Chelgate Local Newsletter – October2018

CaMkOx

This month: CaMkOx corridor, greenfield land prices flourish, ONS releases fresh household projections, and new Head of Chelgate Local

New head of Chelgate Local

Michael Hardware has been appointed to head Chelgate’s planning public affairs division, Chelgate Local.

With a career spanning over 30 years, 24 of them at Chelgate, Michael has a wealth of experience in property and construction. Over those years he has worked with many of the leading developers and housebuilders undertaking planning public affairs and consultation assignments on a myriad of different projects across the country.

As a serving county and district councillor, he brings experience from ‘both sides of the fence’ to client assignments. He is vice-chairman of a county planning committee, sits on a district planning committee and is an opposition local plan spokesman.

As director of planning and property, Michael will oversee the continued growth of Chelgate Local, building on schemes secured across London and the south east. Currently, the firm has projects totalling 90,000 plots on its books ranging from 100 in Ashford in Kent to 10,000 in South Oxfordshire, from 750 in Basildon to 650 in Farnham in Surrey, and from 2,500 in Epping to 5,000 in Tandridge.

Expressway route revealed but still no certainty for Oxfordshire

By Daniel Fryd, Senior Consultant

It’s been an eventful month for the Oxford-Cambridge arc.

The route for the new Expressway was revealed, the Housing Minister embarked on a CaMKOx tour and called for “transformational” ideas to drive growth in the area, and the Communities Secretary changed planning rules in Oxfordshire so they can prepare the Joint Spatial Strategy for 2021.

Just when it looked like the future was becoming a little clearer for the Arc, dramatic new population projections suggested household growth across the corridor will be 57% lower over 10 years than previously thought.

The question now is how MHCLG’s revised housing need calculations, expected to be consulted on in the coming weeks, will continue to set out the continued need for “a million new homes” to help the area realise its full economic potential, despite the significantly reduced housing growth projections.

The importance of CaMKOx

Described by Treasury Minister Robert Jenrick as ‘one of the greatest opportunities for economic growth in Europe’, the Oxford-Cambridge Arc continues to attract significant interest and investment for its potential to provide a million new homes and a million new jobs by 2050.

While Government made a clear dedication to the arc in the Autumn Budget last year, the funding sources and most appropriate location for new homes and jobs has been a bone of contention for local authorities and the development industry ever since.

The fact there is clarity on the expressway route and new commitment from Government to build new settlements in the area will provide some reassurance for investors in the Arc, even if we are still left with more questions than answers.

Expressway route

After months of delay the route of the Cambridge-Oxford Expressway was finally announced with Corridor B, which has a route serving Bicester and Leighton Buzzard on its way to Milton Keynes, getting the go-ahead. The motorway will form part of the biggest road building programme in the country since the 1970s and pave the way for growth along the brain belt.

A public consultation will now be held in 2019 over whether the final Oxford portion of the route should be ‘B1’, to the north-west of the city via Kidlington, or ‘B3’, which runs around the east side of the city through Headington.

Given the final route is not agreed for the whole of the expressway, the announcement comes as little comfort to Oxfordshire local authorities still preparing their local plan. The fact there is still a question mark over the western part of the Expressway has led to frustration from Leaders at Oxford City and South Oxfordshire District councils about the way forward.

Their frustration comes as no surprise – the final route will have significant consequences for any areas it touches upon, considering it will bring up to 470,000 more people within commuting distance of the Oxford Science Park with it. With South Oxfordshire District Council still preparing its Local Plan following months of delays and backtracking, the council need all the certainty they can get to plan their future growth.

Closing in on the Oxfordshire Housing Deal

There have been other positive noises from Government as well. In a sure sign of support for the Oxfordshire Joint Spatial Strategy for 2021, Communities Secretary James Brokenshire MP has allowed Oxfordshire councils to adopt a three-year pipeline of housing sites – two years less than the five-year land supply called for in the National Planning Policy Framework (NPPF).

The move is designed to cut down on ‘speculative development’ and allow councils there to focus on preparing the joint statutory spatial plan rather than worry about a flood of applications coming in from developers trying their luck.

This change has come into effect now and remains in effect until adoption of the JSSP, set for 2021. There is no indication of whether, separately, Brokenshire will allow an extension of Local Plan agreements past March, although all the public rumblings from MHCLG have been that the March deadline remains.

What next for CaMKOx?

The reduction in the housing need growth projections issued by the Office of National statistics this month has come as something of a blow to growth ambitions in the area: Cambridge alone had its 10-year household growth projection reduced by 1,380, and local authorities have been quick to use this as an excuse to avoid meeting their housing need figures.

Given the clarity over the Expressway route and Government commitments to ensuring the potential of the area is realised, it seems like folly to row back and revise housing need numbers down when ‘one million homes by 2050’ is what should be expected for the area.

MHCLG recognise the need to keep consistency, and set out in their new Housing Need Assessment guidance in July that any new methodology will make sure “the plan-making process is… consistent with ensuring that 300,000 homes are built per year by the mid 2020s.”

The next month will be critical to future of the Arc: if the Communities Secretary maintains his commitment to the housing need figures which were consulted on last year for the CaMKOx corridor, it will send a clear message he really is dedicated to making it one of the greatest opportunities for economic growth in Europe.

What came first, the chicken or the household projections?

By Vivienne Shirley, Senior Consultant

The Office for National Statistics (ONS) has released dramatically lower household number projections than previously forecast, causing quite a stir in the planning world.

The 2014 projection, calculated by the Department for Communities and Local Government (DCLG), stated the number of households would grow by 210,000 a year in England – resulting in 28 million homes by 2041. However, the ONS’s figures suggest there will only be 159,000 additional households each year, leading to 26.9 million by the same point.

So why such different numbers?

While the DCLG figures used demographic trends going back to 1971 to produce its figures, the ONS projections are based only on the time between 2001 and 2011. While a trend for households getting smaller can be seen from 1971 onwards, this stopped around 2001 – contributing to the lower household projections. The ONS also assumed a lower annual figure for net migration.

A fair approach?

The validity of the new timeframe has caused controversy, with many arguing that the ONS’s method of calculating household projections ‘bakes in’ a period when not nearly enough homes were built, forcibly curtailing the formation of new households.

Matthew Spry, senior director at property consultancy Lichfields, noted: “The number of households that have formed can only ever match the number of dwellings that there are for people to live in. Statistically a household cannot form if it doesn’t have an extra house to form into.”

Jim Gleeson, senior policy officer at the Greater London Authority, put it even more bluntly when he criticised the ONS’s approach, tweeting: “This is like saying that when we cut bus services the number of people taking the bus falls so we should cut bus services more.”

Indeed the increasing number of young people living with their parents into adulthood would probably argue they would prefer to move out and form new households, but are prevented by sky-high house prices due to high demand and lagging supply. And it’s not just millennials who are affected. Data from listing site SpareRoom showed the number of individuals living in flat shares between the ages of 55 and 64 rose by 343% from 2011 to 2016 – again, it’s questionable if this is by choice.

Lower housebuilding targets?

Though some observers have embraced the new projections and claimed they prove the government’s aim of building 300,000 homes a year is too high, it is unlikely this figure will be lowered.

If the new projections are used as the basis for the Standard Method of calculating housing need, included in the revised NPPF, this would mean only 214,000 new homes each year – prolonging the trend of low house building and high prices, and continuing to bog down the formation of new households.

But the government said in July it will consult on changes to the standard methodology to address the fact the projections are not consistent with achieving 300,000 homes per annum, stating: “It should be noted that the intention is to consider adjusting the method to ensure that the starting point in the plan-making process is consistent in aggregate with the proposals in [last September’s] consultation and continues to be consistent with ensuring that 300,000 homes are built per year by the mid 2020’s.”

This is good news. Otherwise, we could risk entering a downward spiral where lack of houses impacts household projections, and these projections then further limit housebuilding – actively perpetuating the housing crisis.

Cambridge and the CaMkOx corridor

By Michael Hardware, Director of Planning and Property

The Cambridge and Peterborough Mayor has been critical of some of the planning authorities in his region for standing against greater growth.

Speaking at the Built Environment Network event in Cambridge on Tuesday evening (25^th September), James Palmer said that he had been elected to “work with the willing” to bring forward significant growth to the region, but now certain planning authorities were unwilling to work towards that goal.

Combined authorities have to agree to around 70,000 new homes to meet housing need and sustain the growth of the area, but had only agreed to 50,000. James’ objective was to find another 100,000 on top of the 70,000. Government wants to see 250,000 new homes at the Cambridge end of the CaMkOx corridor, but it is unclear whether that is in addition to or included in the 170,000.

James went on to explain further how his land value capture policy may work. His office could acquire land in areas being considered for growth before planning allocations are made, paying closer to the £8,000 per acre instead of the £1 million paid when an allocation had been made. It is not clear what land owners will think of this idea, although planning can apply good leverage to these kinds of deals. The Mayor was keen to create new garden villages in this way, all linked to larger conurbations such as Cambridge by a new metro. He says these plans may be ambitious, they may be radical, but they are deliverable.

The Mayor was also critical of the new ONS population figures, saying they were inaccurate for Cambridgeshire, indicating growth a good percentage point below the reality: Cambridge alone is currently creating some 7,000 new jobs per year.

In terms of the whole CaMkOx corridor, James said that “not many had come knocking on his door complaining about travelling to Oxford”. That said, he acknowledges the historic difficulties of east-west travel and suggests that the corridor should actually be extended eastwards to Felixstow. Towns like Newmarket and Bury St Edmunds and the A14 corridor generally have huge potential for future growth.

The Mayor says the aim of one million new homes in the corridor is ambitious, but could be achieved. It will, however, require far more direction from Government including the creation of a Minister for the area with the right powers to make it all happen.

It certainly needs strategic overview to coordinate the many district, borough and city councils involved, ensuring the right infrastructure is delivered in the right place at the right time.

Greenfield land prices flourish – but central London slumps

By Vivienne Shirley, Senior Consultant

Knight Frank has released its latest Residential Development Land Index for Q2 2018, showing the biggest annual rise in greenfield land prices in England since 2014.

Prices rose by 2.1% on average in Q2 of 2018, taking the annual growth to 4.6% – the strongest seen in four years. This has been largely propelled by demand from developers in the South West and the Midlands, particularly in areas that are desirable to homeowners now or due to benefit from infrastructure improvements in the near future.

Justin Gaze, Head of Residential Development Land at Knight Frank, noted: “Sites which can be delivered up to 2021, and which will benefit from Help to Buy, are most attractive. Beyond this timeframe, policy uncertainty is causing a level of hesitance.”

However, the picture is not as rosy elsewhere with prime central London development land prices falling 1.4% in Q2, contributing to an annual change of -3.5%.

This is partly attributed to the Greater London Authority’s 35% affordable housing requirement, which is pushing some developers to build in the provinces instead.

The capital’s biggest home builder, Berkeley, which only bought one new development site in the London in 2017, recently stated to shareholders: “It is telling that some funders and builders are choosing to exit the market when faced with the degree of risk and regulation that now confronts development in the capital.”

The risk of a no-deal Brexit is also likely blunting developers’ appetite for building in London.

Jonathan Samuels, chief executive of home loans company Octane Capital, explained, “Given that the London property market is heavily exposed to big business and international buyers, if both begin to retreat in the event of a no-deal Brexit, prices in the capital could suffer disproportionately.”

Housing Minister ‘captured’ in disagreement over land value

By Kasia Banas, Consultant

In his first appearance in front of the Communities and Local Government (CLG) Committee on 5^th September, Housing Minister Kit Malthouse MP made it clear he is not planning to introduce a new mechanism for capturing uplifts in land value.

Instead, Malthouse insisted the recently introduced “major reforms” to the NPPF will provide the significant and positive long-term effects that are needed for the process. But while land value capture is definitely off the table for now, he remains open-minded about any new proposals in the future should the reforms not deliver the expected results.

The hearing took place just a week before the cross-party committee of MPs investigating land value capture published its report and recommendations. Formed in late 2017, the committee’s findings are often in opposition to the Minister’s views on the issue.

Land Compensation Act 1961

One of the main recommendations of the committee report is for the government to amend the Land Compensation Act 1961, to give local authorities the power to purchase land “at a fairer price”, and to remove the right of landowners to receive hope value.

When asked about the need for such reform the Minister expressed his concerns about how it could slow down the land supply.

Industry seems to agree with him. Ian Fletcher from the British Property Federation (BPF) said: “If landowners don’t get the uplift in value from change of use, fewer landowners will come forward with land. This will exacerbate the housing crisis.”

BPF puts its support behind new measures such as strategic infrastructure tariffs, where development levies are applied across regions and authorities, such as the London-wide Crossrail CIL.

Compulsory Purchase Order

While the committee calls for further simplification of the compulsory purchase order (CPO) process, Malthouse believes it should be treated as a last resort option, saying CPOs may be appropriate in some cases, but rather than relying on them, he wants to create an environment in which there are enough incentives for the developer not to block new projects.

Voices from the sector such as Philip Barnes from Barratt Developments have questioned the committee’s proposals and their practicality. He asks, for example, what ‘no scheme’ and ‘hope value’ would actually mean in the real world of land valuation, and how a two price market can be avoided if the state wishes to issue CPOs at land values well below the level which rational landowners will sell at.

Community Infrastructure Levy

Commenting on the government’s response to the Community Infrastructure Levy (CIL) review, Malthouse believes that rather than an overhaul, incremental change and market monitoring are desirable for now given the objective of building as many homes as soon as possible. This seems a sensible approach considering Brexit and the current economic outlook.

The parliamentary committee has continued calls for total reform, and CLA director of policy and advice Christopher Price argues the current system already provides a range of benefits, with £6 billion raised via planning obligations such as the CIL and Section 106 in 2016/17.

Support for the report

Committee chair Clive Betts MP said that land value capture is fundamentally about fairness and necessity for the government to improve the infrastructure surrounding the new homes being delivered over the coming years.

His view is shared by the National Infrastructure Commission which welcomed the report’s recommendations and urged ministers to seriously consider these reforms as a source of funding of future projects. Similarly, RTPI chief executive Victoria Hills considers the current system of sharing land value uplift to not be working for the public good and in need of reform.

The government is yet to respond to the report but will do so in the coming year. Given Malthouse’s willingness to give the recent changes in the 2017 Act and new NPPF a chance, a major reform in the near future is unlikely.

County councils step up

By Michael Hardware, Director of Planning and Property

This article was published in Housebuilder magazine on September 7, 2018. You can view it here (registration required).

The role of county councils in planning appears to be changing. Hertfordshire County Council last year called for more planning powers to be able to provide infrastructure, whereas earlier this year it was rumoured that failed local plans may well be passed to county councils to oversee. Some councils are already taking a far greater role in the planning of larger developments, especially garden towns and villages.

This could be a belated step to fill the strategic planning black hole created in 2011 following the demise of regional targets and Regional Development Agencies. This was an issue raised in Housebuilding as long ago as 2009 and led to the then coalition government creating a ‘duty to cooperate’, and we all know how successful that has been!

“Counties should and do play a key role in coordinating between districts and boroughs,” said Cllr Kevin Bentley, deputy leader of Essex County Council, “in effect facilitating that duty to cooperate.

“Apart from the ability we have to join-up the thinking across the district borders, all county councils must have a greater strategic role in the delivery of infrastructure for development. It is critical this is considered earlier in the plan process and brought forward in a more timely way.”

If there was ever a greater example of where an over-arching authority was needed it is Harlow, also in Essex. Having outgrown its new town borders, it faces proposed expansion of over 20,000 new homes being in three planning districts and infrastructure involving two county councils. Without oversight this development will move forward in a fragmented and uncoordinated way, and that is before politics intervenes, which it invariably does especially when different parties are in control.

Regional mayors are mooted to be the solution to many things including strategic planning, even though they are not being adopted everywhere. Although few have yet taken planning powers, most have indicated they will. The Cambridge and Peterborough Mayor has strong views on development and will undoubtedly produce a spatial plan for his region in collaboration with the districts and county in the coming months. But is this additional level of bureaucracy needed when the counties already exist?

Inward investment

County councils already have a role in promoting inward investment, and that is directly related to growth. Cllr Gagan Mohindra, portfolio holder for economic development at Essex County Council said: “Decisions to relocate are often long and complicated and involve studies of potential areas including infrastructure, availability of labour with the right mix of skills, and location of supply chain and support services.

“Enterprise zones are important growth accelerators as they attract new industries to an area. This makes the considerations even more important as generally these zones are coupled with growth areas able to support these new industries and sectors.”

Graham Sutton, cabinet member for planning at Dacorum Council, can see cooperation happening on this: “There has been very productive collaboration between my council in Hemel Hempstead, St Albans, Hertfordshire County and the Herts LEP on delivering the Enterprise Zone.

“We are also working with Hertfordshire County Council on the A414 project, which also involves the other district and county councils along the corridor to Chelmsford.”

County councils already play a role in local planning through highways and education provision, but even here they have not excelled. Most of us have been at consultations where local councillors and residents ask about traffic, health and schools and the answers given are more often than not about the obligatory contribution that will be made but no specifics being available. Often, solutions are considered once a development has been long completed. Perhaps this is a little general, but could county councils do better here? The answer is undoubtedly yes.

Roles need clarity

The wider role of county councils seems to vary immensely with some getting involved at a strategic level and others just at the infrastructure delivery level. Andrew Taylor, head of planning at Countryside, said: “It is certainly a very mixed picture across the country.

“There are examples of where county councils have brought forward infrastructure ahead of development, such as North West Cambridge where a primary school was built before the housing delivery, but it is a delicate balance between development and provision of infrastructure.

“Generally, counties should be more proactive and get involved earlier, providing details of solutions for education and highways, and a realistic timescale when these will be delivered. They could also coordinate agencies on health delivery.”

The role of county councils does need more clarity both in terms of its delivery on its existing role as well as their greater strategic involvement, but MHCLG currently seems happy to let individual counties decide its level of involvement in local planning.

Cllr Dr Richard Moore, chairman of the Strategic Planning and Infrastructure Committee at Basildon Council, and an Essex County Councillor, sees that counties could play a key role. He said: “With some careful thought, the existing role of counties could be enhanced to ensure delivery of solutions for developments in terms of infrastructure that concerns local communities.”

“Local communities would be far more likely to accept development if the infrastructure is made available first so communities could see the new roads, junctions, roundabouts, and schools, up front before the hundreds of houses become a reality – Infrastructure First!

“Counties could also play a key strategic role in wider areas where there needs cross-border coordination and collaboration, such as with garden communities, providing the key infrastructure solutions, but this has to be at the outset, when the site or sites are being promoted, so that those involved – developers, councils and residents alike – have full information upon which to comment and make decisions.”

As to whether counties should be inflicted upon districts and boroughs against their will, such as with the local plan process, is another matter. Cllr Chris White, a St Albans District and Hertfordshire County councillor, does not think counties can get more involved in local planning because they do not have the capability or the experience to do it.”

This is a view many would support, although the strategic position county councils currently occupy does lend itself to a wider role in local planning.

Michael Hardware is an Essex County and Harlow District councillor. He is also an Associate Director at planning public affairs consultancy Chelgate Local.

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