Housing and Planning Bill

Written evidence submitted by the Office of the City Remembrancer, City of London Corporation (HPB 94)

HOUSING AND PLANNING BILL

Introduction

1. The City of London Corporation has various interests in the Bill: in its public guise as the local planning authority for the City of London; as a local housing authority managing social housing both within and without the City; and in its corporate capacity as a landowner with land and property in Greater London.

2. The City Corporation recognises the current housing shortage as a significant risk to London’s economy. In particular, the high price of housing poses an increasing threat to the ability of businesses to recruit and retain staff in the capital. In recognition of this, the Corporation has recently agreed a target to provide 3,700 new homes by 2025. These homes will cater for a range of tenures and income levels. The target will be delivered in part by increasing the density of existing social housing estates (most of which are situated in boroughs neighbouring the City), and in part through new developments on land held by the Corporation in capacities other than as a local housing authority.

3. The intention of the Bill to encourage house-building, particularly on brownfield land, is to be welcomed. On the other hand there are some measures in the Bill which threaten the ability of local housing authorities to invest in new supply, or would deter such investment. This could make it harder for the City Corporation to deliver its intended programme. The Government has however provided a degree of flexibility in the Bill, which is to be welcomed. It is to be hoped that the Government will be open to using this flexibility in order to accommodate investment plans developed by local housing authorities, especially in areas of particularly acute demand such as central London.

4. The City is an area subject to unique planning considerations, owing to its small size, high intensity of development, and predominant focus on commercial activity. It is particularly important to maintain a concentration of high-quality office stock in order to support the City’s position as a world-leading business district. This makes it inevitable that most of the City Corporation’s contribution to new housing will be made outside the boundaries of the Square Mile. It is important that the planning measures in the Bill are carefully handled so they do not have unintended effects on the Corporation’s ability to preserve the City’s distinctive economic contribution.

Starter homes

5. Starter homes could be attractive to some employees in London and therefore have a part to play in alleviating the problems caused by the current shortage. The City Corporation will examine the case for including such homes in the housing developments it intends to initiate.

6. The general duty proposed in clause 3 needs, however, to be applied cautiously in the circumstances of the City. As noted above, new housing provided by the City Corporation will mostly be outside the Square Mile. Local policy in the City discourages the loss of viable office space for house-building (a policy approach recognised by the Government in granting the City an exemption from the national permitted development right for the change of use of offices to housing). It is important that this is not undermined by a duty to encourage housing.

7. Clause 4 provides that further detail on the operation of the starter homes policy will be set out in regulations. In those small parts of the City where residential development may be appropriate, a requirement for such development to include a proportion of starter homes could affect the ability of the City Corporation to seek affordable housing contributions targeted at local housing needs, in accordance with its Local Plan. The City Corporation will want to engage in discussions with the Government as more detail becomes available.

Self-build and custom housebuilding

8. As a densely developed and predominantly commercial area, the City has few, if any, plots which would be suitable for the types of development typically associated with self-build or custom housing. Such development would not be in keeping with the scale and character of the Square Mile. The decision to include an exempting power in the form of clause 10 is a welcome recognition that a binding duty to meet demand may not be appropriate in all areas. The City is likely to be one area where it would be appropriate to invoke the exemption, and the Corporation will seek to discuss this with the Government in due course.

Vacant high value local authority housing

9. The City Corporation is among the local housing authorities likely to be substantially affected by the provisions in Chapter 2 of Part 4. Its social housing is in inner London boroughs where land values are high. Although the threshold for "high value" is not yet known, it is likely to catch much of the Corporation’s stock. The Corporation is a relatively small housing authority and a steady attrition of stock could ultimately undermine its viability.

10. In order to support its own plans to invest in new housing in Greater London, the City Corporation would wish to retain a substantial portion of the proceeds gained from selling high value stock. Otherwise the Corporation’s ability to deliver the investment set out in its Housing Strategy could be seriously undermined. The flexibility provided by clause 67 to agree the local retention of proceeds for house-building purposes is therefore welcome, as is the Secretary of State’s indication that he is open to discussion with local authorities in London. The City Corporation will be keen to engage in such discussion.

11. Serious consideration should be given to some form of exemption for properties built by local housing authorities after the Bill takes effect. The prospect of having to dispose of such properties when they first become vacant would discourage authorities from investing in new housing in high-value areas. If an exemption was not possible then local housing authorities should be guaranteed an appropriate share of receipts.

12. More generally, the City Corporation supports the suggestion that the Bill include a requirement that proceeds from sales in Greater London be retained in the capital for the provision of new housing. The housing need in the capital is particularly acute and an outflow of housing provision to cheaper areas of the country would exacerbate the present difficulties, as well as undermining the Secretary of State’s ambition to see 250,000 new houses built in London in the next five years.

13. The definition of "high value" should reflect the unusual circumstances of inner London. Given the significant disparity in land values between central and outer areas of the capital, it would not be appropriate for a single threshold to be applied.

14. The method of basing payments on future estimates rather than actual receipts gives a welcome degree of flexibility, in that local housing authorities may choose not to dispose of stock if they have some other way of meeting their liability. It does however raise the question of what happens if, through no fault of the local authority, fewer units become vacant than estimated. In such a case it seems fair that the liability of the local authority should be reduced, and some assurance to that effect would be welcome. It is also unclear what thinking lays behind clause 62(7), and the relationship it has with the requirement that payments be based on a true estimate.

High income social tenants: mandatory rents

15. It would not seem justified for income deriving from housing owned by local housing authorities to be claimed by the Treasury. Such income should accrue in the normal way to the housing revenue account, where it would be ring-fenced for purposes of local housing provision rather than being used for general Government expenditure.

16. The mandatory rents scheme would be complicated to administer. Local authorities do not currently collect information about the income of their tenants, so a new system would need to be set up. Particular difficulties may be encountered with respect to households with fluctuating income, for instance because of self-employment. In the case of a relatively small local housing authority such as the City Corporation, it is conceivable that the administrative costs of the system will exceed the additional income that it generates.

17. Clause 79 includes provision for the deduction of administrative costs, but this is at the discretion of the Secretary of State. In order to provide the necessary assurance that local authorities will not foot the bill for the scheme, it would be more appropriate for subsection (3) to use "must" rather than "may." Furthermore, "administrative costs" may not encompass all of the additional costs likely to be incurred by local housing authorities as a result of the new scheme, most notably increased arrears and the cost of pursuing them.

Neighbourhood planning

18. Clause 92 proposes a wide power for the Secretary of State to take away from local planning authorities the ability to modify a proposed neighbourhood area. In an area such as the City, where there is a clear distinction between the commercial core and residential areas on the fringes, it is important that the local planning authority can ensure that a neighbourhood area is appropriately defined so as not to encroach on areas of a different character.

19. It is understood that the intention behind the power is to provide for the automatic designation of neighbourhood areas where the application is made by a parish council in respect of the whole of its parish. The City Corporation would have no objection to this. It would however seem appropriate for the wording of the clause to be confined more narrowly to this objective, so as to remove any potential threat in the future to the ability of local planning authorities to modify inappropriate areas.

Planning in Greater London

20. Clause 101(1) is seemingly designed to pave the way for an extension of the sorts of planning application which will be deemed to be of potential strategic importance for the purpose of engaging the Mayor of London’s ability to ‘call in’ applications from London boroughs and the Common Council. It is understood that the immediate intention is to use the power in a fairly narrow way, so that certain policy areas can be defined by reference to the London Plan rather than in secondary legislation. There is however the potential for wider use in the future.

21. The City Corporation has no objection to the technical effect of the clause. In a wider context, it is important that any definition of potential strategic importance continues to take account of the special circumstances prevailing in the City, where the scale of routine commercial development is considerably larger than in surrounding boroughs. This special position is recognised in the thresholds currently set out in the Town and Country Planning (Mayor of London) Order 2008, and should continue to be recognised in any amendment or replacement of that Order as a result of the new clause.

Permission in principle and local registers of land

22. The City Corporation broadly welcomes the notion of permission in principle for land identified as suitable for housing in a brownfield register or a local plan. It could play a useful role in encouraging a faster pace of house-building. A proper assessment of the planning implications for the City must, however, await the detail which is left to be set out in regulations.

23. Clause 102 does not make clear where the boundaries will lie between planning permission in principle and technical details consent. Ambiguity may arise, for instance, with respect to the physical scale of development, or its effects on listed buildings or conservation areas. It is important that permission in principle does not prevent proper consideration of such matters on a local level.

24. The Government has yet to set out details of how the register of brownfield land (as contemplated by clause 103) is to be compiled. It is important that the register does not become a means of overriding local policies intended to protect land with a valuable employment function. In the City, such a policy is a vital tool for protecting its position as a leading commercial centre. The Government’s previous consultation on the identification of brownfield land suitable for housing explicitly recognised that land should be excluded if it was subject to "severe" policy constraints (Building more homes on brownfield land: Consultation proposals, D.C.L.G., January 2014, at paragraph 14). Assurance would be welcome that this principle will be embodied in the detailed provision about the proposed register. It is noted that new section 14A(7) requires local planning authorities to have regard to the development plan, but this would not necessarily achieve a sufficient degree of protection.

Financial benefits

25. While much will depend on the detail set out in regulations, the requirement proposed in clause 106 is potentially complicated and onerous to implement. Development may produce a number of financial implications both direct and indirect, which may be difficult to calculate reliably. It is not obvious that any problem has been shown for which the new clause is a proportionate remedy.

26. A requirement to identify non-material financial benefits may even give rise to a risk that decisions will be influenced by non-material considerations. It may be that transparency in this area is best delivered through other, non-planning-related, regulation.

Nationally significant infrastructure projects

27. There is good sense in enabling large infrastructure projects to include an element of housing. A potential difficulty, however, stems from the fact that the nationally significant infrastructure process is not subject to a presumption in favour of local plans. This means that local policies intended to prevent the introduction of inappropriate housing into employment areas could be overridden as part of an infrastructure project. This would be in concern in the City, for reasons already identified. The power to permit housing within a development consent order should be made subject to local policy constraints of this sort.

Compulsory purchase

28. Clause 137 provides a new power for bodies able compulsorily to acquire land to override easements and other rights. It replaces, among other provisions, the existing power of local planning authorities contained in section 237 of the Town and Country Planning Act 1990. This power is a valuable one in the City, where easements such as rights to light have the potential to inhibit the scale and pace of development required to maintain an adequate supply of up-to-date office space.

29. The current drafting of clause 137 is problematic. The power is only to apply to land acquired after the clause comes into force. There is no provision for existing powers of overriding (which are repealed by Schedule 11) to continue to apply to land acquired before that date. The result is that land held (for instance) in the planning estate of a local planning authority on the date that the clause comes into force would suddenly be denuded of any power to override easements. This would impair the development potential of such land, and would seem to run counter to the objectives of the Bill.

30. Moreover, local authorities have the power to appropriate land from one statutory purpose to another. There would seem to be no good reason why land acquired before the new power comes into force, and subsequently appropriated for the purposes of development within the scope of a compulsory purchase power, should not attract the power of overriding. The clause does not currently cater for this.

31. It is understood that the Government is considering transitional provision to address these points. A new subsection along the following lines would seem to resolve the difficulty:

"(5A) For the purposes of subsection (2)(b) or (4)(b), land which has been vested in or acquired by a specified authority before the date on which this section comes into force is to be regarded as having been acquired on that date if it is subject on that date to-

(a) any power repealed by Schedule 11, or

(b) any power to appropriate land for a purpose for which the authority is also authorised to acquire land compulsorily."

Other matters

32. The City Corporation strongly supports the call by the Local Government Association and others to permit local planning authorities to set their own planning fees. In an area such as the City, the scale and complexity of development means that the costs of administering planning applications far exceeds the fees set on a national level by the Government. At a time of severe pressure on local government budgets, this is reducing local planning authorities’ ability quickly and efficiently to deal with applications necessary to deliver economic and housing growth. In such circumstances an effective subsidy to developers is not justified.

33. The outcome of the Government’s legal appeal on the Vacant Building Credit and other policy changes is currently awaited. If the appeal succeeds, it is to be hoped that the Government does not to seek to reinstate the Credit in its original form. The effect of the Credit would be that any redevelopment of land would only be liable to make ‘section 106’ contributions to housing in respect of any increase in floorspace. But in an intensely developed area such as the City, it is inevitable that new buildings will to a large extent replace existing floorspace. To remove section 106 contributions in respect of such development would significantly impair the City Corporation’s ability (and that of other central London councils) to fulfil its plans to invest in new housing.

November 2015

Prepared 1st December 2015