first, we will ensure that councils in high demand areas permit more homes for local first time buyers and affordable renters.

My Right Honourable Friend the Communities Secretary will set out more detail in due course.

However, one thing is very clear: there is a significant gap between the number of planning permissions granted and the number of homes built.

In London alone, there are 270,000 residential planning permissions unbuilt.

We need to understand why.

So I am establishing an urgent Review to look at the gap between planning permissions and housing starts.

It will be chaired by my Right Honourable Friend for West Dorset.

And will deliver an interim report in time for the Spring Statement next year.

And if it finds that vitally needed land is being withheld from the market for commercial, rather than technical, reasons.

We will intervene to change the incentives to ensure such land is brought forward for development.

Using direct intervention compulsory purchase powers as necessary.

Mr Deputy Speaker, my Right Honourable Friend the Prime Minister has said we will fix this problem.

And no one should doubt this government’s determination to do so.

But the solution will not deliver itself.

Local Authorities will need help and support.

Developers will need encouragement and persuasion.

Infrastructure to facilitate higher density development must be funded and delivered.

So the Homes and Communities Agency will expand to become “Homes England”.

Bringing together money, expertise, and planning & compulsory purchase powers.

With a clear remit to facilitate delivery of sufficient new homes, where they are most needed, to deliver a sustained improvement in affordability.

But Mr Deputy Speaker, the battle to achieve and sustain affordability will be a long-term one.

So we also need to look beyond this Parliament, to long-term measures.

We will use New Town Development Corporations to kick-start 5 new locally agreed Garden Towns in areas of demand pressure.

Delivered through public-private partnerships designed to attract long term capital investment from around the world.

Last week the National Infrastructure Commission published their report on the Cambridge-Milton Keynes-Oxford corridor.

Today we back their vision and commit to building up to 1 million homes by 2050.

Completing the road and rail infrastructure to support them.

And as a down-payment on this plan, we have agreed an ambitious Housing Deal with Oxfordshire to deliver 100,000 homes by 2031.

Capitalising on the global reputations of our two most famous universities.

And Britain’s biggest new town,

To create a dynamic new growth corridor for the 21st Century.

Mr Deputy Speaker,

This is our plan to deliver on the pledge we have made to the next generation.

That the dream of home ownership will become a reality in this country once again.

But I also want to take action today to help young people who are saving to own a home.

One of the biggest challenges facing young first-time buyers is the cash required up front.

We have put £10 billion more money into Help to Buy equity loan to help those saving for a deposit.

But I want to do more still.

I’ve received representations for a temporary Stamp Duty holiday to first time buyers.

But that would only help those ready to purchase now.

And would offer nothing for the many who will need to save for years.

So, with effect from today, for all first-time buyer purchases up to £300,000, I am abolishing stamp duty altogether.

To ensure that this relief also helps first time buyers in very high price areas like London, it will also be available on the first £300,000 of the purchase price of properties up to £500,000.

Meaning an effective reduction of £5,000.

A stamp duty cut for 95% of all first-time buyers who pay stamp duty.

And no stamp duty at all for 80% of first time buyers from today.

Mr Deputy Speaker.

When we say we will revive the home-owning dream in Britain.

We mean it.

We do not underestimate the scale of the challenge

But today, we have made a substantial downpayment