Memorandum by Land Securities plc (AFH
32)
1. INTRODUCTION
1.1 Land Securities is one of Britain's
major companies, bringing together property portfolio management,
property development and total property services. We aim to be
the UK's recognised leader in creating value through commercial
development projects, demonstrating quality and innovation as
well as economic and environmental sustainability. The property
portfolio had an asset value as at 31 March 2001 in excess of
£7 billion with a £2 billion development programme.
1.2 Land Securities has a wide range of
development projects throughout the UK from city centre retail
led mixed use schemes, in locations such as Birmingham, Exeter
and York; to major central London office developments and large
scale "brownfield" regeneration projects in Kent Thameside
and Cambridge. Kent Thameside is one of the two key development
locations in the Government's priority regeneration area Thames
Gateway. Many of these projects are undertaken either in partnership
with Local Authorities and Government departments or in close
consultation with them. The company has approximately 14,500 residential
units within its development pipeline.
1.3 Land Securities approach to residential
development and mixed use developments in Kent Thameside is not
typical. The company is not a house builder but acts as a "town
developer". The company is undertaking, on a number of large
sites in Kent Thameside, master planning and promotion through
to the construction of strategic infrastructure. It will retain
responsibility for the delivery of the planning obligations and
community benefits including school building, community facilities,
the public realm and affordable housing.
1.4 One example of this is the development
of Eastern Quarry. This site will provide a unique and exciting
opportunity to create a high quality, public transport and community-orientated
development based on the urban village concept. Emerging figures
indicate capacity for approximately 7,250 residential units, up
to (2.25mft2) 209,000 square metres of employment floorspace and
circa (1.85mft2) 171,000 square metres of supporting retail, leisure
and community uses. Discussions are taking place with the relevant
bodies concerning the provision and procurement of affordable
housing. Taking the local authority's current policy requirement,
1,450 or more affordable housing units are likely to be provided.
1.5 Accordingly, Land Securities is a major
consumer in respect of the UK planning system and a major promoter
of affordable housing.
1.6 The key issue from Land Securities perspective
is the need for the planning system to provide certainty and clarity
combined with realism and practicality at all levels.
2. DEFINITION
OF "AFFORDABLE"
2.1 We recognise that there has been a wide
interpretation on the definition of affordable housing. Planning
policies for affordable housing are required, by current government
guidance to be "tenure neutral" see Circular 06/98 (Planning
and Affordable Housing). This guidance states that it is up to
local authorities to define through policy what "affordable"
is taken to mean, but that it should include both low-cost market
and subsidised housing. We note more recent definitions (DTLR
Reforming Planning Obligations: Consultation Paper) go further
and state whether the subsidised housing is for rent or shared
ownership. However we have experienced in negotiations that there
has been a tendency to equate affordable housing with social rented
housing.
2.2 Circular 06/98 recommends that affordability
definitions in local planning policy guidance should be related
to local income levels and their relationship to local house prices
and rents. In our experience this advice is rarely, if ever followed.
This is, perhaps, through difficulties in keeping data sufficiently
up to date to provide meaningful reference points.
3. THE SCALE
AND LOCATION
OF THE
DEMAND FOR
AFFORDABLE HOUSING
3.1 Clearly there is a particular requirement
for affordable housing in the South East and in London. This has
been well documented and is confirmed in the Regional Planning
Guidance for the South East [RPG9—March 2001 particularly
paragraphs 8.7—8.15] and in the initial proposals for the
Mayor's Spatial Development Strategy [May 2001—pp 2.63-2.66].
Further technical work has been published to support the Mayor's
emerging Spatial Development Strategy—Affordable Housing
in London July 2001 and Future Housing Provision: Speeding up
Delivery February 2002.
3.2 Absence or shortfalls in availability
of "affordable" housing seem generally to arise in areas
and pockets of high economic growth and activity.
3.3 Perversely, urban regeneration projects
designed to improve the economic prospects of regions and localities
can create situations where residential accommodation can become
"un-affordable" to some sectors of the local population.
It is extremely important for policies in general and local planning
authorities in applying those policies not to create circumstances
in which demands to provide heavily subsidised affordable housing
could preclude otherwise worthwhile projects.
3.4 Demands that developers wholly subsidise
shortfalls in viability of affordable housing generally or particular
tenures of affordable housing because Social Housing Grant is
not available or is being applied elsewhere are counter-productive.
This operates as a form of local taxation and as a deterrent to
becoming involved in urban regeneration projects. The logical
consequence is that companies such as ourselves, with a choice
as to the sectors of the property market and areas of the country
in which we operate may choose to invest our funds elsewhere.
This needs to be recognised.
4. THE QUALITY
OF AFFORDABLE
HOUSING
4.1 As a major landowner and developer,
with a commitment to achieving quality regeneration, urban renaissance
and sustainable development, we are committed to ensure schemes
with which we are involved will deliver quality affordable housing
and a well managed public realm. It is in our interests to do
so. We specialise in high density, mixed use urban development
projects. Anything other than high quality development will impact
on the investment value of non-residential and market residential
elements of our schemes.
4.2 It should be recognised that in dense
inner urban and new urban mixed use projects, affordable housing
can rarely be a separate, detachable element. It is rarely a collection
of low density "homes with gardens" in the traditional
suburban model but is integral to larger blocks of buildings.
The skills required to develop and manage affordable housing such
as this are different from those required for isolated homes with
gardens within single-use residential projects.
4.3 It is important to recognise, that the
commitment to excellence in the developments that we and similar
developers require, combined with the degree to which affordable
housing is integral to our projects overall, necessitates our
exercising close control over the development process and future
management of affordable housing and the public realm. Choice
as to those with whom we contract to deliver and manage that housing
and public realm on our behalf is crucial. We find that some local
authorities and their housing officers fail to appreciate this.
The result is that projects, and hence regeneration, are delayed
as a consequence of debate as housing officers try to impose partner
housing associations and "standard" development and
tenure structures which are at odds with the development in which
the affordable housing and public realm is to be located.
4.4 We support the Government's initiative
to highlight many examples of residential development best practice
in a wide range of areas in the supporting PPG3 companion guide
By Design Better: Places to Live although it is important to recognise
there are no specific examples of affordable schemes.
4.5 Finally it is widely recognised that
the existing management of private and public sector rented stock
has to be improved. The future social and economic sustainability
of "quality" relies on an absolute mechanism to deliver
in perpetuity effective management not only of the affordable
housing but also of the public realm.
5. THE ADEQUACY
OF EXISTING
SUPPLY AND
THE AMOUNT
OF RESOURCES
AVAILABLE
5.1 The adequacy of existing resources is
crucial to this matter. In the context of the large regeneration
sites with which we are involved within Kent Thameside, it is
not just the cost of creating the serviced development platforms
(especially where significant land remediation costs arise) which
potentially require financial support for regeneration to succeed.
Nor is affordable housing the only issue to be addressed. A heavy
investment is required in sustainable community infrastructure,
including education and skilling, health-care and leisure facilities
in order to prevent social exclusion, as well as transportation
infrastructure. Often this investment is needed over an area far
wider than the immediate area of the development itself. Even
though the site specific costs can sometimes be met by the developer,
these additional needs, often the subject of planning gain negotiations
cannot be met in full.
5.2 In order to monitor the adequacy of
existing supply an effective monitoring strategy needs to be implemented
within regions. Clearly not every planning permission results
in implementation. Therefore work needs to be carried out to check
and co ordinate on completions, focussing purely on affordable
housing with information detailing phasing, on site and off site
provision, what happens to the affordable housing after delivery
and the role of commuted sums specifically identified for affordable
housing.
5.3 It is encouraging to see in the Government's
Regional Development Agency for the South East (SEEDA ) Regional
Economic Strategy consultation document a recognition that it
is "unrealistic to expect the planning process to deliver
affordable housing on the scale needed", and that "only
a major increase in allocation to the registered social landlords
will seriously address this issue".
6. THE EXTENT
TO WHICH
PLANNING GAIN
CAN FUND
THE LEVEL
OF AFFORDABLE
HOUSING REQUIRED
6.1 Private sector property development
must generate an adequate return on capital employed and reflects
the level of assessed risk. Development activity is therefore
inevitably concentrated in those areas where demand (preferably
existing but also predicted) is either already robust or can be
stimulated by the economic activity associated with regeneration.
Certainty is a key factor influencing investment decisions.
6.2 The Government's Planning Green Paper
(Planning Obligations Consultation Paper) emphasises the desirability
of funding affordable housing from planning obligations. Our experience
in recent years is that this requirement as already applied to
housing schemes has led to increasingly complex scheme and financial
negotiations. In many parts of the country the consequential delays
appear disproportionate to the benefits that can actually be secured
and we have asked the government to look again at whether planning
obligations are the best vehicle for funding affordable housing.
Affordable Housing is an issue for society at large, not just
for the development industry.
6.3 Land Securities specifically made representations
both to the London Mayor and the Secretary of State for Transport
Local Government and the Regions on this issue. It is considered
that requirements for funding from planning gain are wholly unrealistic.
Concern has been voiced by the development industry on the proposed
imposition of a 50 per cent target and for requiring commercial
developments to make provision for affordable housing in London.
6.4 The issue of contribution is recognised.
However there is a concern that the imposition will not provide
the flexibility to deal with all development circumstances. This
is particularly relevant where there are abnormal development
costs associated with the development; such as land reclamation.
Equally there is a concern that the gain will be overly skewed
to the provision of affordable housing when there may be other
and, indeed in certain cases more important claims, on expenditure,
such as schools and other local, physical or social infrastructure.
6.5 Finally there needs to be careful consideration
given to existing commercial locations. The provision of on-site
affordable housing can be detrimental to the bringing forward
of commercial development, particularly where this involves recycling
a wholly commercial site such as a major office building.
7. HOW RESOURCES
SHOULD BE
BALANCED BETWEEN
SOCIAL HOUSING
AND OPTIONS
FOR OWNER
OCCUPATION FOR
THOSE WHO
CANNOT AFFORD
TO BUY
(INCLUDING SHARED
OWNERSHIP) AND
WHETHER ANY
ADDITIONAL MECHANISMS
ARE REQUIRED
TO BRING
FORWARD SHARED
OWNERSHIP—TYPE
SCHEMES
7.1 Clearly a balanced approach needs to
be made which reflects the particular requirements in an area.
Financial resources therefore ought to be focussed to match these
requirements. Local authorities are obliged to compile housing
needs assessments and it is from these surveys that an answer
should be gained.
7.2 The government's starter homes initiative,
which aims to provide 10,000 affordable homes for key workers
over a three year period is an example of an innovative and practical
mechanism. However the scale must not be underestimated and we
understand that demand for the initiative has far outstripped
supply.
7.3 It is important to have a range of tenures
of affordable housing in addition to social rented housing. Otherwise
those on lower incomes will not be able to progress to home ownership.
Shared ownership and discounted market forms of affordable housing
need to be available. The key issue to address is how to ensure
that once built and made available, these homes remain part of
the affordable housing stock and perform a long-term function
in enabling home owners to staircase up to full ownership.
8. WHETHER TARGETS
IN REGIONAL
PLANNING GUIDANCE
ARE APPROPRIATE
8.1 We are familiar through our work in
Kent Thameside with the Regional Planning Guidance for the South
East (RPG9 March 2001). Policy H4 provides a very clear resume
of the factors which planning authorities need to consider in
their plan making (and site negotiations).
8.2 Government has recently published a
research report "Delivering Affordable Housing through Planning
Policy" (DTLR March 2002) where amongst other things an approach
to adopt thresholds and targets (based upon the recently published
RPG9) is highlighted. The approach suggests that local authorities
need to consider:
— the most up to date housing needs
surveys and/or other evidence of housing need on which the authority
can draw (eg the housing register, local house price trends and
relationship to income);
— the authority's housing strategy;
— results of urban capacity studies
(showing likely contribution to housing from sites of different
sizes, from brownfield and greenfield sites and from allocated
sites and the likely flow from windfalls);
— analysis of site development economics;
and
— results from monitoring exercises
which show the amounts and sources of affordable housing achieved
in the recent past and the use made of commuted sums (and what
these have funded).
8.3 With our experience of dealing with
brownfield sites the level of affordable housing that can be provided
on any particular site will in the first instance depend on the
development economics of that site.
8.4 The short point is that affordable housing
targets can be acceptable at regional level but in practice demands
for affordable housing grow out of local disparities between rates
of pay and income and house-prices. Regional targets are likely
only to be of use if the principle of developers and local authorities
delivering affordable housing "out of area" as well
as off-site is embraced. Acceptance of this principle could easily
achieve an early and rapid increase in numbers of affordable dwellings.
For example commuted sums in lieu of affordable dwellings in some
parts of Inner London could readily finance greater levels of
affordable housing in outer London or the Thames Gateway Sub-Region
than if employed in the Borough in which they are collected.
9. WHETHER TARGETS
ON "DECENT"
AND AFFORDABLE
HOUSING WILL
BE MET
BY CENTRAL
AND LOCAL
GOVERNMENT
9.1 The key to this is an effective working
relationship between the stakeholders in the delivery process.
9.2 Policy needs to be clearly defined and
effective systems and processes in place including an assurance
that members of local authorities have a clear, consistent and
realistic understanding of the interface between affordable housing
and development demands. The challenges to overcome are significantly
greater (and different) in relation to mixed use, high density,
inner urban projects than in relation to green field suburban
settlements.
10. WHETHER CURRENT
POLICIES AND
PRACTICES ARE
LEADING TO
THE CREATING
OF MIXED
COMMUNITIES
10.1 Unfortunately, the equal failure of
both planning and housing providers to adequately value the importance
of "place making" in their activities has undermined
the image of both in the public's eyes. The realisation of the
importance of urban design is now fully reflected in government
guidance and something that Land Securities fully subscribes to.
10.2 PPG 3 specifically encourages (amongst
other things) the creation of mixed communities, giving priority
to reusing previously developed land and promotes good design
by using land more effectively to create attractive high quality
living environments at higher densities than have recently been
built at.
10.3 Our only concern with regard to the
"densification" and the mixed use developments is the
appropriateness for affordable housing within schemes where plot
sizes, gardens, access and accommodation may not fit in traditional
requirements.
11. WHETHER MORE
GREENFIELD DEVELOPMENT
IS NEEDED
TO MEET
HOUSING NEED
11.1 The planning system undoubtedly plays
a critical role in influencing the location of new development.
PPG3 has restrained development on many greenfield sites, but
it is unclear whether it has been as effective as expected in
promoting the release of previously used sites. What appears to
have happened is a significant restriction on the release of greenfield
sites while many brownfield sites fail to be released sufficiently
quickly to replace them, leading to a reduction of land supply
resulting in a supply/demand imbalance.
11.2 At the moment there remains risk attached
to investing in brownfield residential development particularly
in areas such as Kent Thameside. The development potential of
the area is dependent, to a significant extent, upon delivery
of major infrastructure. The attitudes of some local authorities
toward slavish adherence to inflexible local affordable housing
protocols (manifestly unsuited to dense mixed use development
on brownfield sites) significantly stifles the actual delivery
of some afforable housing. We do not consider that increased allocation
on greenfield sites will solve this issue.
12. THE COST
TO INDIVIDUALS,
BUSINESSES AND
THE ECONOMY
RESULTING FROM
ANY SHORTFALL
IN THE
PROVISION OF
DECENT, AFFORDABLE
HOUSING
12.1 The time and resources spent negotiating
Section 106 Agreements (the traditional planning mechanism for
providing affordable housing) has been a major issue for Land
Securities when securing planning permission. The complexity of
negotiations is often the principal issue behind this delay, exacerbated
by the fact there are little or no "ground rules" for
conducting such negotiations [Land Securities has responded to
the Government on the Planning Green Paper as mentioned earlier].
12.2 Our concern is there is often a lack
of appreciation by the local authorities of the extraordinary
costs associated with delaying projects and the consequent impact
this has on the delivery of identified affordable housing.
12.3 On a more general basis the concern
remains that government's laudable strategy to raise the profile
of (and increase the numbers within) public sector services in
health, education, transport, emergency services and even planning
has also to tackle and resource the corresponding requirements
for housing that is affordable to the workers in these key sectors.
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