The Property Week/Berwin Leighton Paisner Big Debate asked: “How can development be revived?”
Property Week and Berwin Leighton Paisner last month brought together key players from government and the development world to answer the important questions that face the property industry today.
The Big Debate was held at Berwin Leighton Paisner’s CIty of London offices on 23 September, and was chaired by Property Week editor-in-chief Giles Barrie.
Will simplification of the planning process boost development?
The Conservative author of the coalition’s draft National Planning Policy Framework has robustly defended the controversial reforms and blamed the media backlash on a “misunderstanding” of the principles behind sustainable development.
John Howell, MP for Henley and parliamentary private secretary to planning minister Greg Clark, told a property industry gathering in the City that the government’s stated aim of simplifying the planning system is “the right thing to do”.
Howell rejected criticism from campaigners led by the National Trust and the Daily Telegraph that the framework would lead to a development free-for-all.
Howell said: “This is not just about planning as a technical issue. We’re in a situation where waiting lists have doubled, where only one in four young families can find a home and where the estimates put the average age at which you can buy your home for the first time at 37. We’ve had a crisis in homelessness that is politically and socially and morally unacceptable.”
Property Week is informing the consultation on the new planning framework with its Campaign for Sustainable Development, which, since it was launched three weeks ago, has garnered the support of anti-homelessness charity Shelter.
The consultation runs until 17 October, but for all the current furore, Howell pointed out that he set out the basis for reform as long ago as February 2010 in a Conservative discussion paper, Open Source Planning.
Although Howell prefaced his comments with the caveat that he was not speaking on behalf of government, it nonetheless represented the most robust defence of the planning reforms from a senior Conservative politician to date.
“Certainly in the feedback from local communities that I’ve talked to, they recognise that, and that something has to be done,” he said.
The criticism of the draft framework centres on its presumption in favour of sustainable development. Campaigners also fear the coalition will sanction the reforms when many councils do not have local plans.
But Howell said: “The origins of the backlash lie in a misunderstanding of the nature of the presumption in favour of sustainable development. An application is still judged against the local plan.
“An application is not judged against a separate thing called the presumption in favour of sustainable development. Primarily the presumption in favour of sustainable development is a plan-making tool to ensure the plans are put together to reflect sustainable development.
“What happens if there isn’t an up-to-date local plan is exactly the same as what happens now. If you haven’t got a plan now, the only thing you’ve got to judge the application on is national policy and material considerations. That is not open season [for development].”
The proposed planning reforms informed much of the debate, which examined how development can be revived amid economic uncertainty and a continuing scarcity of finance.
Peter Andrew, Taylor Wimpey’s land and planning director and an adviser to the coalition on the draft framework, questioned one of the National Trust’s central demands: that brownfield land should always be developed before greenfield land.
“I’m an advocate of using the right land in the right location for the right development,” said Andrew. “I’m of the belief that using brownfield for development only is not necessarily the right answer. There are many brownfield sites that have high biodiversity and would be better used for that type of use than development. I believe that the National Planning Policy Framework goes some way to helping to deliver this.”
Robert MacGregor, head of real estate at Berwin Leighton Paisner, which hosted the event, said: “What the development community is really looking for is certainty, and within the framework there
is a lot of good stuff. The key is going to be its implementation.”
Even if the draft framework is finally approved, however, MacGregor questioned whether local authorities have the resources to process a new, streamlined planning system, given that town halls have borne the brunt of public spending cuts.
He added: “It would be tremendously helpful if there was also a planning guarantee for a period — 12 months has been talked about — within which developers knew that their application was going
to be determined.”
How can local authorities be encouraged to bring surplus
land to market?
Planning is not the only area in which central and local government can seek to boost sustainable development. The release of public sector land has grown in importance, suggested Richard Blakeway, director for housing at the Greater London Authority (GLA). Blakeway said that this year the GLA has been offering housing sites for procurement at the rate of one a month.
“There’s a lot of public land coming forward, but we haven’t done much — and the public sector as a whole hasn’t done much — in putting land forward as an equity investment.
Often we’ve just preferred the [sale] receipts,” he added. “But we’re now serious about portfolio sites, bringing them forward, possibly later this year, as an equity investment where we can also talk about what product goes on the site.”
Will tax-increment finance smooth the path for development?
The other big public sector lever for development is the widely lauded tax-increment financing (TIF). But there was demonstrable frustration among speakers and audience at the lack of urgency shown by the Treasury in pushing through the required legislation. Liz Peace, the British Property Federation’s chief executive, predicted it would be 2014 before TIF could start in England.
“It’s like saying, the recovery is on hold,” Peace said.
DTZ director Robert Peto questioned the government’s resolve to tackle infrastructure.
“There’s tremendous reluctance to get involved because they say the coffers are empty and yet it’s never been a cheaper time to borrow,” he said.
“If we ringfence this additional money coming into infrastructure in innovative ways, we might be able to encourage development in the right places. I’m not sure the National Planning Policy Framework is addressing the infrastructure issue.”
Roger Madelin, Argent Group’s joint chief executive, urged government to come up with “big solutions”, adding: “This is a crisis. There are 250,000 on housing waiting lists in London. You’ve got to build huge new settlements, otherwise we’re going to be sat here in 10, 20, 30 years’ time with exactly the same problem.”
What will incentivise the private sector to buy and develop?
For Hines director Mark Swetman, the problem in commercial property owes more to a crisis in business confidence. As a result, office take-up in the City has plummeted and, as Deutsche Postbank director Bruce Matthews conceded, the banks are “cherrypicking” the best deals.
Not surprisingly, in a straw poll of the 100 property professionals assembled, most thought it unlikely that development activity, residential or commercial, would pick up by this time next year.
But as Swetman suggested, dwindling supply offers hope.
“With very few [commercial] speculative buildings coming through, ” he said, “what we are going to see are occupiers strategically planning their decisions far more. And that has a benefit to developers and funding institutions.
“Tomorrow’s occupier will actually have to go and prelet larger buildings. One of the reasons why is because they’ve got specific specification requirements that speculative development doesn’t always meet. On the developer’s side we get a prelease — 50%, 80%, 100% — which means we can go and fund it with banks.”
Berwin Leighton Paisner’s MacGregor pointed out that for all the UK’s domestic problems, London at least remains a powerful draw for overseas investors.
“It doesn’t matter whether it’s prime residential or offices,” he added, “there’s an enormous amount of international money looking to invest here.”