Five Problems With Neighbourhood Plans

The real effects of neighbourhood plan making on housing delivery and on the efficient, democratic operation of the planning system are hard to pin down and yet the Government continues to champion its role. Are we really heading in the right direction? After all, despite the positivity of government sponsored initiatives such as mycommunity.org.uk  it isn’t all sweetness and light. Here is my personal worry list:
1. Neighbourhood Plans are usurping the role of local plans, whilst being subject to a lighter-touch examination process
The Court of Appeal, in R (DLA Delivery Ltd) v Lewes District Council  (10 February 2017), has now confirmed that a neighbourhood plan may be made without there being an up to date local plan. Until such time as the local plan comes forward, as the only up to date development plan, the neighbourhood plan’s policies will benefit from the statutory presumption in section 38(6) of the Planning and Compulsory Purchase Act 2004 and from paragraph 198 of the NPPF: “[where] a planning application conflicts with a neighbourhood plan that has been brought into force, planning permission should not normally be granted”.
This gives neighbourhood plans a role which was surely not foreseen by Parliament. Neighbourhood plans are intended to be in general conformity with the local plan’s strategic policies. But instead any policy vacuum can be filled by the neighbourhood plan’s own strategic policies. Whilst the Planning Practice Guidance urges collaborative working between neighbourhoods and local planning authorities, this does not prevent problems from arising which are exacerbated by two further factors:
–  in order to survive the ‘relatively limited‘ (Court of Appeal in DLA Delivery, para 5) examination process, neighbourhood plans only have to satisfy the ‘basic conditions’ set out in the paragraph 8(2) of Schedule 4B to the Town and Country Planning Act 1990 as applied to neighbourhood plans by section 38A of the Planning and Compulsory Purchase Act 2004, rather than the wider and more rigorous soundness test applicable to local plans. 
–  the Neighbourhood Planning Bill proposes to accelerate the process, by deeming post-examination pre-referendum neighbourhood plans to be a material consideration in the determination of planning applications (clause 1) and by deeming post-referendum neighbourhood plans to be treated as part of the statutory development plan ahead of formally being made by the district or borough council (clause 2). It will be easier for the Secretary of State to dismiss appeals on the basis of inconsistency with emerging neighbourhood plans (a sensitive subject for DCLG given for example Holgate J’s quashing in Woodcock Holdings Limited v Secretary of State, 1 May 2015 and a series of examples of the Secretary of State having consented to judgment in similar circumstances). 
2. The Neighbourhood Plan process is “complex and burdensome”
Not my words but a description given by participants, according to recent research by the University of Reading: Neighbourhood Planning Users Research Revisited.  
Any community embarking on a neighbourhood plan has to be ready for the long haul. Because policies within the plan can have real consequences for communities and developers alike, it is no surprise that the process can be litigious. 
R (Crownhall Estates Limited) v Chichester District Council  (Holgate J, 21 January 2016) was the third (third!) judicial review in relation to the Loxwood Neighbourhood Plan, with the claimant developer seeking unsuccessfully to challenge the plan’s provision for only 60 homes against a background of a failure of the district council to meet its obejectively assessed housing needs. 

I do not believe that there is a transcript of Dove J’s rejection in Swan Quay LLP v Swale Borough Council on 31 January 2017 of a challenge to the Faversham Creek Neighbourhood Plan which contained a policy preventing redevelopment of the claimant’s property on the basis that it would lead to ‘gentrification’. The ruling is summarised by the Faversham Creek Trust in a press release.  
Challenges commonly focus on whether there has been compliance with the requirements of the Strategic Environmental Assessment Directive, another unsuccessful ground of challenge in DLA Delivery. R (Stonegate Homes Limited) v Horsham District Council (the late, missed, Patterson J, 13 October 2016) was an example of a successful challenge on this basis. The Haddenham Neighbourhood Plan is another, where Aylesbury Vale District Council consented to judgment.
3. Neighbourhood Plans dissipate the local planning authority’s resources

Parish councils such as Haddenham are unlikely to have the resources to resist a legal challenge, leaving the responsibility to the local planning authority which, under the legislation, formally “makes” the plan. How much say will they have over the way in which the defence case is brought and, as importantly, why should the local planning authority’s resources be stretched in this way?

We also have of course dissipation of CIL proceeds, with 15% of CIL proceeds available to be spent by parish councils, increased to 25% where a neighbourhood plan is in place – proceeds that would otherwise have applied towards infrastructure projects required to deliver development. 
4. Neighbourhood Plans are unnecessary and marginalise the role of the local planning authority

District and borough councils are designed to operate down to ward level. We elect ward councillors to represent our local interests – that is to say, the things we care about in relation to our home environment, our neighbourhood. Local plans can and do include policies at neighbourhood level. Additionally, there is scope for area action plans to provide more detailed site-specific policies where justified. 

We should all engage more with local plan making. Does the distraction of neighbourhood planning fuel the inaccurate sense that what happens at district or borough level is remote and not to do with us? What if the energy that one sometimes sees expended on neighbourhood planning were to be properly harnessed at local planning authority level, with proper access to officers and with consistency of plan making over a strategically sensible area?
5. Neighbourhood Plans are not fit for the further roles that Government continues to give them
Neighbourhood planning is of course voluntary. It is more prevalent in affluent areas and its heartland is in the south east (Turley research, 2014). In unparished areas it is the preserve of unelected groups. And yet the Government intends it to play a grown up role alongside local plans. Indeed, given that they have statutory force, unlike the NPPF, have neighbourhood plans in fact become more important than the Government’s own planning policies?
Gavin Barwell’s 12 December 2016 written ministerial statement (see my blog post That Ministerial Statement) set out that relevant policies for the supply of housing in a neighbourhood plan that is part of the development plan should not be deemed to be ‘out-of-date’ under paragraph 49 of the National Planning Policy Framework where the following circumstances arise at the time a planning decision is made: 
* the written ministerial statement making the policy change on 12 December 2016 is less than 2 years old, or the neighbourhood plan has been part of the development plan for 2 years or less;

* the neighbourhood plan allocates sites for housing; and

* the local planning authority can demonstrate a three-year supply of deliverable housing sites. 

The statement is of course the subject of a judicial review. In the meantime, the Government’s Housing White Paper has added the further qualification that neighbourhoods should be able to demonstrate that their site allocations and housing supply policies will meet their share of local housing need and that the local planning authority should be able to demonstrate through the White Paper’s housing delivery test that, from 2020, delivery has been over 65% (25% in 2018; 45% in 2019) for the wider authority area (to ensure that delivery rates across the area as a whole are at a satisfactory level). 
 The White Paper also proposes changes to the NPPF to “highlight the opportunities that neighbourhood plans present for identifying and allocating small sites that are suitable for housing, drawing on the knowledge of local communities”.

Finally, local planning authorities will now be “expected to provide neighbourhood planning groups with a housing requirement figure, where this is needed to allow progress with neighbourhood planning. As part of the consultation on a new standard methodology for assessing housing requirements, we will seek views on whether a standard methodology could be developed for calculating housing need in a neighbourhood plan area“.
Let us remember that these are voluntary plans, prepared by parish councils and community groups. Are we not seeing, yet again, a relentless move towards process and complexity, in an effort to make running repairs to a mechanism that was not designed for this function? 
Simon Ricketts 19.2.17
Personal views, et cetera

From The White Paper Mountain, What Do We See?

After so long we have reached the top of the mountain: the white paper and accompanying documents have all been published today, 7 February 2017. However, now we see a series of further peaks on the horizon. 
A good way into the white paper itself, Fixing Our Broken Housing Market, is to start at the back end. From page 72 you have the detailed proposals listed, including a series of proposed changes to the NPPF and other policies which are now the subject of a consultation process from today until 2 May 2017. The consultation focuses on a series of 38 questions but some of the questions are potentially very wide-ranging. Further consultation is proposed on various matters, including 
– housing requirements of older people and the disabled

– Increasing local authorities’ flexibility to dispose of land at less than best consideration and related powers

– Potentially increasing fees for planning appeals (up to a maximum of £2,000 for the largest schemes, recoverable if the appeal is allowed)

– Changes to section 106 processes (with further consideration being given to dispute resolution “in the context of longer term reform”)

– Requiring housebuilders to provide aggregate information on build-out rates and, for large-scale sites, as to the relevance of the applicant’s track record of delivering similar schemes

– Encouragement of use of CPO powers to support the build out of stalled sites. 

There is a supplementary consultation paper on planning and affordable housing for build to rent  containing a further 26 questions, with a consultation deadline of 1 May 2017.
There are responses to previous consultation papers and reports:
– Summary of responses to the technical consultation on implementation of planning changes, consultation on upward extensions and Rural Planning Review Call for Evidence  (including a u-turn on the previous idea of an upwards extensions permitted development right in London, now to be addressed by policy). 
– Government response to the Communities and Local Government Select Committee inquiry into the report of the Local Plans Expert Group 
There is plenty to get to grips with, for example:
– the housing delivery test and new methodology for assessing objectively assessed need

– an understandable focus on whether the applicant will proceed to build out any permission and at what rate, although with a worrying reduction of the default time limit for permissions from three to two years

– Homes and Communities Agency to become “Homes England”. 

It is also reassuring to see the Government applying real focus to build to rent, reducing its emphasis on starter homes – and also reducing its reliance on permitted development rights. 

However, it is surprising how much still remains unresolved. We will apparently have a revised NPPF “later this year” but for much else the start date looks to be April 2018, for example a widened affordable housing definition including watered-down starter homes proposals (no longer a statutory requirement and with reference to a policy target of a minimum of 10% “affordable housing ownership units” rather than the requirement of 20% starter homes previously proposed) and a new methodology for assessing five year housing land supply. 

Liz Peace’s CIL review team’s review of CIL: “A new approach to developer contributions”  (October 2016 but only now published) remains untackled. The Government’s response will be announced at the time of the Autumn Budget 2017. 

Decision-makers will need to grapple very quickly with the question as to the weight they should give to the white paper as a material consideration, given the Government’s clear policy direction now on a range of issues. 


Simon Ricketts, 7.2.17
Personal views, et cetera

That Written Ministerial Statement

Gavin Barwell’s 12 December 2016 Neighbourhood Planning: Written Statement  has attracted criticism not just for its content, but for inserting significant changes to the operation of the NPPF without prior consultation and without indeed making an amendment to the NPPF itself. 
Paragraph 49 of the NPPF provides that:
“Relevant policies for the supply of housing should not be considered up-to-date if the local planning authority cannot demonstrate a five-year supply of deliverable housing sites.”
ie the presumption in favour of sustainable development in paragraph 14 is triggered. This means:
“where the development plan is absent, silent or relevant policies are out-of-date, granting permission unless: 

    * any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole; or 


    * specific policies in this Framework indicate development should be restricted”


The December 2016 written ministerial statement provides, “…that relevant policies for the supply of housing in a neighbourhood plan, that is part of the development plan, should not be deemed to be ‘out-of-date’ under paragraph 49 of the National Planning Policy Framework where all of the following circumstances arise at the time the decision is made:

* This written ministerial statement is less than 2 years old, or the neighbourhood plan has been part of the development plan for 2 years or less;


* the neighbourhood plan allocates sites for housing; and


* the local planning authority can demonstrate a three-year supply of deliverable housing sites.”


It seems that consultation will take place in due course that will refine the policy, but in the meantime it takes immediate effect:

“Following consultation, we anticipate the policy for neighbourhood planning set out in this statement will be revised to reflect policy brought forward to ensure new neighbourhood plans meet their fair share of local housing need and housing is being delivered across the wider local authority area. It is, however, right to take action now to protect communities who have worked hard to produce their neighbourhood plan and find the housing supply policies are deemed to be out-of-date through no fault of their own.”

So, suddenly local authorities have an additional “get out of jail” card even where they cannot demonstrate a five-year supply – if the proposal is in a part of its administrative area that (1) has a neighbourhood plan that has policies for the supply of housing (including allocation of sites) and (2) if the local authority has at least a three-year supply of sites.


Local authorities with a dubious housing land supply position may now be immediately tempted to secure that neighbourhood plans within their area contain policies that echo their own housing supply/allocation policies!

Those determining applications and appeals will now need to grapple with the additional questions of whether the relevant neighbourhood plan includes policies for the supply of housing (a phrase that will be examined by the Supreme Court in February in the Hopkins Homes/Richborough Estates litigation) as well whether there is a three-year supply of deliverable housing sites (of course in some situations there may be a five-year supply but not a three-year supply, if the allocated sites have a long lead-in period but the lack of a three-year supply will be irrelevant if the five-year supply is there). 

It seems that the Government does not intend to amend the NPPF but to leave it to be read alongside the written ministerial statement. So much for the intent behind the NPPF in the first place, as described rather sceptically by the Court of Appeal in Hopkins/Richborough  (17 March 2016):
“”The “Ministerial foreword” concludes by stating that “[by] replacing over a thousand pages of national policy with around fifty, written simply and clearly, we are allowing people and communities back into planning”. Some judicial doubt has been expressed about that assertion. As Sullivan L.J. said in Redhill Aerodrome Ltd. v Secretary of State for Communities and Local Government [2015] 1 P. & C.R. 3 (in paragraph 22 of his judgment, with which Tomlinson and Lewison L.JJ. agreed), “[views] may differ as to whether simplicity and clarity have always been achieved, but the policies are certainly shorter”. In an earlier case in which this court had to consider the meaning of the policy in paragraph 47 of the NPPF, City and District Council of St Albans v Hunston Properties Ltd. [2013] EWCA Civ 1610, Sir David Keene had expressed the view (in paragraph 4 of his judgment, with which Maurice Kay and Ryder L.JJ. agreed), that “[unhappily] … the process of simplification has in certain instances led to a diminution in clarity”.” (paragraph 8)
The lack of any intention to amend the NPPF is particularly disappointing given the fact that the Government consulted  in December 2015 over other proposed changes to the framework, which remain in hiatus pending the forthcoming Housing White Paper. If the document is to be updated, why not do the job properly (and clear up other ambiguities at the same time), rather than to allow people and communities to be shut out again from the process by having a supposedly comprehensive policy statement that is anything but?
Policy making by written ministerial statement  is understandably attractive for politicians. Indeed, since the changes to the Government’s consultation principles in January 2016  we can presumably expect much less consultation:
“Do not consult for the sake of it. Ask departmental lawyers whether you have a legal duty to consult…Do not ask questions about issues on which you already have a final view. “
A legal duty to consult often does not arise – if, for example, there is no specific statutory requirement, if there has been no prior indication that has lead to a legitimate expectation that there will be consultation or if the proposal is not a plan or programme to which the Strategic Environmental Assessment Directive applies.  
The Government’s 28 November 2014 written ministerial statement that introduced the vacant building credit and affordable housing small sites threshold predated the Government’s amended consultation principles. It may well be that there was in fact no duty on the Government to consult. However, if a public body chooses to carry out consultation it must abide by judge-made rules of lawful consultation – the Sedley principles:
a)  Consultation must take place when proposals still at a formative stage;
b)  The public must be given sufficient information to allow for intelligent consideration and response;

c)  Adequate time must be given for consideration and 
response;

d) The consultation responses be conscientiously taken into 
account in finalising the proposal.

The adequacy of the consultation undertaken ahead of the 2014 statement was of one of the grounds of challenge in West Berkshire Council v Secretary of State  (Court of Appeal, 11 May 2016). Whilst the Court of Appeal found the consultation process to be lawful, that had not been the conclusion of Holgate J at first instance. No wonder the advice is now: if you don’t have to consult, don’t. Depressing for those who might hope that open debate leads to better policy making and fewer unintended consequences.

Simon Ricketts 29.12.16

Personal views, et cetera

Section 123…Go!

Rightly, no-one ever believed section 1(1) of the Localism Act 2011: “A local authority has power to do anything that individuals generally may do”. Section 2 (“boundaries of the general power”) put paid to that. 
There are many good things which authorities might do, if they were allowed. In some circumstances, this would be to dispose of their interests in land at an undervalue, where this would unlock viable development, or would for example secure more affordable housing.  
In an excellent recent Property Law Journal article  Stephen Ashworth sets out the pitfalls of section 123 of the Local Government Act 1972, which prevents local authorities from disposing of land “for a consideration less than the best that can reasonably be obtained”. “Consideration” means financial consideration rather than any wider benefits that may be secured. There is an exemption from consent in cases where the undervalue is £2m or less and the purpose of the disposal would contribute to the promotion or improvement of economic, social or environmental well-being. Stephen rightly questions this:
Critically the £2m limit is risible in the present market. It is the value of less than five London starter homes. It is often less than the difference between competing bids for land. At the very least it needs updating. In a devolutionary world, maybe, if a limit is necessary, it should be set locally, perhaps by mayors or local enterprise partnerships.”

It is certainly disappointing that the £2m cap hasn’t been increased, or that the Secretary of State has not set out any guidelines that encourage deals at an undervalue above the threshold which promote well-being, particularly in the form of increased delivery of housing, especially affordable housing. 

By coincidence, since the article was written, on 26 August 2016 Holgate J delivered judgment in R (Faraday Development Ltd.) v. West Berkshire Council & Anor  where he rejected a claim by a competing developer that West Berkshire’s development agreement with St Modwen in relation to the comprehensive regeneration of the London Road Industrial Estate in Newbury was in breach of section 123. Landmark Chambers’ summary  sets out the judge’s distillation of the principles to be applied in determining when a court should intervene in relation to the application of section 123. After a detailed examination of the deal that had been negotiated he rejected the section 123 challenge. It was common ground between the parties that if that ground of challenge failed, so too would the allegation fail that the deal amounted to unlawful state aid (ie a distortion of competition by favouring any party by virtue of the support provided by the Council to that party). 

The case is also interesting and useful for its detailed examination as to whether the arrangement between St Modwen and the Council was caught by public procurement requirements as a public works contract, in which case the Council would have breached its obligation to follow the formal public notification and competitive procedures laid down in the Public Contracts Regulations. After an analysis of the European case-law, the judge rejected this ground too:
“In my judgment the DA is a contract to facilitate regeneration by the carrying out of works of redevelopment and to maximise WBDC’s financial receipts, particularly rent, from the LRIE. The provision of services under clauses 4 to 7 and land assembly do not represent a main purpose in themselves, but simply facilitate the Council’s regeneration and financial objectives, the “twin objectives” with which WBDC’s process began (see paragraph 29 above). WBDC lawfully decided that the DA itself should not impose upon the developer an enforceable obligation to carry out the redevelopment. It is therefore not a “public works contract.

 The case should give comfort to developers and authorities alike that the pitfalls of section 123 along with equivalent risks arising from EU state aid and public procurement legislation can be safely navigated. However, challenges on these grounds remain an ever-present threat, whether for instance the state aid complaint  that has been brought in relation to the London Borough of Hammersmith and Fulham’s arrangement with CapCo in relation to the Earls Court development and the successful challenge (Stephen Ashworth acting for the claimant…) of Winchester City Council’s revised development agreement with Thornfield for the now possibly defunct Silver Hill project in R (on the application of Gottlieb) v Winchester City Council (Lang J, 11 February 2015). 

The need for some common-sense over section 123 is illustrated by the interesting wrinkle in London in relation to section 123: it doesn’t apply to Transport for London, because it is not a “principal council” for the purposes of the section, even though Schedule 11 paragraph 29 of the Greater London Authority Act 1999 does require that when it engages in development, either directly or through a subsidiary, it must do so “as if it were a company engaged in a commercial enterprise”. So it can dispose of land at an undervalue (subject to avoiding state aid problems) but can’t take an equivalently enlightened position when developing in its own right or through a subsidiary! These complications will no doubt constrain how the London Mayor delivers on his promise of increased levels of affordable housing on Transport for London land, the subject of a 26 August 2016 EGi piece

It would of course be equally useful to see a lighter touch state aid and public procurement regime, but that relies on rather larger political cogs. 
A final note arising from Faraday:
Interesting to see that the case featured Landmark’s Batman and Robin, David Elvin QC and Charlie Banner, this time on opposing sides, with Robin being given a very hard time by Holgate J, if the judgment is anything to go by…


Batman and Robin in happier times. 

Simon Ricketts, 2.9.16
Personal views, et cetera

Time To Review The “C” Use Classes?

Isn’t it time to update the Use Classes Order, in particular its categorisation of residential and quasi-residential uses?

Until replaced in 1987 following a 1985 review, the 1972 Order reflected another age. Those lists of specific special industrial uses (blood boiling, bone burning, maggot breeding…) have been jettisoned. Since 1987 use class A1 has no longer explicitly excluded cats-meat shops or the sale of tripe. Since 1987 office, R&D and light industrial uses have been amalgamated into B1 (notwithstanding the government’s and LPAs’ continuing attempts to this day to maintain distinctions between the respective sub-classes).

Subsequently the 1987 Order has been tinkered with endlessly (13 separate revisions) but never again subjected to a root and branch review. Outside of legal subscriber-only websites, the Planning Jungle’s website probably has the best summary of its current, increasingly convoluted, status.

Three decades on, don’t we need to take a step back and reassess the ways in which we use property and how uses should be categorised so as to reduce uncertainty when it comes to determining whether changes should engage the planning system and as to how policies are to be applied?

The “C” classes in particular continue to pose problems. There are in reality many permutations and gradations of residential use.

The current “C” classes

We need to consider whether 2016 reality slots easily into the following pigeon holes:

Use class C1 is defined as “hotels, boarding and guest houses where no significant element of care is provided”, specifically excluding hostels, which are “sui generis” (not in any use class).

Use class C2 is defined as use as “residential care homes, hospitals, nursing homes, boarding schools, residential colleges and training centres”. Secure residential institutions are in a separate class, C2A.

Use class C3 is defined as use “as a dwellinghouse (whether or not as a sole or main residence) by—

(a) a single person or by people to be regarded as forming a single household

(b) not more than six residents living together as a single household where care is provided for residents; or

(c) not more than six residents living together as a single household where no care is provided to residents (other than a use within class C4)

Use class C4 is defined as small shared houses “occupied by between three and six unrelated individuals, as their only or main residence, who share basic amenities such as a kitchen or bathroom”, otherwise known as homes in multiple occupation (HMOs) although use as an HMO occupied by more than six individuals is sui generis.

The reality

However the spectrum in the real world includes:
– dwellings occupied on a longterm basis by a single household up to six residents where no care is provided (slam dunk C3 whether or not owner-occupied, PRS or in any affordable housing tenure, or indeed whether left empty for much of the year)

– serviced apartments (section 25 of the Greater London Council (General Powers) Act 1973 provides that in Greater London, the use as temporary sleeping accommodation, for 90 days or less, of any residential premises involves a material change of use – so C1 not C3 if the occupation is relatively short-term, otherwise possibly sui generis, but then again, increasingly, high end apartments come with significant concierge, cleaning and other services, so where is the boundary between serviced apartment use and C3?)

– aparthotels – just a clunky word denoting a block of serviced apartments, or is there a distinction?

– longterm occupation of hotel rooms (how longterm would the occupation have to be for the use to fall outside C1? The 1975 case Mayflower Cambridge Limited v Secretary of State for the Environment and Cambridge City Council 73 L.G.R. 517 talks of hotels serving a “transient population” with no indication of what that translates to in terms of weeks or months. A season could be said to be transient. What about a year?)

-purpose-built student housing (probably sui generis but differing approaches are taken by LPAs, illustrated by a recent NLP blog post)

– co-living in purpose-built blocks with a high degree of communal facilities, more akin in many ways to a student hall of residence than traditional C3 (again sui generis?)

– hostels/HMOs with more than six individuals staying (sui generis but often difficult to draw a boundary line with C1 applying criteria set out in Panayi v Secretary of State for the Environment [1985] J.P.L. 783 and R. (on the application of Westminster City Council) v Secretary of State for Communities and Local Government [2015] EWCA Civ 482)

– extra-care accommodation (either C2 or C3 depending on the level of care and self-containment)

– airbnb type short term lets (not now jeopardising C3 use of the dwelling if the short-term lets are for no more than 90 days of the year, following section 25A of the Greater London Council (General Powers) Act 1973, introduced by section 44 of the Deregulation Act 2015, otherwise probably sui generis?)

Good for the lawyers, as they say. Not good at all for ensuring that schemes can come forward to meet modern housing (and funders’) needs or to reflect what modern policy priorities may be.

Simon Ricketts 1.7.16

Personal views, et cetera

Valuing Starter Homes

The sound-bites from chapter 1 of the Housing and Planning Act 2016 make it sound so simple. Starter homes will have be sold at a discount of at least 20% to market value, with a price cap of £450,000 in London and £250,000 elsewhere.
That much is baked into the Act (subject to change via a subsequent statutory instrument). But most of the necessary detail is to follow in the Regulations that we expect to see this Autumn following the Government’s technical consultation in March. A busy summer ahead within DCLG.

I was speaking on a Westminster Briefing conference panel this morning alongside Jennifer Bourne from the Council of Mortgage Lenders and Chris Buckle from Savills. The mix of private sector and public sector delegates had a series of interesting and thought-provoking questions for us but more particularly (if they had been in the room) for those busy ministers and civil servants. I came away with a series of thoughts swirling around as to the particular difficulties in arriving at a valuation process that will work without introducing unnecessary extra complexity, delay or uncertainty into development (an already hazardous adventure):

– What will be the precise mechanism for having starter home valuations signed off? We expect some standardised section 106 agreement clauses – presumably they will require the developer (and home owner on any prospective re-sale within the restricted period) to submit a valuation for the LPA’s sign off but how can we ensure that processes won’t be elongated if there is disagreement? Who will pay for the LPA’s valuation sign-off or will this be centrally managed via the HCA or any other body? Who is to oversee the process to avoid any lack of rigour as between developer and LPA?

– How to deal with the uncertainties inherent in valuing any new home, with the premium that newness initially attracts, such uncertainties being particularly accentuated in the case of larger developments where local comparables may be less relevant?

– Is the valuation to exclude the “starter home” nature of the property, given that purchasers may well be prepared to pay more than 80% of that valuation (or, where relevant, more than the price cap) thereby increasing the valuation of the property? This premium will increase on potential re-sales during the restricted period (even allowing for any tapering).

– How to ensure that there are no side deals between developer and purchaser, particularly where there are more potential purchasers than potential starter homes or where the starter home seems a particularly good deal, for example where the price cap works so as to lead to a reduction of much more than 20% (as it will in parts of central London and the home counties)? Indeed how is the developer in practice to choose between different buyers, faced with that price cap?

– How to take into account any reduction in value of the balance of the private market housing within a scheme if it turns out that starter homes are cannibalising private market sales?

– where off-site contributions are negotiated in lieu of on site provision, how is the level of those contributions to be set?

This is the Council for Mortgage Lenders’ detailed and measured response to the Government’s technical consultation on the proposed Regulations.

Lastly, Savills have an interesting slide showing the likely viable mix of starter homes and other affordable housing – figure 1 in their April 2016 briefing note . However starter homes are valued, they come at a price.
Simon Ricketts 21.6.16
Personal views, et cetera

How Does Your Garden Village Grow?

It is encouraging to see the practical encouragement that the Government is giving for local authorities and promoters jointly to bring forward high quality proposals for new communities.

Expressions of interest are sought by 31 July 2016 for “garden village” projects defined by the Government as developments of between 1,500 and 10,000 homes that meet specified criteria. Up to 12 proposals are to be supported. The list of information required has now been published.

This follows DCLG’s March 2016 prospectus that covered both garden villages and garden towns/cities (10,000 homes plus).

Key criteria include:
– backing from the relevant local authorities

– engagement with the local community

– embedding of “garden city principles” (how strictly, one wonders, given the lack of many developments to adhere to all of those principles articulated by the TCPA.

The prize for selected applicants is a package of government support that could include:

– delivery enabling funding (ie funding for the local authority for staff or consultancy work)

– support from ATLAS

– “brokerage across government” to unblock cross-departmental issues

– access to government housing funding streams (eg the starter homes fund and affordable housing funding)

– “financial flexibilities” to improve viability and cashflow (TIF-type mechanisms perhaps?)

– planning freedoms (presumably eg the potential to be a “planning freedom zone” under section 154 of the Housing and Planning Act 2016)

– dedicated delivery vehicles (eg public-private sector JVs or even development corporations, made easier to create by sections 166 and 167 of the Housing and Planning Act 2016).

The Government has learned from the failings of the previous eco-towns initiative, where schemes that were selected achieved an unfair policy advantage, short-circuiting the then regional planning process, and failed to live up to promises made to promoters and the public alike as to consultation and assessment processes. Whilst the legal challenge to the lawfulness of that process failed (the Bard Campaign v Secretary of State for Communities and Local Government [2009] EWHC 308 (Admin), public unpopularity ran the process into touch in the lead up to the 2010 General Election.

Instead, this time round there is no explicit shortcut through the planning process – expressions of interest must set out how the proposed garden village fits with the “strategic growth plans for the area”.

Alongside the prospectus, the Government has been refining its policy stance on new settlements, in DCLG’s December 2015 consultation paper on proposed changes to national planning policy.

The NPPF currently says this:
“52. The supply of new homes can sometimes be best achieved through planning for larger scale development, such as new settlements or extensions to existing villages and towns that follow the principles of Garden Cities. Working with the support of their communities, local planning authorities should consider whether such opportunities provide the best way of achieving sustainable development. In doing so, they should consider whether it is appropriate to establish Green Belt around or adjoining any such new development”
The consultation paper proposes the following:
“20. We propose to strengthen national planning policy to provide a more supportive approach for new settlements, within locally led plans. We consider that local planning authorities should take a proactive approach to planning for new settlements where they can meet the sustainable development objectives of national policy, including taking account of the need to provide an adequate supply of new homes. In doing so local planning authorities should work proactively with developers coming forward with proposals for new settlements in their area.”

If you have a scheme that meets the criteria in the prospectus, there is little time to be lost.

Simon Ricketts 17.6.16

Personal views et cetera