Lets Be Clear the Residential Property Developer Tax is the ‘Grenfill’ levy+ That Captures Nothing of Windfall Profits for Landowners on Planning Permission Being Granted

Just read the draft legislation

Section 3

RPD activities
(1) Activities are RPD activities if they are carried out by an RP developer—
(a) on, or in connection with, land in the United Kingdom in which the RP
developer has, or had, an interest (see section 4), and
(b) for the purposes of, or in connection with, the development of
residential property (see section 5).
(2) For the purposes of subsection (1)(b), activities that are carried out for the
purposes of, or in connection with, the development of residential property
include—
(a) dealing in residential property;
(b) designing it;
(c) seeking planning permission in relation to it;
(d) constructing or adapting it;
(e) marketing it;
(f) managing it;
(g) any activities ancillary to any of these other activities.

Section c Gladmens your share price will take a hit

Then section 8

8 Charge to tax
(1) A sum equal to [x%] of an RP developer’s RPD profits in relation to a
chargeable accounting period, so far as they exceed its allowance for the
period, is to be charged on the developer as if it were an amount of corporation
tax chargeable on the developer

So this is specifically designed to charge a differential corp tax on large residential developers land residential – A Grenfill Levy – as already proposed

If your a farmer who makes a bilion pound fortune on a new Garden Community you dont pay a penny more. Indeed its is especially badly designed as there is nothing to prevent the tax being passed on to land price as an increase in economic rent. I

Will Gove Reign Back or Push Forward Planning Reform?

Timing is everything. The reshuffle was timed to be on the day after departments submitted there final comprehensive spending review bids. Changes were apparently planned months in advance. So it was curious that Jenrick planned to issue the planning bill (we don’t know if it was planned in draft form or not) the week after he was due to be sacked when an incoming SoS would be in position to read into his brief and prepare for media scrutiny on what was likely to be the most complex bill in this parliament.

So the timing should not automatically be assumed as a reigning back on reform – the timing made a pause inevitable.

So was Gove brought in to reign back or press forward?

Jenrick and Pincher had already announced a more pragmatic approach to reform, here here, exactly what we proposed on here many times. Of course the tableau rasa tear everything down approach was pressed by Jack Airey at Number 10. So was this a defeat for him or was this a rare case of a Policy Exchange alumni listening to experts and reading the evidence – that would be a thing.

What was interesting was the Daily Mail briefing a couple of weeks ago which suggested the government was no longer so concerned on the 300,000 homes ‘aspiration’ and that the government was reigning back on reforms – giving the impression the rebels had won, whilst reading through the details (little that was breifed) suggested that zoning for ‘growth’ zones would remain – which was disastrous press and party management, it was deceptive, would give rebels incentive to rebel, rather than incentivising then to accept reasonable reform, and gave the impression that if increase in housebuilding was no longer important MPs could freely be Nimbys. As we know only a small minority of the 95 odd members of the Whats App group on planning concern are out and out opponents of any form of increase in housebuilding – we might call them the Nimby Spartans, I estimate less than 20 from their public prenouncements. I plan to name and shame them shortly. Remember with EVAL a rebellion would have to be over 93 or so to succeed, with govys political skills and a 3 line whip threatening withdrawal of whip inconceivable. Just look at the recent vote on raising taxes. The real threat is not the Spartan Nimbys, a paper army, but legislation getting locked down in the lord’s for a year, as with the Environment Bill.

Serious reform and an increase in housebuilding can only move forward if the Nimby Spartans and taken on and SEEN to be defeated, paring off the rest of the concerned MPs through well crafted pragmatic reforms that undoubtedly introduce international best practice on urban planning, rather than the hacked, overly discretionary system and mindlessly complex we have which empowers only those wanting to throw spanners to jam the process of housebuilding.

There are two theories in the press.

Firstly Gove was brought in to press forward, number 10, being alarmed at Jenrick being overly accommodative to the Nimby Spartans. Evidence of this was former Policy Exchange tanker Neil O’Brien as a PPS. Gove having a reputation on pushing forward complex reforms – though slowly – look at the Environment Bill.

The other theory is that this is the nail in the coffin for reform.

Jenrick speaking to the Telegraph

Mr Jenrick states that Mr Johnson “cares passionately about housing, more than any Prime Minister I’ve known”, quoting the Conservative leader’s remarks last year the Government needs to “take big, bold steps so that we can finally build the homes we all need and the future we all want to see.” Mr Jenrick states: “That can be done in different ways, but I know he and my successor won’t want that to slip through our fingers. Young people and families deserve nothing less.” 

The Telegraph piece had a nugget:

Following concerns about residents being unable to object to planning applications under the Government’s proposed new system, plans agreed over summer would also have allowed local residents to continue to submit comments after a scheme had been agreed “in principle”. 

Once you have permission in principle, as of right, however you call it you have permission. You cant be a little bit pregnant or have a little bit of a planning approval. Of course you can always submit comments, but you cant change the legal position. If you can and the LPAc an still unpermission, to coin a phrase you are going backwards, there is no as of right allocating sites becomes a promise that can and will be broken. Local Plans, as now, will not be worth the paper they are written on. The democratic will of those making plans will be discarded by a minority of councilors unconcerned by the discipline of the costs system because they stood on Advocado Nimby platforms and will actually be pleased in their planning departments collapse – chaos is good for those who want to block and stall the entire development system.

Or it simply means you can comment but only the matters to be decided in detail, reserved matters, technical matters, parameters etc. (we must simplify the law and language here the law is a mess and a have suggested simple reforms to permission in principle/outline to reflect modern masterplanning practice). So this is the test for Govy, if he introduces unpermissioning he will see outrage from the entire planning and development community, if however he introduces a statutory right to be heard, on matters relevant to the permission on hand, and not going back on previous statutory decisions – a ratchet principle (always moving forward and not backwards), rather than the greasy pole of unpermissioning, he will be their hero.

All that is needed a clause stating ‘Following agreement of a planning scheme the public still have a right under section X to submit representations and the planning authority shall have regard to them in considering applications for scheme parameter details’.

No clue on which way he will go. Govy is not known for being button up on private press briefings. So only one explanation; he has not made up his mind.

Why the ‘Waterbed Effect’ means Labour’s new policies will have zero effect on reducing House Prices

Lucy Powell is to introduce some wise changes to Labour Housing policy, such as reforming cpo existing use values and capping social rents – but restricting who can buy a home – demand side restrictions – never work and never can work. It is effectively casting around for any excuse not to reform planning and increase supply – the one approach where there is evidence that it works.

Guardian

Labour plans to slash affordable rents and give first-time buyers exclusive rights to purchase new-build homes for six months, it will announce this weekend, as it bids to steal the Conservatives’ claim to be “the party of homeownership”.

Lucy Powell, shadow housing secretary, will say a government led by Keir Starmer will restrict to 50% the number of properties in a development that can be sold to overseas buyers, which in some city locations has created “ghost towers” as investors leave homes empty. 

The problem is what is known as the ‘waterbed effect’ – if you restrict someone who wants to buy a service in one sub-market for that service they will switch to the second best – and likely more affordable – sub market pricing poorer buyers from that market – which creates huge ripple effects because it blocks the ‘filtering effect’ . Richer buyers buying new homes never blocks filtering. So the effect is actually counterproductive as the ‘waterbed spreads’ as buyers spill out into making previously affordable non new stock unaffordable and gunking up the filtering which drives affordability througout the whole housing market, especially low income first time buyers. Where it has been tried, such as British Columbia the results have been disappointing, they kept cranking up restrictions on foreign buyers ever more strictly to no effect. The only changes occur where contraction in China forced repatriation of capital.

[it is what} Vancouver Mayor Gregor Robertson – who, after 10 years in office, announced that he won’t seek reelection – calls the “waterbed effect of capital flooding wherever taxes are lowest and regulation is weak.” When one area tries to tamp down on the influx of foreign money, the flow simply goes somewhere else.

Business Insider

The effect is well studied in climate economics. If you introduce carbon trading in one market and not every market it has no impact on emmissions because of the waterbed effect. Capital always flows to the margin of greatest return.

Frankly the policy is dumb and totally counterproductive. Lucy Powell, any study of any housing market anywhere in the world where it has reduced house prices? Like the Sadiq Khan rent control challenge – its a challenge that cant be won, its virtue signalling gesture politics designed to deflect from the necessary pain of increasing supply and reforming regulation of unblock resistence to increasing supply i.e. planning reform.

Street Votes Via Neighbourhood Development Orders – A tactically stupid combination that takes Planning Reform Backwards @ChrisPincher

Telegraph

Neighbours will be given a vote on the design of housing developments on their road, in an olive branch to Tory rebels who oppose the Government’s planning reforms, The Telegraph has learnt.

Ministers are rewriting the Planning Bill after about 100 Conservative MPs suggested they would vote against it, arguing that its attempts to increase housebuilding would shut out the voice of local residents….However, in a major concession to the rebels, The Telegraph understands that Mr Jenrick will also add a new section to the Bill that will allow local people to vote on plans for development near them.

The idea, first proposed in a paper by the Policy Exchange think tank, would involve residents of a street voting on the design of new homes around them, or modification to existing buildings.

It is hoped that giving local people a say on the developments on their streets will encourage “Nimbys” to accept building works, and Tory MPs to vote for the planning reforms

The Ministry of Housing, Communities & Local Government is planning to use “neighbourhood development orders”, an obscure planning tool, to enshrine the street-level groups in law.

It is thought that groups of residents will be allowed to band together and suggest a building development for their road, such as extension of one storey to every home.

The idea is supported by many of the Bill’s critics in Parliament. This week, a group of Tory MPs formally proposed edits to the Planning Bill to include street votes.

A government source said: “We want communities to help set the rules for how their own streets should develop so that development reflects local views. The Planning Bill will reflect this, and we are exploring the idea of neighbourhood development orders being adopted at street level.

Nothing against street votes – but this is tactically stupid.. Widening a narrow and obscure rule is not major reform. Ministers have two choices, a universal legal tool of ‘as of right’ development (planning schemes) of which street orders are just one use of a flexible tool, or an obscure use of an obscure rule which will rarely be used. In teh former case they can say to back bencers, if you want your cake you must swallow the broccoli, in the latter its ‘cakism’ they can gorge and swallow nothing and never get healthy. It results in no tactical leverage on Nimby MPS. It achieves nothing and simplifys and consolidate planning law not one jet. Like everything from the Planning Exchange and Planning its not planning, lurching from one pamphlet in consistent to the last and completely half baked.

With backbench Nimbys yuo have to lead them to reforms not give them isolated one clause morsels they can vte for whilst voting down the ones they dont like. That why tactically street votes have to be part of far wider clause that include planning schemes (growth sites) and as of right development in general. If you want you cake you must eat your broccoli.

A Surprising Update on the Ox-Cam Arc

Infrastructure and Major Projects Authority – Transforming Infrastructure

Alignment and integration – HMT’s
review of the Green Book for evaluating
investment decisions using a wider
selection of benefits, implementation
of the Public Value Framework to align
decisions to priority outcomes, and
updating IPA Assurance criteria to
reflect wider priorities to support more
integrated design at the start of projects,
such as the Oxford-Cambridge Arc and in
the Thames Estuary. The government has
endorsed the National Infrastructure
Commission’s design principles for
national infrastructure and committed
to embedding them in infrastructure
projects going forward…

Example: Oxford-Cambridge Arc
Spatial Framework Data
Observatory Pilot
In February 2021, the government
set out how it intends to develop
a long-term Spatial Framework
for the Oxford-Cambridge Arc.
In line with the commitment
made at the launch of the Spatial
Framework process, we are
planning to undertake wide
public engagement and
consultation this summer to
shape a vision for the area, also
seeking views on our approach
to using data and evidence to
support the Spatial Framework.
The intention is to build a robust
evidence base to inform
development of the Framework,
but at present data across local
planning authorities, government
agencies and infrastructure
providers is in different formats,
often inaccessible, and regularly
held in documents rather than
stored as data. In line with wider
proposals in last year’s Planning
for the Future white paper, the
government wants to use this
opportunity to support better
use of data and digital tools in
local planning and development
of the Framework. The OxCam
Unit in MHCLG recently
completed a discovery into
users and needs of the people
who will use or benefit from
creating a shared, open source
digital evidence base across the
Arc, acting as an exemplar
nationally. Having built a strong
understanding of the user needs
in the discovery phase, we are
now planning to build prototypes
this summer, through the alpha
phase of the project, focusing on
solving the end-to-end service
journey for the production of
the evidence base. This digital
platform will provide the basis
for much more effective local
and joint planning and
investment, through a common,
cross-boundary, standardised
and accessible evidence base –
and thereby encourage
greater collaboration between
local authorities.

Local Natural Capital Pilot
The LNCP project is the first
project delivering under the Arc
Environment pillar. It is a Defra
Group-led project (cross-Defra,
Natural England, Forestry
Commission and Environment
Agency), with a team hosted by
the Environment Agency. It was
conceived to develop a local
natural capital plan (LNCP)
for the OxCam Arc in order
to support the delivery of
environmental protection and
enhancement as part of the
planned growth and investment
within the Arc. Within the
25 Year Environment Plan,
the government committed
to LNCPs, with the aim of
embedding natural capital
thinking into growth plans.
A secondary aim of the OxCam
LNCP project is to provide
a scalable and replicable
framework for local natural
capital plans elsewhere.

Looks like “pragmatic’ zoning for growth sites will still go ahead – FT

It was difficult to read the runes of the Times story over the weekend. Ministers had already signalled in parliament an end to the rip it up and start again approach, signalling pragmatism. As long advocated here even to the extent of publishing s draft planning act to show how it could be done.

There was a contradiction though between the headline suggesting scrapping of whole reform agenda, and text which only suggested scrapping of idea of a comprehensive zoning system replacing everything. Which was never needed as nowhere in Europe has such a system and the last thing you want to do is ape the legal basis of America n zoning. The times story however was unclear. Would growth sites have ‘as of right’ permission in principle or just another presumption, which would be meaningless. How many presumptions do we need for housing 4 5 10? The FT story today gives more clues. Its all about making Bob Seeley and the housing hosting nimby what’s app group think they have won. When in fact they have been cleverly outflanked.

FT

Jenrick also signalled that the government had heeded criticisms of its reforms to the planning system, which seeks to liberalise laws and make it easier to build. The changes are opposed by a significant number of Conservative MPs representing seats in the south of England.

“We’ve spent the best part of a year listening to members of parliament, councils, members of the public and I think we will bring forward a set of proposals which are sensible, pragmatic improvements to the current planning system, which all reasonable people will be able to get behind.”

On Saturday, the Times reported that plans to rip up the planning application process and replace them with a zonal system would be dropped. One MCHLG insider said: “We’ve had a huge period of engagement and we do understand people have concerns” but declined to comment on whether “growth sites” for development with automatic planning permission would be introduced.

The NI vote has shown that there is unlikely to be a major rebellion. And as an EVEL would require pretty much every whats app Nimby MP to rebel – unthinkable. Prgamtic planning reform is going ahead. The real test though is hether it makes sensible proposals for simplification of planning law and strategic planning.

Times Reports Wholesale Zoning to be Dropped – But Growth Sites will remain

Times

The biggest shake-up of planning laws for 70 years is set to be abandoned after a backlash from voters and Tory MPs in southern England.Reforms designed to help ministers hit a target of 300,000 new homes annually by the middle of the decade will be watered down, The Times understands.

The government had intended to rip up the planning application process and replace it with a zonal system, stripping homeowners of their rights to object to new houses. It said that councils would also be given mandatory housebuilding targets.Robert Jenrick, the housing secretary, will announce a more limited set of changes.

Tory MPs blamed the planning overhaul for their party’s shock defeat by the Liberal Democrats at the Chesham & Amersham by-election in June.The need for wholesale reform has been questioned after developers set records for housebuilding. Almost 244,000 homes were built in 2019-20, the highest number since the late 1980s, and developers appear to have coped well with the pandemic. In the first three months of this year construction began on 46,010 dwellings, an increase of a third on the same period last year and the highest number of quarterly starts for 14 years. There are more than 1.1 million homes with planning permission waiting to be built, analysis by the Local Government Association has found.

Ministers are expected to abandon their intention to make housebuilding targets mandatory. The zonal system proposed last year is also likely to be dropped — although councils could be asked to designate “growth sites” where there is a presumption in favour of development and planning applications will be fast-tracked.

..”The backbenchers are likely to seek more concessions. Bob Seely, a leading rebel, said: “Communities . . . have a right to demand to be listened to without being shouted down by the Westminster elite as so-called nimbys.”The Ministry of Housing, Communities and Local Government said: “We will not comment on speculation. Our response to the consultation will be released in due course.”

We have long argued that wholesale and universal zoning is not needed, and indeed applies nowhere in Europe, and was only really most strongly needed to enable large growth sites- so it seems that this is the path they are going down. What is worrying is SPDS spinning the need for large scale housing growth has gone away – what completions are likley to collapse in 21-23 because of labour abd supply chain problems. The litmus test will be whether any ‘as of right’ development proposals remain. If they dont it will be yet more unproductive tinkering and not reform.