Sarah Monk, Christine Whitehead, Connie Tang and Gemma Burgess IFHP - - PowerPoint PPT Presentation

International Review of Land Supply and Planning Systems Sarah Monk, Christine Whitehead, Connie Tang and Gemma Burgess IFHP 100 Centenary Conference Track 5: Housing and Social Justice UCL June 11th 2013

Introduction

• The JRF Housing Market Taskforce identified land supply

as a key issue contributing to housing market volatility and housing affordability problems in England.

• It therefore commissioned research to establish whether

experiences in other countries could contribute to understanding of the constraints on land supply in England

• The research explored whether mechanisms that work in
• ther countries might be introduced to help unlock new

housing supply here

The research

• Long list of 24 countries with data on population, households,

population density, house prices, housing completions, completions per 1,000 population compared

• Selected 11 countries for detailed analysis
• Literature and data search and review
• Advice and critiques from country experts
• Round table of stakeholders to test how far the findings could be

replicated in the English context

• Case study countries:

Why land supply is a vital issue

• Record house price increases in early 2000s yet supply of

new homes did not increase significantly

• This contributed further to affordability problems
• Global financial crisis and resultant recession only

worsened the supply situation

• A review of planning systems and land supply is therefore

timely

Current policy and practice The Coalition government has introduced policies to achieve sustainable growth and address housing supply

• A strong presumption in favour of development
• New Homes Bonus
• Speedier planning system
• Fast tracking of major infrastructure projects
• Duty to co-operate
• Neighbourhood planning
• Land auctions and green belt swaps

How much land do we need?

• Green belt currently covers some 13% of the total land

area of England

• Urban land covers only around 10%
• Planning Minister recently stated that increasing this to

12% would meet all identified future requirements

• This could be done while preserving green belts

The problem: perceived constraints on supply

• Lack of incentives for local authorities to support new

development

• Nature of the housebuilding industry
• Disincentives to make land available in light of potential

future price increases

• Mechanisms for funding and providing infrastructure
• Availability and cost of finance for development
• Risks associated with re-use of urban land
• Market volatility and uncertainty

Figure 1 New housing completions, England

50,000 100,000 150,000 200,000 250,000 300,000 350,000 1969 1972 1975 1978 1981 1984 1987 1990 1992-93 1995-96 1998-99 2001-02 2004-05 2007-08 2010-11 Completions

Household numbers England 1951 – 2021 (projected)

Approaches to land supply

• Only England has purely planning permission background,

although South Korea is moving that way

• All the others used zoning with varying degrees of

discretion/flexibility

• Almost all countries face growth pressures in desirable areas
• Most have constraints to curb urban sprawl and protect

agricultural and other land

• But most did not see planning as a constraint
• Many have low responsiveness of supply to price increases
• OECD data show that GB (not England) is very similar to France

and Germany while higher than the Netherlands.

• Several were more responsive – Australia, NZ, Ireland and

Denmark

Findings - governance

• Most countries have three layers of governance for planning –

national, regional and local

• England outside London is alone in having no regional strategic

layer

• The number of local authorities varies enormously – in France

there are 22 regions, 100 departments and 3,600 communes

• England has no regional layer and 336 local planning authorities
• Smaller local decision making areas are thought to help

community involvement

• Looking to particular instruments we identified five main themes

Findings – Growth management

• Growth management boundaries / urban growth limits are used

by most countries to prevent urban sprawl

• To ensure land and house price stability the limit is revisited

regularly

• However any limit will affect land prices both within and outside

the boundary

• There are some examples of successful urban containment and

relative price stability over time – Portland, Oregon, at least until recently

• Successful management requires planners to be pro-active, not

reactive, in monitoring and adjusting land supply

Findings – Land assembly

• In many countries local authorities play an active role in land

assembly, often using compulsory purchase powers

• Germany – address fragmented land ownership by

assembling the land so the increase in value following development is shared proportionately among the original

• wners after repaying the local authority for infrastructure

provision

• Netherlands – local authorities have traditionally purchased

land at existing use value, provided infrastructure and services, and sold it to developers at a price that at least recovered costs

Findings – Infrastructure provision

• Several countries have mechanisms to ensure infrastructure is

in place prior to planned development

• France – tax on employment in larger towns and cities which is

hypothecated to transport infrastructure

• Netherlands – early provision through municipal land purchase

and sale

• Germany - land readjustment processes also provide for

infrastructure

Findings – Compensation and incentives

• Most compensation and incentive mechanisms involve

increased benefits to local authorities

• Switzerland – cantons retain the tax revenues that accrue to

new development – as this is their main source of revenue it acts as an incentive for further development

• Tax Increment Financing – hypothecating future local tax

revenues has been used extensively in the USA to incentivise inner city regeneration schemes

• Density bonuses are used in a number of countries to

compensate developers for potential loss of income from providing affordable housing on site.

• In the Netherlands there is provision to compensate individuals,

but it is not widely used

Findings –Land value capture

• Underpinning many of these mechanisms are forms of land

value capture (in zoning systems) or planning gain (England)

• These include infrastructure charges, inclusionary zoning to

provide affordable housing, and land value taxation.

• Infrastructure and services, including affordable housing, can
• ften be funded from the increase in land values associated with

development

• But works best in periods of economic growth – becomes

difficult when land values are falling

Implications for England

• Most of the mechanisms identified have their equivalent in

England

• Could they be used more widely or brought together more

effectively and on a sufficient scale to ensure a larger and more regular flow of land to meet current and future housing needs? Three interlinked core issues:

• How to provide sufficient incentives to bring land forward
• How to enable growth without urban sprawl
• How to provide infrastructure to support new housing

development

Incentives to bring land forward

• Land assembly and land readjustment (including compulsory

purchase) are powerful tools to enable development – and help stabilise expectations about future land prices

• Incentives to enable development work best where the local

authority retains local taxes which are spent on local services – and possibly where the authority is small enough for the community to appreciate the benefits of growth

• In England neighbourhood planning with community buy-in plus

the New Homes Bonus may help to incentivise development

• So may the strategic use of public land

Growth management

• The green belt has been successful in preventing urban sprawl

but at a price

• Evidence from other countries suggests it should be operated

more flexibly, with boundaries revisited regularly

• Planners should monitor land supply and respond to price

changes by adjusting potential supply

Infrastructure provision

• Provision in advance of, or alongside, development is essential
• Funding can come from land value uplift, taxation (including

additional tax revenues from new development) and debt finance paid for from a growing tax base

• A rolling infrastructure fund has clear potential, provided an

initial source is available and the returns are recycled for further infrastructure investment

• It can also be used counter-cyclically, enabling development to

go ahead during the downturn and be repaid in the upturn

• Cambridge provides a case study of how to bring these different

elements together pro-actively

• Other areas may find it harder, but it is proof that attitudes and

incentives can change

Conclusions

• There are examples of effective use of the range of instruments

available – Cambridge; Milton Keynes

• Some government initiatives are in line with international

experience

• But still need a pro-development cultural change based on a

growth agenda

• A more stable economy and a more proactive approach to land

assembly