Member Article

New homes are a key element to economic growth

Housing remains an important part of our economic recovery. Delivery of the target of 230,000 homes per annum until 2030 across the country still remains a challenge, with less than half that annual number being delivered so far.

Successive governments have not met their targets – and as a region we are not doing any better.

A recent report for the Royal Institution of Chartered Surveyors (RICS) by The Cambridge Centre for Planning Research has looked at those factors that are needed to improve performance. So what needs to be done in the region?

The report unequivocally states that: “Bringing more land forward for housing is crucial if availability and affordability are not to worsen”. It then goes on to look at the mechanisms in place that bring forward land for housing development and compares and contrasts those mechanisms being taken successfully in other countries.

‘Green Belt’ swaps are an interesting idea. The report says there is potential for wider use of this mechanism across the country. However, such changes are fiercely opposed by local residents and politicians, the latter not wishing to prejudice their chances for re-election. Essentially it is a readjustment of Green Belt boundaries rather than a loss and it will be a useful tool where the mechanism can be used in low profile.

Putting infrastructure in place prior to development is considered to be an enabling tool but as a grant it can only help once. In my opinion, it would be far better to be looked at as a loan, obtaining repayment on completion of development and sale, thus creating an “evergreen fund”. This is the approach being taken by the North East Local Enterprise Partnership’s Investment Fund.

Putting infrastructure in place prior to development combined with land value capture is similar to the above but puts the risk on the local council to borrow the capital and make payment back through the gain in value. Termed Tax Incremental Finance (TIF), this has been successful in the USA and would be useful for large schemes in buoyant market conditions (such as London).

Land value capture and compensation and incentives is the mechanism known as the Community Infrastructure Levy (CIL), and it is just bedding down in the UK. The Cambridge report’s case study shows that it works best in small rural communities where the local residents see the benefit with better roads, schools and other social infrastructure.

Local authority involvement in land assembly or compulsory purchase by any other name is not attractive because it is extremely complex and time consuming.

The report concludes that in the current economic climate these mechanisms will be a challenge to operate. It also points out that where such measures are successful in other countries there is another tier of government to oversee implementation to ensure that councils exercise their duty to cooperate to achieve development across boundaries.

I have also found that the allocation of land for development is predicated on population growth forecast. But in this region there has been a fall in population over time, caused by the drift of population to the south east following jobs.

We need a more careful assessment of population forecasting to have regard to the economic growth plans for the region and to ensure that an adequate supply of land for housing is provided. We must catch up with the provision of housing and operate from a much more secure base on which to build the regional economy.

This was posted in Bdaily's Members' News section by JK Property Consultants .