Affordable homes blocked by Hart’s restrictive brownfield policies

Affordable homes blocked at Zenith House, 3 Rye Close, Fleet, Hampshire by Hart's restrictive brownfield policies

Affordable homes blocked by Hart’s brownfield policies

The delivery of 36 affordable homes is being blocked by Hart’s restrictive brownfield policies. Magna Group is seeking to convert Zenith House on Rye Close on Ancell’s Farm in Fleet into 36 relatively affordable properties, designed to retail at £175,000 to £300,000. But they are being blocked by Hart’s restrictive SANG policy.

The council has given its prior approval to the development. However, Hart is effectively blocking the development by refusing to allocate any of its SANG.

redevelopment of Old Police Station,Crookham Road, Fleet, Hart District, Hampshire being blocked by restrictive brownfield policies

Proposals to redevelop Fleet Police station being blocked by restrictive brownfield policies

We understand the same developer owns the old Fleet Police station on Crookham Road in Fleet and plans to replace it with 14 new dwellings. However, we understand the council planning officers have been instructed to refuse planning permission for even compliant proposals.

This has the effect of:

  • Restricting the supply of housing that would be affordable for many young people trying to get on the housing ladder
  • Adding extra pressure to build on green field land
  • Stopping the market dealing with the problem of the over-supply of dilapidated office blocks in the district

This policy is also blocking Ranil’s ideas for regenerating Fleet. His petition can be found here.

It transpires that Hart’s SANG policy may well be illegal. We understand that legal representations have been made that cast doubt on Hart’s SANG policy:

First the policy is clearly intended to frustrate the delivery of housing rather than to facilitate development.  The policy confers on the head of the regulatory services absolute discretion to allocate SANG but makes clear that SANG will not be allocated to any development unless the Council considers it to be acceptable.

That means that if Planning Permission is granted on appeal the Council will nevertheless use its powers in relation to SANG to thwart that development.

The policy may result in the Council preventing people from exercising the rights they have been granted by Parliament through the permitted development process. In effect the Council is removing a property right from them in breach of the terms of the Human Rights Act 1998.

Furthermore the Council is in breach of its duty to make proper provision to facilitate the delivery of housing.

It certainly looks like the council is setting itself up for more expensive legal battles.

 

 

 

 

 

Hart District Council seeks to block development of brownfield sites

Hart District Council seeks to block development of brownfield sites

Hart District Council seeks to block development of brownfield sites

Hart District Council is seeking to block development of brownfield sites. It has put forward proposals to be discussed at the Planning meeting later today to implement an Article 4 direction to

Withdraw permitted development rights related to the change of use of offices, light-industrial units, and storage or distribution units to residential use within the Strategic Employment Sites and the Locally Important Employment Sites

This covers substantially all the brownfield sites in the district. We do have some sympathy for the view that simple conversion of office sites to residential is not good for the district. We much prefer complete redevelopment of these sites, so the provide higher quality housing and a better sense of place.

But the council’s approach is heavy-handed and sends a signal that they do not welcome brownfield development. Moreover, this approach will discourage the regeneration that our urban centres badly need.

The proposals call for:

  • Draft Article 4 Direction and supporting documents;
  • Give notice as soon as possible after a Direction has been made by local advertisement, site notice, owners and occupiers (unless reasons to justify not doing so);
  • Send a copy of the direction and the notice to the Secretary of State;
  • Notify the county planning authority;
  • Following the above, take into account any representations received; and
  • Confirm the Direction by giving notice as above and sending a copy of the confirmed direction to the Secretary of State.

They have to give 12 months notice of the implementation of the direction.  They identify as risks that:

  • Developers may make claims for compensation from a local authority
  • The proposals could result in a rush of applications before the rights are withdrawn, it is not
    possible to mitigate against this risk.

A more positive approach would be to put a policy in the draft Local Plan that unequivocally encourages  redevelopment of brownfield sites and give examples of the kinds of scheme the council would encourage.

Hart Brownfield sites in Employment Land Review

The other puzzling thing is that Hart’s own Employment Land Review identifies much of the employment land in the district as:

Lower grade stock for which there is limited demand and a large supply. As a result of limited demand. The poorer quality stock is remaining vacant for prolonged periods.

They say that:

The current over-supply of lower grade office accommodation is limiting investment in the refurbishment of such stock as low rent levels make such investment unviable.

To summarise, Hart is seeking to block the redevelopment of low grade office blocks, and there’s no hope of refurbishing these into high quality office accommodation. So it seems that we are going to be stuck with many of the eyesores in the photo carousel below. They really have gone through the looking glass.

 

Time to oppose silly Hartley Winchook new town in Local Plan

Policy SS3 Murrell Green and Winchfield Area of search for Hartley WInchook new settlement

We don’t need Hartley Winchook new town so why is it in the Local Plan?

Hart District Council has begun the Regulation 19 consultation on the Local Plan. This is the final version before submission to the Inspector later this year. Unsurprisingly, this still contains Policy SS3, with proposals for the entirely unnecessary Hartley Winchook new town.

The consultation run from 9 February 2018 to 4pm on 26 March 2018. The whole suite of documents can be found here.

We will, of course, oppose the new town elements of the Local Plan. However, we have to take great care in opposing the plan, because the worst outcome would be that the whole plan is failed by the Inspector.

Hart says that representations about the Local Plan should relate to legal compliance, duty to cooperate and tests of soundness. Helpfully, the council has provided a guidance note on how to respond.

We beleive there are grounds to challenge the plan on the grounds of soundness. Overall our objective should be to get Policy SS3 removed, together with the necessary grammar changes to Policy SS1 to ensure consistency.

How will the Inspector assess the Local Plan

We understand the Inspector is going to look at seven key areas:

1. Duty to co-operate / legal compliance
2. Spatial strategy
3. Housing numbers
4. New settlement area of search
5. Town centre regeneration
6. Infrastructure
7. Development management policies

We believe the spatial strategy is flawed, because it includes provision for the new town, which is enitrely unnecessary to meet the still inflated housing numbers.

The housing numbers themselves are based on the new Government methodology. However, they have included an arbitrary 25% uplift to the requirement, which we believe is too high.

The new settlement area of search is very wide and covers areas that have already not passed testing:

  • The area west of Winchfield was ruled out of the sustainability assessment, because it is a more peripheral location relative to the train station, does not offer a central focus and is in close proximity to Odiham SSSI.
  • The area east of Winchfield fared less well that Murrell Green and of course the sustainability assessment grossly understated the flood risk. And of course there were other issues with Historic Environment, Bio-diversity, Landscape and Water Quality.
  • The sustainability appraisal famously did not take account of the high-pressure gas main traversing the site.

Moreover, it is highly likely that the costs to deliver the required infrastructure will far exceed any realistic assessment of developer contributions.

Hart acknowledge that Fleet will face a challenge “to secure investment so that it can compete with the comparable towns in neighbouring districts”. Yet, the local plan contains no plans to regenerate our main town centre.

The infrastructure plan is paper thin, and they offer no solutions on how to close the £73m infrastructure funding deficit and no plans in particular to improve healthcare in the district.

The development plan policies contain a number of strategic gaps around the district, but leave Hartley Wintney totally exposed with no strategic gaps planned.

 

 

Hartley Winchook leads to no strategic gaps around Hartley Wintney nor to the east of Hook

We will pull together a more detailed response in the coming weeks.

Elvetham Chase refused, Wates on the warpath

Wates image Elvetham Chase aka Pale Lane

Wates image of Elvetham Chase (Pale Lane)

Thankfully, last week Hart District Council decided to refuse the Elvetham Chase (Pale Lane) proposal. Whilst this is good news, it is clear from Wates’ press release that they are very disappointed. They are likely to be on the warpath and launch an appeal.

Here is their statement in full, my emphasis:

Wates Developments today expressed disappointment at Hart District Council’s decision to refuse planning permission for its Elvetham Chase proposal without giving it the chance for proper consideration at Committee.

Emma Gruenbaum from Wates Developments said, ‘Housing in Hart is in crisis, with the District Council relying on 22 year old Local Plan, and the emerging Plan remaining untested and therefore a long way off adoption.  With homes costing 12 times average household income, the simple fact is Hart needs more homes now.  This decision prevents 280 new affordable homes being delivered to help the 1,300 families currently registered on the housing waiting list. The Council’s decision to refuse this sustainable, high quality, proposal offering a total of 700 homes, delivering an outstanding new community, is simply astonishing.’

The proposal which has no technical constraints and no statutory objections would have provided a vast array of community benefits including;

  • £10 million of investment to local primary and secondary schools
  • Facilitation of a new on-site primary school for 420 children
  • A new on-site 60 place pre-school nursery
  • £600k of investment to existing medical facilities
  • £6 million to essential local highway improvements as well as physical works across many local road, cycle and footpath routes, improving safety and easing congestion to address local concerns
  • A new community bus servicing both the new and existing communities of Elvetham Chase and Elvetham Heath to Fleet railway station and other local destinations
  • 82 acres of public open space including; on-site SANG, areas of play, woodland walks and informal space

Emma added, ‘this exemplar landscape led scheme would, we believe, become as loved locally as its predecessor Elvetham Heath. We remain 100% committed to the site and are reviewing our next steps.

They are obviously less than complimentary about Hart Council. We think that it is inevitable that Wates will appeal this decision. The full statement can be downloaded here.

Impact of Local Plan timetable on Elvetham Chase (Pale Lane)

Separately, we understand that the Government has postponed its planned publication of the new National Planning Policy Framework (NPPF) indefinitely. The new NPPF and associated new approach to calculating housing need was supposed to have been finalised by the end of January.

We understand that Hart District Council will press ahead with the consultation on the draft Local Plan. This will run from 9 February until 26 March 2018. This will be to test the soundness, legal compliance and the duty to cooperate.

This means that is is unlikely that the Plan will be examined by the Inspector until September 2018, or later.

This may well be enough time for Wates to lodge an appeal, for it to be heard and decided before the Local Plan is examined. There may not be sufficient grounds for the appeal to be rejected.

We have to hope that the right planning reasons can be found to overturn the appeal. And of course get the Local Plan in place on time, without the unnecessary new town.

Fleet resident calls for plans to regenerate Fleet

Plea to regenerate Fleet and Hart urban areas. Old Police Station in Fleet, Hart District, Hampshire

Plea to regenerate Fleet and Hart urban areas

An important letter has been published in Fleet News and Mail, pleading for the Hart Local Plan to be altered to include plans to regenerate Fleet and our other urban areas.

The author of the letter first sympathises with the plight of councillor Parker who voted reluctantly for the Local Plan. Councillor Parker said ‘an appalling plan is better than no plan at all’.

However, he goes onto criticise the CCH/Lib Dem leadership of the current administration, in particular calling out the two councillors who defected from Conservative to Community Campaign Hart without calling by-elections.

The main plea from the letter though is:

..our dysfunctional cabinet has ignored pleas for the [Local] plan to deliver regeneration of the urban areas (especially Fleet) and has favoured unnecessary greenfield development….

Since the change in administration last year, HDC has become less transparent, and does not encourage engagement with the electorate.

Meetings in public do not welcome participation from the public, and the bureaucracy is weighted in favour of councillors and officers.

Interestingly, the author comes from Fleet.

We could not agree more.  The disastrous policy SS3 setting out plans for an unnecessary new town should be dropped from the Local Plan. In the fullness of time, this policy should be replaced by plans to regenerate Fleet and other urban areas. Please join us in delivering this message when the consultation is launched.

 

 

Hart Council approve draft Local Plan with Hartley Winchook proposal

Policy SS3 Murrell Green and Winchfield Area of search for Hartley Winchook new settlement

Area of search for Hartley Winchook New Town

At last week’s council meeting Hart Council approved the draft Local Plan including a proposal to build Hartley Winchook new town from as early as 2024.

We are pleased that Hart has taken the next step in getting a Local Plan in place. However, we are angry and disappointed that the draft Local Plan includes proposals for an entirely unnecessary New Town in Winchfield and Murrell Green. We will of course, support the process to get the Local Plan adopted, but we will fight hard to get the New Town proposals removed from the Plan both in the forthcoming consultation and, if necessary, when the Plan is put before the Inspector.

It was confirmed by councillor Cockarill at the council meeting that the Local Plan can proceed without the Hartley Winchook proposals. So, the new town is entirely unnecessary.

We did prepare a statement for the council meeting that was partially read out by Councillor Burchfield.

This is reproduced in full below.

We are at an important point in the history of Hart District. We need to get a Local Plan in place urgently. We need to gain control over speculative planning applications. We need to regain control over developers who are running roughshod over the wishes of local people.

However, you shouldn’t just approve any old Local Plan. The Government has done us a favour by changing the methodology to calculate housing need. The result is a position that We Heart Hart has been advocating for three years, namely a sensible housing target.

The base requirement is 209 dwellings per annum. I can see the logic of planning to lift the ‘affordability cap’ resulting in 310dpa. I can even see a logic in adding a few more houses to cater for a realistic amount of unmet need in Surrey Heath. So, my favoured target would be 335dpa or 5,360 over the new plan period. But we would live with the proposed 388 target. I don’t believe anybody in the district would seriously challenge this outcome.

However, for very dubious reasons, you have decided to plan for even more houses by promising to plan for an unnecessary new town. I and many others cannot live with this outcome, for a number of reasons.

First, the proposed new town is not necessary. It will deliver houses we don’t need from as early as 2024, adding perhaps 100-200 houses per year, resulting in 800-1,600 extra houses.

Second, this additional rate of building will end up being carried forward and compounded in future plans because of the way that the ONS household projections are calculated. Adding gratuitous extra houses now will add extra building pressure on our green fields for decades to come.

Third, the proposed new town will end up starving our urban centres in Fleet, Hook and Yateley of much needed investment in regeneration. The residents of Hart have not been consulted on any regeneration plans. But a sensible regeneration policy could gather widespread support and deliver necessary affordable housing and infrastructure investment where it is most needed.

Fourth, the proposed ‘area of search’ is inappropriate, as we know it includes areas that essentially failed testing in the recent sustainability appraisal, and some land that is definitely not for sale.

Finally, the proposed draft Local Plan is very light on its plans for infrastructure. There are no objectives set for infrastructure, just a set of vague and woolly policies. There is no acknowledgement of the £72m infrastructure funding gap; there are no specific tangible projects and no costings. I fear this is contrary to current NPPF guidance and may render the plan unsound at inspection.

So, I would urge you to modify this draft Local Plan to remove the unnecessary new town proposals. You should also provide greater focus on the plans and objectives for infrastructure: road improvements, healthcare facilities, cultural amenities and allowing appropriate room for expansion of our secondary schools should extra capacity be shown to be required. I believe these modifications would achieve near unanimous support across the district.

New Local Plan fails to address infrastructure funding gap

Hart District Council Failed to address infrastructure funding gap

Hart Local Plan Fails to address infrastructure funding gap

The new draft Local Plan fails to address the infrastructure funding gap facing Hart. At the very least, this fails the residents of Hart, but sadly, may render the plan unsound at inspection. We therefore believe significant extra work needs to be done before this version of the Local Plan is put to consultation later this month.

Why is infrastructure so important to the Local Plan?

The National Planning Policy Framework (NPPF) is clear that infrastructure must be planned alongside new housing. Failure to adequately plan for infrastructure requirements and costs could lead to the Local Plan being found unsound at inspection. See references to paras 17 and 177 of the NPPF below.

plan to avoid infrastructure funding gap

NPPF Para 17: Avoid infrastructure funding gap NPPF Para 17: Avoid infrastructure funding gap

Recently, the leader of Community Campaign Completely Concrete Hart, James Radley went on the record in Fleet News and Mail saying he would deliver an ‘infrastructure led’ Local Plan.

We tried to ask questions at Hart Council about the £72m infrastructure funding gap, but our questions were not allowed to be even asked, let alone answered.

Hart infrastructure funding gap £72m

Hart infrastructure funding gap £72m

Now the draft Local Plan has emerged, and it is clear why they were so reluctant to answer questions.

What are the infrastructure proposals in the Local Plan?

That is very good question, to which there is only an inadequate answer. As far as we can tell, there are five fairly insipid ‘policies’ about infrastructure, and that is it:

  • Policy I1: Infrastructure – weak policy simply requiring developers to deliver adequate infrastructure as part of their developments
  • Policy I2: Green Infrastructure – feeble policy to supposedly protect green infrastructure
  • Policy I3: Transport – inadequate policy simply to provide ‘maximum flexibility in the choice of travel modes’, nothing specific to improve road network
  • Policy I4: Open space, sport and recreation – policy to support development that improves sporting facilities, but no tangible plans for anything new
  • Policy I5: Community Facilities – a very vague policy to improve childcare facilities, healthcare, police stations, youth provision, libraries, community halls, local shops, meeting places, cultural buildings, public houses, places of worship, and public toilets. But crucially, no specific projects or proposals.

However, it gets worse. In the details of the infrastructure proposals, several road and junction improvement schemes have been dropped. Examples include the junction near Fleet railway station;  the junction between the A30 and Thackams Lane at Phoenix Green and the junction between the A287 and Redfields Lane.

Deletion of road and junction improvement policies to avoid infrastructure funding gap

Moreover, the amount of land set aside for school expansion has been reduced. Here is the before and after map for Robert Mays.

Land for Robert Mays Expansion (Before)

Land for Robert Mays Expansion (Before)

Land for Robert Mays Expansion (After)

Land for Robert Mays Expansion (After)

This simply isn’t good enough.

What infrastructure proposals should we expect?

We would expect as a minimum:

  • Acknowledgement of the existing £72m infrastructure funding gap
  • Quantification of the items missing from the Hampshire County Council assessment such as healthcare, extra-care housing for the elderly and green infrastructure
  • A set of prioritised, costed projects that are required to alleviate the worst of our infrastructure problems. This should include road improvements, particularly near Fleet station and the bridge over the railway near the end of Elvetham Heath Road. It should also include significant improvements to the cultural facilities, particularly in Fleet.
  • Proposals for raising the necessary funds for delivering the required projects
  • Some external validation that the infrastructure plans in the draft Local Plan are ‘sound’ and will pass inspection

Perhaps if the councillors spent less time planning for a new town we don’t need, they would then be able to focus on the real needs of the district.

Hartley Winchook plan comes back like a terminator

Hartley Winchook new town keeps coming back like a terminator

Community Campaign Hart and Liberal Democrats bring back the Hartley Winchook new town plan, like a Terminator

Happy New Year to everyone. Before Christmas we reported on the details of the forthcoming draft Local Plan.  We thought the new Government approach to calculating housing need had killed off the idea of a Hartley Winchook, but it has returned like a Terminator who doesn’t understand its time has passed.

The CCH/Lib Dem coalition have included plans for a new Hartley Winchook settlement in the draft Local Plan, even though a new town is not required. There are key council meetings on the 2nd, 3rd and 4th of January 2018 to discuss these plans. We would urge as many people as possible to go along an oppose this aspect of the proposed Local Plan.

 

Policy SS3 Murrell Green and Winchfield Area of search for new settlement

Policy SS3 Murrell Green and Winchfield Area of search for new settlement

We oppose this element of the proposed Local Plan for the following reasons:

  1. A new town is not needed to meet the required housing numbers. The Council have set the housing target at a generous 6,208 over the planning period from 2016 to 2032. We believe this target is more than is required, but we could live with it. A new town is not required to deliver these numbers. They have identified 6,346 homes to supply this requirement, without the new town being required.
  2. They are intending to plan for a new town that will start delivering even more new houses in 2024. This will lead to significant over-delivery of housing, unnecessarily decimating our countryside and setting an increased target for future generations.
  3. Diverts attention away from the necessary regeneration of our urban centres of Fleet, Hook, Blackwater and Yateley.
  4. We believe the proposal is misleading and potentially unsound because the area of search includes land that is definitely not available, for example Andrew Renshaw’s farm in Winchfield.
  5. Unnecessarily blights the property values of residents in the area of search, which might well be illegal.
  6. No local gaps provided around Hartley Wintney, Winchfield or to the east of Hook, (see image below).
  7. Creates unnecessary extra work and lack of focus at this crucial stage of plan development. It is imperative that the Local Plan is approved as quickly as possible. Everybody would be able to live with the proposals if the Hartley Winchook new town plan were deleted. Including it now, adds unnecessary controversy.

Hartley Winchook leads to no strategic gaps around Hartley Wintney nor to the east of Hook

Please do go along to the following council meeting and make these arguments:

  • Overview and Scrutiny meeting on 2nd January at 7pm
  • Cabinet meeting on 3rd January at 7pm  and finally,
  • Full Council on 4th January at 7pm

It is time to terminate this daft idea. We are sorry that we can’t be there, as we are travelling over this Christmas and New Year period.

 

Hart Local Plan details emerge

Breaking News: Hart Local Plan Update

Hart Local Plan details emerge

We have been in touch with sources close to the Hart Planning team and received an update on what is intended to be published next week in the version of the Local Plan that will be used for the Regulation 19 consultation.

Here are the key bullet points:

  • The planning period will be changed from 2011-2032 to 2016-2032, a period of 16 years.
  • Hart will adopt the new Government approach to calculating housing need, but with some modification
  • The housing target for the new planning period will be 6,208
  • If all goes to plan, we won’t need a new settlement at Murrell Green or Winchfield. We also won’t need urban extensions at Pale Lane (Elvetham Chase) or Owens Farm (West of Hook).
  • There will be important council meetings to agree this plan on 2, 3 & 4 January, with a view to going to Regulation 19 consultation in mid-to-late January and submission to the Inspector by the end of March.

Overall, we believe this to be very good news. However, there are some risks that we will discuss below.

[Update]: We understand that the hybrid planning application for the first phase of Hartland Village has been withdrawn, and will not be heard at tonight’s planning meeting. We don’t know what impact this will have on the Local Plan outlined here. More details when we get them. [/Update]

[Update 2]: We have now heard Hartland Village might now be back on the agenda. Who knows what is happening. [/Update 2]

Hart Local Plan: new housing target

Regular readers may recall that the annual housing target for Hart in the Government consultation was 292 dwellings per annum (dpa). This was based upon 218 dpa from the raw ONS household projections, plus a market signals uplift to arrive at 292 dpa. The scale of the uplift was capped in the consultation. Hart believe this cap will be lifted to give an annual target of 310 dpa. Over the plan period this would result in a total of 4,960 new houses.

Because there is some uncertainty about the status of the consultation and whether we need to build some additional houses for Surrey Heath and/or Rushmoor, Hart believe it is prudent to uplift this target by 25% to give a planning target of 6,208.

We think this uplift is a bit too generous, but will support it, because it gives us the best chance of the plan being approved by the Inspector.

Hart Local Plan: Housing supply

We understand this housing target will be met by the following:

Built to from 2016 to 6/10/17     798
Outstanding permissions 3,048
Other deliverable 504
Other sites like to be granted 184
Odiham NP 111
Windfalls 275
Hartland Village (deliverable in plan period) 1,400
Total Supply 6,320

Eagle eyed readers will note this does not include Murrell Green, Winchfield, Pale Lane (Elvetham Chase) or Owens Farm (West of Hook).

Hart Local Plan: Risks

The big risk to this plan is Hartland Park (Pyestock). The developer has proposed only 20% affordable housing in their plan compared to Hart’s target of 40%. We understand that Hart are trying to persuade the developer to agree to periodic viability reviews. This would force the developer to be open about how much profit it is making. If it makes more money than planned, then it could be asked to build more affordable homes in the rest of the development.

If agreement on this cannot be reached, then it may not be possible to include Hartland Village in the draft Local Plan and the shortfall would have to be made up from some combination of Pale Lane (Elvetham Chase), Owens Farm (West of Hook), Murrell Green or Winchfield. We will see what happens over the coming days.

Hart Local Plan: Timetable

The finalised version of the draft Local Plan will be published on 19 December. This will be followed by:

  • Review by Overview and Scrutiny on 2 January 2018
  • Approval by Cabinet on 3 January 2018
  • Approval by full Council on 4 January 2018

The intention is then to move to Regulation 19 consultation in mid-to-late January for a six week period. The consultation needs to close by mid-March. This is to give enough time to make minor tweaks before submission by the end of March. This deadline is driven by Government guidelines and the Council purdah period prior to the Local elections in early May.

It is hoped that the Government will make clear its intention regarding the consultation on how to calculate housing need in January. It is also hoped that the draft NPPF is published in early January. This is to allow time for any tweaks to be made to the draft Local Plan in the light of this new information,

There are also three other documents due to be published alongside the Local Plan:

  • Transport Assessment
  • Sustainability Assessment
  • Habitat assessment

Conclusion

We believe the council is taking a pragmatic approach to the Local Plan, and that this approach should be supported. If we don’t support it, then the Local Plan will be delayed. This would significantly weaken the Council’s hand in relation to Pale Lane and Owens Farm.

Let’s hope this approach finds favour with councillors and we can all look forward to a Happy New Year.

 

FT: Housebuilding boom will not make houses cheaper

Today, the FT has run a very important article about the proposed housebuilding boom in the UK. This echoes the work of Ian Mulheirn that we highlighted back in February. The key takeaways are:

  1. There is no housing crisis. The housing market is adequately supplied and there is no shortage
  2. Other than in London, rents have risen less quickly than consumer prices
  3. House prices are high because of low interest rates and easy availability of credit
  4. The way to reduce housing costs, if not house prices, is to increase the supply of homes for rent
  5. More of the same tweaks to the planning system and housing market are doomed to fail.

We do hope Hart Council take notice of this article. Because carpeting out green fields with 10,185 houses isn’t going to make them any more affordable for local people. All they will do is add to the £72m infrastructure funding gap, increase waiting times at doctor’s surgeries and add to our already bad road congestion.

It is time to adopt the new Government approach to calculating Hart’s housing target so we can meet local needs and address our infrastructure problems. This will cut our housing target to around 6,500 after we make allowance to build some houses for Surrey Heath.

The article in reproduced in full below.

Lex in depth: The false promise of a UK housebuilding boom

Chancellor Philip Hammond is under pressure to commit billions of pounds to build more affordable housing. But what if a lack of houses is not the real problem?

© AFP

The cost and availability of housing has become a potent political issue in the UK, where younger people especially are being priced out of the market as their parents and grandparents benefit from decades of above-inflation rises in home values.

The ruling Conservatives, traditionally the party of home ownership, now find themselves shunned by millennial voters frustrated by spiralling housing costs. So far, the response has been to provide subsidy to renters and buyers, and to exhort the construction industry to build more. Philip Hammond, the chancellor, is under pressure to announce more money for housing in Wednesday’s budget.

Yet building more homes is unlikely to meaningfully reduce prices, especially in the short term. One reason is that, whatever the other dysfunctions of the housing market there is — nationally at least — no shortage of homes.

To suggest this is to challenge a prevailing, almost universally accepted wisdom: that British house prices are high because the country has for many years failed to build enough houses. In the aftermath of the financial crisis, new home construction fell by more than a third, and even their pre-crisis levels were a far cry from the halcyon days of the 1960s or the 1930s, when completions were higher, both absolutely and relative to population.

Those on the left attribute this to the sharp fall in the construction of social housing since the 1980s. Those on the right blame the planning system for throwing sand in the wheels of the free market. Both broadly agree that the solution is to build many more homes. In 2015, ministers set a target of 1m new dwellings by 2020. On Sunday, Mr Hammond pledged to build 300,000 homes a year, though he did not specify a timeframe.

That number echoes the promise made by Harold Macmillan, housing minister in the 1951-55 Conservative government, whose achievements are hailed by those in the ruling party calling for more ambition on housing. The 1951 administration came to power on a promise to “give housing a priority second only to national defence” and presided over a construction boom in an era when austerity included food rationing.

Many prognostications about the housing market cite government data on new builds. But what matters more is the net change in overall supply, which includes property converted to residential from other uses, and subtracts the homes demolished.

The gap between these two was substantial in the Macmillan era and in the 1960s, when housebuilding was at its peak but thousands of condemned homes were also being flattened in slum clearances. It is still fairly wide today, but in the opposite direction. In the year to March 31 2017, 183,570 homes were built in England, the most since 2008. But conversions and changes of use took the total net new supply to 217,350.

All that would be academic if the supply were consistently behind demand, which at first glance does appear to be the case. In recent years, net new supply has been below the 210,000 dwellings that the government estimates will be needed each year from 2014 to 2039 in England. But long-range forecasts on household formation require big assumptions about longevity, fertility, household size and migration, and are subject to large margins of error. In 2008, the government estimated that 280,000 homes would be needed in the UK each year until 2016. In 2012, after the global financial crisis, that had dropped to 231,000 a year.

Not only are the figures a moving target — the statisticians now have to factor in the impact of Brexit on migration, for instance — but they are also some way off the reality. The 2012 forecasts predicted 27.7m households by 2016. Figures from the Office for National Statistics say there are now 27.2m households — around 500,000 fewer than predicted.

As for dwellings, there were 28m in 2014, the last year for which UK-wide figures are available. Even allowing for second homes — around 200,000 in England, down from over 300,000 a decade ago — and those that are temporarily empty, there are clearly more dwellings than there are households. That may be because there is a surplus of housing in some areas, such as old industrial towns. But Ian Mulheirn, director of consulting at Oxford Economics, says that even London and the south-east added more dwellings than households from 2001 to 2015.

One possible explanation for this contradiction is that high prices have suppressed household growth. Households cannot form because 30-year-olds are still living in their parents’ spare bedrooms. The data do not really bear out the anecdotal evidence of the “boomerang generation”. Around a quarter of people aged 20-34 still live in the parental home. In 1996, when house prices were much lower relative to earnings, the proportion was still a fifth.

But many more young people are now renting. A study by the Resolution Foundation in September found that two in five millennials (those born between 1981 and 2000) were living in private rented accommodation at the age of 30. For baby boomers (born 1946 to 1965), the equivalent figure was one in 10. Rented households are still households, but it may be that the individuals who rent together may prefer to have bought individually. The Resolution Foundation also found that, on average, renters were living in less space further from their place of work than would have been the case in the past.

Julie Rugg, a research fellow at the University of York’s Centre for Housing Policy, also cautions that national data on rents conceal wide regional variations. “There are parts of the country with housing oversupply, and where private rents may sit somewhere below social housing rents,” she says. Nevertheless, aggregate rents have risen far more slowly than aggregate prices — suggesting that high prices are about something more than just the supply and demand of homes.

For Toby Lloyd, director of housing policy at Shelter, the housing charity, that something is actually two things, “land and money”. Not just the cheap credit that followed the global financial crisis and pushed up real estate prices in cities around the world, but a whole series of policy interventions over several decades.

In Macmillan’s era, only building societies could extend mortgages, and only then on conservative terms. Liberalisation of credit and tax cuts led to the “Barber boom” of the early 1970s, where wages and prices (including house prices) rose sharply. More relaxing of credit regulation at the start of the 1980s drove an even larger expansion in lending. Mortgage securitisation facilitated further growth, as did the Basel II reforms cutting the risk weights applied to real estate. This made mortgage lending less capital-intensive for banks.

The fuelling of the housing boom

UK housing charts
  1. 1963 Tax on imputed rents scrapped
  2. 1969 Mortgage interest relief at source (Miras) introduced
  3. September 1971 Competition, Credit & Control Act (allows banks to borrow from wholesale market)
  4. October 1980 Housing Act gives council tenants right to buy their homes
  5. 1988 Assured shorthold tenancies introduced, giving landlords more rights
  6. 1996 First buy-to-let mortgages sold
  7. 2000 Miras scrapped
  8. 2007 Collapse of Northern Rock and onset of financial crisis

A similar thing happened in other European countries, notably Spain and Ireland. “After about 2003 [the boom] became more about rates and money,” says Kieran McQuinn, a research professor at the Economic and Social Research Institute in Dublin. “Lots of overseas banks set up shop in Ireland. More of the buying became about investment and retirement. Even business loans were increasingly tied to property.” In the peak year for home construction, 2006, this country of just 4m people built over 90,000 homes — yet prices still rose 11 per cent that year.

The expansion of credit was only one part of what Neal Hudson, a property market analyst, calls the “financialisation of housing”. In 1963, “schedule A” personal income tax, an annual levy on the imputed rent of an owned home, was abolished. Housing profits were exempted from the new capital gains tax. In 1969 came “Miras”, a tax break on mortgage interest that endured until 2000.

Council house sales in the 1980s gave rise to a private rental market, whose development was accelerated by the reform of assured shorthold tenancies and the advent of buy-to-let mortgages in the 1990s. These came with their own advantages: landlords only paid the interest, not principal, and until this year interest costs could be offset against profit in full. More recently came the Help to Buy equity loan scheme, and increased allowances for property within inheritance tax.

Such favourable treatment of property in the legal and tax systems, and the ready availability of cheap credit and government support, did more than just nurture a long house price boom. They created behavioural effects that no econometric house price model could capture.

“People like houses as an investment because they are tangible,” says Greg Davies, a behavioural economist. “They feel they understand them far more than funds or shares or bonds. People assume that property is safe because of its familiarity.”

They may also feel that policymakers are standing behind the market. The government spends £24bn a year on housing benefit, and recently earmarked another £10bn to the Help to Buy scheme. Andrew Lilico, an economist who subscribes to the idea that there is no housing crisis, points to a key Bank of England meeting in August 2005 when, according to the minutes, “the ongoing adjustment in the housing market” was one factor that resulted in a narrow vote to cut rates to 4.5 per cent. “We took a decision to protect those who had paid too much for houses at the expense of those who wanted to buy,” says Mr Lilico.

© Getty

From the mid-19th century until the start of the 1970s, the price of land moved more or less in line with the prices of homes, according to Paul Cheshire, professor of economic geography at the London School of Economics. After that, land prices tended to act as a leveraged play on house prices, with considerable volatility.

This was partly down to credit conditions. But it was also due to changes in the planning regime, especially the 1961 Land Compensation Act. This forced local authorities to pay a price for land that reflects its likely future use, rather than its current value, and gradually curtailed the involvement of local authorities in constructing new housing.

The steep rises in the value of land as it moves through the planning process are a major driver of profits for landowners and housebuilders, who have the legal expertise and financial resources to endure the often lengthy process. But the fact that land with permission to build is so costly, up to half the final selling price in some areas, is a major reason why British houses are small, poor-quality and expensive.

The existence of “green belts” around many conurbations, designed to limit further development, makes it hard for councils to approve new housing in response to local conditions. In the five years to 2017, more homes were built in Barnsley (3,480) a former mining town in South Yorkshire, than were built in booming Cambridge (2,490).

Few would dispute that building more homes is a good idea, even if aggregate data suggest there is no acute shortage. “All of the other problems become easier to solve if there are more houses to start with,” says Mr Lloyd. But few expect that building more homes to buy will reduce prices in anything but the long term — meaning over five years.

The problem for Mr Hammond is that other options are either ineffectual or politically difficult. No politician is going to turn off the credit tap. Appropriating unearned property profits from older homeowners — who in aggregate are under-occupying housing — results in howls of outrage from voters. Reforming the planning system to permanently lower the cost of development land risks incurring the wrath of voters in the leafy, prosperous counties that surround London.

Interventions such as taxing foreigners who buy UK property play well politically but have little impact. The same pattern is evident elsewhere; overseas investors buying property in Hong Kong, Singapore, Vancouver and some Australian cities pay additional stamp duty of up to 15 per cent, but such eye-watering levies have done little to stem the appetite for real estate in those cities.

Perhaps the most promising way to reduce housing costs — if not house prices — is to increase the supply of homes for rent. “The nub of the whole debate is that the market in housing assets is different from the market in housing services,” says Mr Mulheirn. “House prices do not set rents. Landlords charge what the tenant market will bear.” Yet even here, the current administration lacks the pragmatism of past ones.

© AFP

Harold Macmillan encouraged private developers, but also thought nothing of mobilising the resources of the state to ensure that his target of 300,000 homes a year was met. In some of the most open markets in the world, such as Hong Kong and Singapore, the state owns most of the land and up to half the population is housed in government-owned apartments.

Some have lobbied for more state intervention. Last week Sajid Javid, the UK secretary of state for communities and local government, said he would alter the rules so that housing associations are treated as private companies and can borrow more freely. But this is a timid reform compared with the one that many academics, think tanks and even former ministers have advocated: legislating to change planning rules so that the cost of land comes down. Mr Hammond appears unmoved. His comments so far suggest the Budget will offer more of the same: relying on benefits, mortgage subsidies, tweaks to planning rules and increased private-sector construction to improve the affordability of houses to buy. Like previous attempts, it looks doomed to fail.