CAPITAL GAINS:

A BETTER LAND ASSEMBLY MODEL FOR

2000

1950

1900

Research commissioned by the Authority CONTENTS

- EXECUTIVE SUMMARY I -French ZAC’s - - -Introduction -Incentivising land assembly - - -Methodology -German urban development measures - - -Why land assembly matters for house -Resourcing land assembly - building -German municipal independence - - -What London can learn from it’s past -French transport charge - - -What London can learn from elsewhere -American development commissions - - -Implementing alternative measures -Lessons for London - -The advantages a better model would bring 4.HOW ALTERNATIVE MEASURES - -Land assembly action list COULD BE IMPLEMENTED 51 - -Planning for strategic housing - INTRODUCTION 1 -Acquiring land - - -The brief -The impact of a better land assembly - -Methodology model - -Incentivising land assembly - -Resourcing land assembly 1.WHY LAND ASSEMBLY MATTERS FOR HOUSE 5.THE ADVANTAGES OF A BUILDING 5 BETTER MODEL 67 - - -Building more affordable homes -The test cases FRONT COVER: - - The illustration shows how the -Sharing land value uplift -Potential impacts - - built-up area of the Capital has -Recognising environmental constraints -Testing the impacts - - evolved over a century (Source -Finding enough suitable sites for new -Benefits of the recommendations URBED: City of Villages, GLA, 2002) homes - - -The advantages of a better model -The realities of land economics - -The challenges of land assembly CASE STUDIES - This report has been produced -London for the GLA by Dr Nicholas Falk - 2.WHAT LONDON CAN LEARN 15 - 20 (BA, MBA, Hon FRIBA, Hon MRTPI, FRSA) FROM IT’S PAST - - -King’s Cross 21 drawing on support from URBED, -Development frameworks (19th Century) - Housing Futures Ltd, Dentons, and - -London Docklands 22 -Piecemeal development (1930s) - Gerald Eve. - -International -New Towns (1950s-90s) - - -Vathorst, Amersfoort 44 -Comprehensive development - February 2018 - -ZAC Claude Bernard, Paris 45 -Public-led partnerships (1980-2008) - - -Pearl District, Portland 46 -The present situation - - -Toronto 47 Contact: Nicholas Falk -Lessons from London’s past - -Rieselfeld, Freiburg 48 [email protected] 3.WHAT LONDON CAN LEARN APPENDICES FROM ELSEWHERE 25 - - -A: Barriers to speedier housing -Planning for strategic housing - delivery 78 -Dutch VINEX housing policy - URBED (Urbanism Environment and - -B: How London evolved 82 -German urban development measures - Design) Ltd, Fifth Floor, 10 Little Lever - -C: Powers to assemble land in Street, Manchester, M1 1HR -French spatial planning Germany, France, and the Netherlands 88 - - -US urban renewal areas -D: Land assembly test cases 92 - The URBED Trust, The Building Centre, -Acquiring land - 26 Store Street, London, WC1E 7BT -The Dutch ‘Building Rights’ model EXECUTIVE SUMMARY CAPITAL GAINS: A BETTER LAND ASSEMBLY MODEL FOR LONDON

INTRODUCTION METHODOLOGY This report brings together the evidence The research team identified an initial and makes recommendations for changing range of challenges in its submission the way land is assembled in London. It which provided the focus for selecting and responds to the commission from the GLA analysing relevant case studies, including: to address the following basic research questions over a period of four months: • Allocating suitable land for affordable housing; • With reference to international • Achieving quality development; examples, what conditions would best support land assembly for house- • Changing planning practice; building in London? • Mobilising people and funding; • Which specific statutory land assembly • Achieving a cultural step change; and models could enable an increase in and acceleration of the delivery of homes in • Building partnerships that work. London? • How could these specific statutory land assembly models be implemented in To help ensure the results would be robust, London? a Research Advisory Group was set up with the aim of testing our conclusions with a range of other experts from across the The report outlines a range of models, sector, including academics and the RICS. drawing on both international good The team undertook the commission in practice and London’s own past, and four phases: proposes improvements that could be made in the short term, as well as those Agreeing what may need to change requiring changes to statutory framework. An initial meeting considered conditions It is entitled Capital Gains because it deals that might need to change to support an with the particular challenges facing the increase in house-building in London, nation’s capital, and because it is aimed drawing on a review of previous research. at harnessing land values for the city’s Some thirteen barriers were identified that benefit. can arise in assembling land. Fourteen The research team has been led by Dr possible case studies were identified, and Nicholas Falk from URBED, supported by were narrowed down to the places from legal experts at Dentons and surveyors which the most could be learned. at Gerald Eve with particular experience of compulsory purchase, the network of Assembling the evidence metropolitan regions and areas, plus inputs Case studies were prepared of housing from Pete Redman at Housing Futures Ltd. developments in four countries.

I • The French case study is ZAC Claude into individual plots. Finally, as well as designation of a New Towns and the Bernard in a disadvantaged part of North WHY LAND ASSEMBLY MATTERS owners who prefer to ‘hold out’ and London Green Belt enabled damaged land East Paris plus an example from the fast- FOR HOUSE-BUILDING speculate, there is a loss of the skills and to be mobilised in a strategic and planned growing city of Montpellier and Paris Delivery rates for housing have fallen far techniques that used to be available in both way. Comprehensive Development Areas Rive Gauche, where a railway line has behind demand for decades, with common the public and private sectors to assemble enabled sites in different ownerships to been built over to create a new district criticisms including restrictive planning land. be rapidly assembled, as did the setting policies, limited resources for planning up of the development corporation for the • The German case study is a sustainable larger schemes, a shortage of developers Utilities and transport undertakings can London Docklands. urban extension to the historic university willing to take complex schemes forward, be hard to engage because their priorities city of Freiburg plus an example of land and an acute shortage of experienced staff are not aligned with the need to deliver Today public-private partnerships are used pooling in Frankfurt. in the boroughs. For London the assembly more homes, making it hard to secure the to achieve something similar. But whereas • The Dutch case study is a new of land in multiple ownership is now seen ‘marriage value’ from putting adjoining London’s footprint grew physically by 60% settlement on the edge of the mid-sized as one of the main obstacles to doubling land together. Compulsory purchase, or the in the last hundred years, it has expanded town of Amersfoort where land has been house-building rates. threat of it, is therefore often essential, but very little in the last thirty. Successes such pooled plus an example from Amsterdam local authorities may be wary of exercising as the London Olympics and subsequent of creating new housing sites in the Land assembly to deliver housing is their powers because of a lack of capacity development in East London were at a high River Ij. inherently complex and time consuming as or experience as well as financial reasons. cost in terms of land assembly, and are it may involve any or all of: • The North American case study is a The nervousness about compulsory exceptional. Redevelopment of Council regeneration area in a former industrial purchase is deeply embedded in strategic estates is important but difficult. Case area in Portland Oregon plus the a. Unifying multiple interests including planning for housing with a general studies of the redevelopment of Croydon, example of Toronto in Canada. adjoining land, leasehold and other reluctance to incur the costs and delays the Docklands and King’s Cross illustrate interests affecting the title of the land; involved. possible models for mobilising strategic • The report also draws on examples land. of planned intensification from Hong b. Removing ransom strips and other Kong and Denmark where housing and impediments such as rights of way; transport has been combined. c. Obtaining agreements with statutory WHAT LONDON CAN LEARN FROM undertakers, including highways and ITS PAST WHAT LONDON CAN LEARN FROM other agencies; While land assembly today presents greater ELSEWHERE Because the UK has particular cultural and challenges than in the past, useful lessons d. Remediating damaged land; Continental cities that have kept up house- legal traditions, the team also drew heavily can be learned from when London has e. Providing infrastructure to land which building rates and suffered less from on what London could learn from its own grown fastest: a combination of leasehold otherwise would and could not come the effects of house-price inflation have past. A literature review has summarised development and public infrastructure forward; adopted much more proactive approaches the lessons from periods when London investment were responsible for the great to land assembly. grew fastest as well as good practice from f. Relocating non-compliant uses that private development ‘surges’ that have would conflict with housing; recent experience. taken place, for example in the early Planning for strategic housing g. Freeing up of underutilised land that 19th century or the 1930s. The use of the Drawing the lessons does not make good use of its location, Landlord and Tenant Act enables private Strategic planning is used to join transport and development together in Northern Dentons drew up a list of eighteen possible for example by taking advantage of landowners to take a long-term perspective Europe. Municipalities develop strategic measures that could address the various accessibility or amenity, but which may and enforce covenants thus attracting currently be occupied or operational; spatial plans that specify where growth challenges and that were capable of institutional investment. or regeneration should and should not implementation both in the short and h. Investing in advance of planning The high rate of building in the 1930s is take place: thus the French differentiate longer terms. The measures broke down permission being granted and certainty sometimes attributed to fewer planning between ‘urbanisme’ and ‘L’aménagement into four topics: planning for strategic that the development can proceed. controls, but just as importantly included du territoire’, that is between development housing; acquiring land; incentivising land the availability of cheap land and finance, management and spatial or regional assembly; and resourcing land assembly. The review of barriers to land assembly and simple-to-build ‘pattern book’ houses. planning. Transport is integral, not kept in The most promising ones were selected identified factors that are inherent in New arterial roads and extensions to the silos, as case studies of Paris and Freiburg and worked up. the sites, such as contamination and London Underground - aimed at tackling illustrate. unpredictable costs and values, as well as unemployment and the Great Depression Testing the recommendations factors associated with ownership, such as - opened up large areas of former Local leadership is critical. While guidelines Two very different ‘test cases’ have been absentee owners, and over-expectations agricultural land. may be set nationally, as in with the VINEX examined to see how far the possible due to an inflated ‘hope value’. Land housing schemes in the Netherlands, measures could achieve the GLA’s aims and is often occupied, which requires After the Second World War, and the Town agreement is reached at a regional or what benefits or advantages could secure compensation or relocation. Ownership and Country Planning Act, public measures metropolitan level to link transport and the support of the different stakeholders. can be fragmented, and land value across such as the use of Comprehensive development, rather than relying on central the entire site may not split proportionately Development Areas (CDAs) and the government. Priorities are resolved locally,

II III thanks to the greater devolution of powers development skills. If London were to where development will occur and when while offsetting the costs of providing local and resources to local authorities. follow the Dutch Building Rights or ‘First infrastructure investment will be made. infrastructure. Choice’ model, developers would recoup The main message from Portland Oregon Local infrastructure can be funded out the proportion of the site’s value or area or Toronto in Canada is that cities benefit of land value uplift. Spatial plans provide that they put in, with the sanction that from local private developers with the IMPLEMENTING ALTERNATIVE the certainty that investors, both public the municipality could undertake the plan capacity and commitment to support their and private, are looking for. The German MEASURES it has drawn up, which would speed up cities, assisted by tax incentives at a State Much can be achieved by making better concept of ‘poorly or under-utilised cooperation. level. Agreement is secured through skilled land’ is used to identify locations for use of existing powers, but there are also negotiation over development rights and some measures that require government planned intensification as a prelude to The availability of ‘patient capital’ for densities by the municipalities, aided by applying ‘Urban Development Measures’ installing local infrastructure, such as roads support or even legislative change. Our ten public development agencies that engage recommendations are structured around to recover the costs of infrastructure from and utilities is a further strong incentive for private sector support for the overall plan. development. Something similar applies in collaboration, as it has been in London in the four themes of the report, and some of the Netherlands, where locations have been the past. Larger European cities such as Paris or these are already being implemented. They classified in terms of their connectivity. Amsterdam intervene more directly in land, start with the fundamental proposal of Incentivising land assembly and employ some form of development introducing Land Assembly Zones (LAZ) to Higher quality standards are achieved, make the whole process easier and faster. Land values are generally lower in the agency that can act independently from thanks to greater municipal power. (See next page for Land Assembly Action Netherlands and Germany than in the UK the local authorities that set it up. They Though planning powers are weaker in List). and housing is much more affordable than have long benefitted from the popularity of North America, spatial sub-regional plans in London. Lower house prices and hence living near the city centres, and have had also have greater force in progressive land values are helped by faster rates of less competition from the suburbs. Hence cities such as Portland Oregon. These are development, the availability of suitable even with lower property values housing THE ADVANTAGES A BETTER backed by tax incentives and public private land with planning permission on which development can still be viable. MODEL WOULD BRING partnerships that mobilise the support of to build, and a wider variety of house- Gerald Eve examined two strategic private landowners and investors behind Smaller cities such as Montpellier, builders, which are mutually reinforcing. opportunities (one in West and another in what the municipality is planning. North with a population the size of a London East London) to assess the overall impact of American cities, as well as Hong Kong, use A compromise is secured over who gets Borough, tend to set up joint ventures with our recommendations in terms of financial density guidelines, or Floor Area Ratios, what from development. Land prices are landowners or private developers. Their considerations, delivery and risks. to negotiate community benefits, such ‘frozen’ on ‘under used or poorly used land’ companies have full-time staff dedicated as affordable homes, in return for greater designated for development under the to implementing projects that outlive any Their modelling suggests that on former private development. Urban Renewal Areas German system. They have also been kept political change, and who can cross the industrial sites benefitting from investment focus the benefits of tax incentives on down in the Netherlands by cities being boundaries between different authorities, in improved transport services housing priority areas, thus incentivising private given the power to implement an agreed and supplement the skills and resources of yield could increase between 20 and 30% investment where it is most needed plan under the ‘building rights’ or ‘first the private sector. with an overall saving in development choice’ model. In other words, the rights times of five years, while on the edge of a Acquiring land State investment banks supply long-term of the private owner are constrained by the metropolitan town centre the yield may loans at lower interest rates than a private Researchers agree that planning is much wider public interest. increase between 5 and 10% with a time developer would have to pay, which less adversarial in most of Continental saving of two to three years. helps make complex schemes viable, for Europe than in the UK, as a stronger The local authority or a special purpose example in pooling land from different In conclusion, our report shows the general tradition of collaboration between vehicle set up as a partnership with private owners or developers. The successes benefits from adopting a better model the stakeholders for historic reasons developers, plays a more proactive role in in building affordable and sustainable for land assembly on sites large and small is supported by government planning enabling development on complex sites, housing are achieved by ‘winning teams’ include: policies, such as the VINEX policy in the with landowners getting a share of the working together over many years (more Netherlands. Land pooling, as in cities uplift in development value. Note, with than a decade) to create sustainable new such as Amersfoort or Frankfurt, helps faster rates of development speculators • building extra homes faster lose out, but genuine investors may well neighbourhoods. overcome the barriers to complex schemes • reducing costs and risks to investors and do better, as financing costs will be lower. where the local authority does not already Instead of public funds being spread house-builders Portland Oregon provides a good model for own the land. Joint ventures or municipally thinly and dependant on bids to central smart growth (see page 45). • joining up transport and development, owned development companies reduce government, investment is concentrated reliance on private developers to take the in places with the most growth potential. • creating stronger communities, Resourcing land assembly lead. More funding is raised locally thanks to • tackling ‘free-riders’, and Effective partnerships between the municipalities being able to identify and Joint venture companies can also align • diversifying development and investor public and private sectors work best mobilise the necessary land. Compensation or adjust the interests of different land partners. where they are supported by national reflects a balance between public interest owners by providing a dedicated project policies with long lives so investors know and the interest of the original owner, management team with planning and

IV V LAND ASSEMBLY ACTION LIST

1. Introduce a new planning 3. Identify a lead body with 6. ‘Use CPO land or lose it’. 9. Introduce a planning application designation termed ‘Land responsibility for land assembly in . The GLA or local authority should hold moratorium. Assembly Zone’ (LAZ). each Land Assembly Zone. land acquired pursuant to a CPO in a . This would enable district councils to land bank where development does not . This will provide the focus and . This would normally be the local defer the consideration of planning occur. incentive to encourage land owners authority. applications in a designated Land to self-assemble by resolving to use Assembly Plan for one or more years, compulsory powers in priority areas for depending on the complexities. It 7. Introduce statutory land pooling. housing development or intensification. 4. Allow confirmation of CPOs ahead would necessitate an amendment to . Develop a contractual basis for land the Town and Country Planning Act of planning consent. pooling and introduce a statutory 1990. . Guidance should in the longer term model for land pooling. Compensation 2. Require Land Assembly Zone allow for the confirmation of CPOs paid to landowners should include designations to be accompanied outside designations ahead of planning part of the marriage value of the 10. Create a multi-disciplinary team consent in the interests of ‘good by an ‘in principle’ commitment to assembled site, perhaps with planning’. to support the boroughs and exercise compulsory acquisition graduations depending on the time developers in tackling strategic powers. at which participants contribute their and difficult sites. . In the longer-term, the process for land. This will require changes to the 5. Allow Mayoral confirmation of . This would be supported by the CPOs relating to the designation land Land Compensation Act 1961 and CPO devolution of additional finance to should be streamlined by removing London local authority CPOs. Guidance. provide a long-term London revolving the scope for public inquiries for . CPO confirmation powers should be fund to support land assembly, and can compulsory purchase orders in respect delegated to the GLA for London for start right away. of LAZ land. CPOs not promoted by the GLA within 8. Freeze land values in LAZs. LAZs. Amendments would be needed . In any land pooling model, the land to the Acquisition of Land Act 1981, values should be set at the market and the CPO Guidance. value on the date of designation for the purposes of fixing the share of the pool. A freeze on land values from the point that a draft designation is published would require changes to the Land Compensation Act 1961.

VI VII INTRODUCTION

This report brings together the evidence themes and specifically in relation to: for changing the way land is assembled, predominantly for major or strategic • Planning policy and wider legislation development projects, to build the housing (including application of the European London needs on appropriate land where Convention on Human Rights and appeal there is a multiplicity of owners, and other processes) barriers. It is entitled Capital Gains because • Resources (including funding) and skills it deals with the particular challenges facing the nation’s capital, and because it • Cultural context is aimed at harnessing land values for the • Strategic planning city’s benefit. • Public sector land use and private sector The report draws on international models partnership? of land assembly to propose ways of increasing the supply of housing in London 2. Which specific statutory land assembly in locations that would be sustainable. models could enable an increase in and It outlines a range of models, drawing on both international good practice acceleration of the delivery of homes in and London’s own past, and proposes London? These models should deliver improvements that could be made in the homes that: short term, as well as those requiring changes to the statutory framework. • Are located on sites that were previously of complex or fragmented land The report has been commissioned by the ownership (including public land) GLA and the team has been guided by a steering group of officers and supported • Exceed the housing provision that by a research advisory group of different could have been achieved without land interests (see Page 15). The research team assembly has been led by consultants from URBED • Are deliverable within a reasonable and with Housing Futures Ltd, supported timeframe by legal experts at Dentons and surveyors • Secure a land transfer price that will at Gerald Eve with particular experience enable a viable and deliverable scheme of compulsory purchase, the network of • Comply with the London Plan by metropolitan regions and areas. being well-designed, high quality and environmentally-sustainable THE BRIEF • Are located within well-connected neighbourhoods and support The commission from the GLA was to employment. address the following research questions: 1. With reference to international examples, what conditions would best 3. How could these specific statutory support land assembly for house- land assembly models be implemented building in London under a series of in London? What would be the risks

1 associated with these, and what are the that can arise in assembling land. Fourteen Testing the recommendations possible case studies were identified RESEARCH TEAM implications for: Two different ‘test cases’ were put forward with the aim of selecting three or four by the GLA. These were analysed by Gerald • Dr Nicholas Falk, Sangeetha Banner, contrasting examples. • Planning policy and wider legislation Eve with support from Housing Futures to Helen Berg - URBED Ltd

(including application of the European see how far the possible measures could • Pete Redman - Housing Futures Ltd Convention on Human Rights and appeal Assembling the evidence achieve the GLA’s aims and what the processes). Specific consideration • Stephen Ashworth and Katie Scuoler - Case studies were prepared for four main benefits or ‘capital gains’ would be that should be given to the legislative powers Dentons UKMEA LLP countries, guided by practitioners working would influence and secure the support of that would be required to implement • Robert Fourt - Gerald Eve within each setting. The case studies had all the different stakeholders. these models, and whether this would require devolution of existing national been visited, in some cases several times. • Henk Bouwman - METREX The report is structured around four main powers to London. topics: • Jonah Rudlin • Resources (including funding) and skills • The French case study was ZAC Claude Bernard in a disadvantaged part of North • Strategic planning 1. Planning for strategic housing East Paris supplemented by an example from the fast-growing city of Montpellier and how land requiring assembly in RESEARCH STEERING GROUP all its different forms can be identified 4. How could these land assembly models • The German case study was a for strategic development and • Philippa Bancroft, Scott Bryant James increase and accelerate delivery on two sustainable urban extension in the intensification Clark, Jamie Ratcliff, GLA agreed sites in London? historic city of Freiburg supplemented by an example from Frankfurt 2. Acquiring land, • The Dutch case study was a new suburb including the powers and agencies to RESEARCH ADVISORY GROUP METHODOLOGY to the mid-sized town of Amersfoort supplemented by an example from overcome multiple different interests The research team identified an initial • Gareth Blacker - HCA Amsterdam range of challenges in its submission 3. Incentivising land assembly • Jonathan Bower - Womble Bond which provided the focus for selecting and • The North American example was by recognising the choices of land Dickinson analysing case studies selected for their Portland Oregon supplemented by the owners, and other parties with interests, relevance. The challenges included: example of Toronto in Canada. • Matthew Essex - LB Redbridge through shared equity mechanisms • The report also draws on examples from which can include how land value and • Rose Grayston - Shelter Hong Kong and Denmark for evidence • Allocating suitable land for affordable future returns are apportioned and the • Stephen Hill - C20 futureplanners housing on planned intensification. inevitable tension between the market • Tony Mulhall - RICS • Achieving quality development and wider planning and social objectives • Sarah Payne - University of Sheffield • Changing planning practice Drawing the lessons 4. Resourcing land assembly • Darren Richards, Jeremy Skinner - GLA The team thought it important to consider • Mobilising people and funding to secure collaboration and overcome what London could learn from its own • Achieving a cultural step change local resistance both public and private. past when most housing had been built. We would also like to thank the many • Building partnerships that work. Case studies have been drawn up of how people we have consulted including comprehensive development was achieved The conclusions from the case studies are Professor Michael Hebbert, David Rudlin, in Croydon, and later in the Docklands and To help ensure the results would be robust, summarised in the sections that follow. Sarah Yates and Richard Simmons and Tony King’s Cross. a Research Advisory Group was set up. Travers on how London has evolved. Dentons drew up a list of eighteen possible The team undertook the commission in We have drawn on many sources for the measures that could address the various four phases: Dutch, French and German case studies, challenges and that were capable of and would particularly like to thank Wulf

implementation both in the short and Daseking, Paul Lecroart, Tom de Mann, Agreeing what may need to change longer terms. Trudy de Mooy, Griel van der Viles, Han A Scoping Paper from URBED summarised The measures break down into four topics: Lorzing, Kal Vockler, as well as Troy Hayes the conditions that might need to change, planning for strategic housing; acquiring for Portland Oregon. drawing on a review of previous research land; incentivising land assembly; and into international lessons on house- resourcing land assembly. building as well as a review of the literature on housebuilding in London. An analysis This structure was then used in drawing by Dentons from the firm’s experience lessons from abroad. identified some thirteen different barriers

2 3 1 WHY LAND ASSEMBLY MATTERS FOR HOUSE-BUILDING

1. “Land assembly” generally has to be the land itself, such as contamination, to undertaken before major house building problems with ownership, such as foreign can begin, and has been identified as the ownership or unauthorised occupiers. Note most significant obstacle to substantially that not all of the issues can be addressed increasing housing output in London.1 Land – for some, the evidence in the case studies assembly to deliver housing is inherently does not identify a solution. complex and time consuming as it may involve any or all of: • Messy title / unknown foreign interests • Fragmented Land Ownership • Unifying multiple interests including adjoining land, leasehold and others • Problem sites: eg. contamination affecting the title of the land; • Sites which are too small • Removing ransom strips and other • Ransomed sites impediments such as rights of way; • Unequal sites • Obtaining agreements with statutory undertakers, including highways and • Over expectations (“hope” versus other agencies; existing use value) • Remediating damaged land; • Range of values • Providing infrastructure to land which • Uncertain CPO powers (division between otherwise would and could not come acquiring and confirming authority) forward; • Unpredictable costs and values • Relocating non-compliant uses that • Lazy landowner / speculation would conflict with housing; • Occupied land • Freeing up underutilised land that does not make good use of its location, • Loss of skills and techniques for example by taking advantage of accessibility or amenity, but which may currently be occupied or operational; 3. In this section we summarise what is known from previous research on factors such • Investing in advance of planning permission being granted and certainty as planning policy, resources, culture and that the development can proceed. organisation, and basic land economics that A better model for land assembly can slow down the rate of housing growth is key to achieving the objectives and regeneration. of building more homes in London. 2. Dentons used their considerable experience It is also vital to meeting the to identify some thirteen different barriers 4. The main challenges for development are wider concerns of affordability to land assembly for which answers are usefully summarised in the introduction to and quality, sharing in land value required. They range from problems with a recent book from the New Economics uplift, recognising environmental Foundation on land economics as well constraints, finding enough suitable 1 See for example the report of the Homes for as earlier research into experience with sites, and dealing with the realities Londoners Board June 2017 and references in land values, and so will not be repeated of land economics. the draft London Housing Strategy, 2017

5 here.2 The factors most relevant to London made both renting and buying increasingly include escalating unaffordability and unaffordable to most, which has reinforced 1 House building in London since 1961 Housebuilding rates have lagged behind demand and inflated land values unfulfilled needs, sharing in land value inequalities in wealth and incomes. Most of uplift, recognising Green Belt and other the evidence is set out in the draft London environmental constraints, and finding Housing Strategy, as well as reports from enough good sites for new homes within organisations like Shelter.6 London’s boundaries, as well as dealing with 8. Essentially London’s population is £450,000 50,000 the realities of land economics. expanding, especially in outer London, and £400,000 45,000 5. Appendix A summarises the findings of Housing in London 2017 highlighted the

research relating to the debates on the need to double the rate of house building £350,000 40,000 7

impact of planning policies, the resources in order to keep pace with job creation. 35,000 Houses built £300,000 to execute larger schemes, resistance to Since 2000, the ratio of house prices to 30,000 development, and the skills and capacity to gross average earnings has effectively £250,000 build better neighbourhoods. doubled, stoking the rise in land values, 25,000

Housing price Housing £200,000 while private housebuilding until last year 20,000 has been relatively constant. Despite, and £150,000 BUILDING MORE AFFORDABLE possibly because of a growth in ‘buy to 15,000 £100,000 HOMES let’, private rents have also significantly 10,000 increased. (Exhibit 1) 6. The draft London Housing Strategy sets £50,000 5,000 out that the capital’s housing crisis has its 9. As a result, it is increasingly difficult for origins in the failure over decades to build Londoners to save up the deposit to get the homes that London needs. Though sites on the ‘housing ladder’. London’s future 1961 1966 1969 1973 1977 1981 1986 1990 1993 1997 2001 2006 2009 2013 for 650,000 homes over the next ten years prosperity is particularly threatened as have been identified in the Strategic Land businesses locate where living costs are Availability Assessment for London, and most reasonable, and London will have to there is a pipeline of 278,000 new homes compete with other financial, business and The draft London Housing Strategy sets out plans for: (2015/6) growing year by year, output has educational centres in the aftermath of • Achieving clear delivery targets for councils, including on small sites. The Mayor’s long- remained stubbornly around 20,000 new Brexit. term strategic target is for 50% of new homes to be affordable homes a year (a third of the level in the • Promoting better use of land, including through co-location and a more intensive use of 10. The current level of need has been 1930’s). However 2015 was an exception land (for example building over single storey commercial buildings) identified as some 66,000 new homes a with 24,000 completions.3 Larger sites year of which 65% need to be affordable.8 • Supporting higher-density development, in and around town centres and transport links, (over 100 units) are being developed at a including in Outer London and on small sites The availability of land is now regarded third of the rate of smaller sites.4 80% of the as the main obstacle in London, with an • Continuing to work with public sector landowners to bring forward sites for housing (and new homes developed in London are only independent review for the Mayor’s Homes using the Mayor’s own land to do the same) affordable to 8% of Londoners.5 for Londoners Board recommending that • Coordinating development around key sites and exercising the Mayor’s compulsory 7. Land assembly, the use of land and land priority be given to assembling disparate purchase powers where necessary, and supporting LAs to do the same values, are all contested areas, where 9 public and private sector sites. • Targeting public investment to unlock sites for delivery, de-risk housing delivery and successive British governments have bring forward affordable homes 11. Though house-builders have rejected changed the ground rules, reversing the criticisms that they are holding back on • Diversifying the house-building sector and ensuring that there are enough Londoners actions of their predecessors. This has building on land they own, there is some with the right skills to construct these homes • Extending and refocusing City Hall staffing resources and using an initial £250m revolving 2 Ed. Josh Ryan-Collins, Toby Lloyd and Laurie 6 Peter Jefferys and Toby Lloyd, Shelter, New Civ- Macfarlane, Rethinking the Economics of Land ic Housebuilding: rediscovering our tradition of fund to acquire and prepare land for housing and Housing, Zed Books, 2017 Ed. Owen Con- building beautiful and affordable homes, March nellan, Land Value Taxation in Britain: experi- 2017 • Investing £3.15bn through the Mayor’s Affordable Housing Programme to support ence and opportunities, Lincoln Institute of Land 7 GLA, Housing in London, The evidence base for delivery of 90,000 housing starts by March 2021 Policy, 2004 the Mayor’s Housing Strategy, February 2017 3 GLA Housing in London: the evidence base for 8 GLA, Strategic Housing Market Assessment for the Mayor’s Housing Strategy, February 2017 London, 2017 • Considering the scope to use new funding models, including land value capture, to fund 4 Source www.Moliorlondon.com 9 See short report on New Delivery Models from future transport schemes 5 GLA, Draft London Housing Strategy, 2017 the Homes for Londoners Board, 13th June 2017

6 7 evidence that house builders induce low development rights auction model, or terraced housing often resist what they see FINDING ENOUGH SUITABLE ‘absorption rates’ through higher prices; DRAM, which aims to promote voluntary SITES FOR NEW HOMES as inappropriate ‘town cramming’. arguments about viability may be used to assembly of land interests. This is 18. While most commentators agree London 22. The main reasons given for moving are avoid building affordable homes that would influenced by examples such as Hong needs to double the rate of house- better neighbourhoods or schools and a cut profits or affect sales.10 Kong, where the metro railway system has building, this calls for a different model larger home.20 The London Plan is therefore been funded from associated property from that of the volume house-builders concerned to achieve higher design development14, and by German and Dutch SHARING LAND VALUE UPLIFT that have dominated supply in recent standards for both the housing and the models. surrounding neighbourhood. 12. Many delays in development can be years. As building capacity is limited, the

attributed to disagreements over what development of land for housing needs Open space and jobs both need protection: land is worth and who should pay for RECOGNISING ENVIRONMENTAL to be prioritised by local authorities, as what community benefit or planning gain. CONSTRAINTS reviews, ranging from Lyons to Morton, 23. Objections are generally made to Numerous studies have identified that 15. London is built to relatively low densities have highlighted.18 developments that take away open space overall compared with other similar sized most of the uplift in values that results 19. We have identified four main principles without replacing it, or that threaten cities, and enjoys high levels of green space from public investment in infrastructure, based on a review of research on this existing jobs. There is a recognised need in its centre.15 But unlike most Continental and/or planning consents, accrues to the subject (see Appendix A): to protect public spaces, including for landowner.11 cities it is tightly constrained on the edge recreation, community events and creative by an extensive Green Belt. This was The sites have to be in the right location: enterprise, by building on brownfield 13. A growing number of organisations are designated in 1947 to stop urban sprawl, land first.21 Competing demands for land calling for a more equal sharing of this 20. Locations near public transport, both along with other objectives such as access therefore need to be balanced effectively in uplift between the public and private existing and proposed, are vital to for leisure uses. order to meet Londoners’ needs, including sector, for example to deliver infrastructure minimising the extra congestion and protecting businesses and jobs. improvements or affordable housing.12 16. The Mayor has set out his commitment pollution that would be caused if all

Winston Churchill, in a much quoted speech to protect the Green Belt and to promote trips were by car. Locations need to be Planning should shape land values, not the as far back as 1909, attacked ‘the unearned intensification of existing built-up accessible to jobs and services if they are reverse: increment’.13 This needs to be carefully areas, including in and around town not to arouse excessive levels of opposition, balanced with the fact that land value centres and in Outer London. Hence or large enough to support a balanced and There is no simple solution to this, as capture could result in land not coming there is growing interest in measures to mixed development. As house prices and all development can come up against forward or only very slowly through a overcome the barriers to development on land values vary hugely across London, it unpredictable and costly obstacles. Policies statutory process. under-developed sites, and to speed up is also important to find locations where in the draft London Plan and the London development, especially on land that has values (which reflect potential demand) Housing Strategy prioritise ‘stalled sites, 14. Owners, whether public or private, been consented, or that is close to transport suburban intensification especially around understandably want to obtain the ‘best are high enough to cover the costs of hubs.16 town centres, and under-used land, consideration’ for their property, and any development if subsidies are not available. including small sites.’ The challenge is to acquisition through compulsory purchase 17. ‘Identifying and bringing forward more land Quality should be as important as quantity: deliver all these priorities quickly, and at has to provide them with ‘equivalent’ for housing’ consequently forms the first scale. compensation. In the search for new theme in the Mayor’s draft London Housing 21. Much of the resistance to house building sources of finance for infrastructure, Strategy, with a number of proposals for comes from the belief that new housing will consideration is being given by TfL, GLA increasing the supply of land for new not be good enough in terms of floor space THE REALITIES OF LAND and Government to ideas such as the homes, including ‘exploring options for or design to attract a balanced population. ECONOMICS new land assembly models drawing on Councillors resist proposals they believe will Development is as much about economics 10 David Adams et al. Town Planning Review, Why international experience.’ 17 overload infrastructure capacity.19 Though Not Build Faster? Explaining the speed at which as it is about planning, and to be viable, attitudes to flat living are changing, people British housebuilders develop new homes for 14 See the proposals by KPMG and Savills for the value of what is built has to exceed all owner occupation, June 2009 DRAMs in Land Value Capture, TfL, February in areas of low density semi-detached or 11 Shelter and KPMG, Building the Homes we 2017 the costs. As a report from Shelter points Need: a programme for the 2015 government, 15 Steen Rasmussen, London: the Unique City, 2014 Jonathan Cape 1937, or see density tables in egy, September 2017 out ‘land is essential to human activities, 12 Eg. Daniel Bentley, The Land Question: Fixing Lessons from Higher Density Development, 18 Lyons Review, Mobilising Across the Nation to fixed and permanent’, and is therefore the dysfunction at the root of the housing crisis, Three Dragons for GLA, 2016 Build the Homes our Children Need, 2014/ Alex Civitas, 2017 16 See for example the article: Christopher Brig- Morton, How to Deliver a One Nation Housing 13 Winston Churchill, quoted in Daniel Bentley, The stocke, partner in Winkworth Sherwood, Scour- Policy, The Policy Exchange, 2016 Land Question, Civitas, 2017, and also attributed ing the World for a Housing Solution, in Estates 19 Councillor Attitudes to Higher Density Devel- 20 Home Builders Federation, Home Buyer Inten- to Ebenezer Howard and further back to John Gazette, 2nd October 2017 opment, URBED with MORI for South East tions and Opinions, 2016 Stuart Mill 17 Greater London Authority, London Housing Strat- Regional Assembly, 2004 21 National Policy Planning Framework, CLG 2014

8 9 26. Development value depends on location, 29. The Housing White Paper 2017 called 2 London Development Costs which can be shaped by the public sector the housing market ‘broken’ and has Source: Gerald Eve (infrastructure plus planning permission), proposed ‘pooling’ as a possible solution to and by likely costs and risks, which fragmented sites (which our German and are usually shaped by developers and Dutch case studies explore)27. landowners, and affected by property This chart shows the relative development 30. But even quite small sites can remain cycles. (Exhibit 2) Comparable land costs for different types of schemes around undeveloped for years until the timing is transactions influence the price of land. London, and the variations between central favourable. So the problem may not just In London the high alternative uses for and outer locations. Land costs have be ‘multiple’ ownership but the ‘right’ significant upfront costs but are low in land are also competing with residential ownership - that is developers with the relative terms once high density schemes development which in turn underpins land have been completed. The time taken to capacity both to draw up and implement pricing in general through the market cycle. complete the scheme affects the cost of plans that take more than five years to The impact of time can be seen in a diagram finance and the required return for risk, implement. having regard to the market cycle. illustrating the relationship between market values and the values where compulsory purchase powers are used. (Exhibit 3) 1. 50 units; 24% Affordable Housing; and 2 THE CHALLENGES OF LAND year delivery programme. 27. According to the important Callcutt Review, ASSEMBLY FOR LONDON 2. 52 units; 35% Affordable Housing; and 2 one of the many sources to investigate the 31. To deliver the Mayor’s housing priorities, year delivery programme. barriers to development, house-builders and find enough sites for new and 3. 196 units; PIL of Affordable Housing; and prefer ‘shovel ready’ sites to ones where affordable homes, whilst protecting open 3 year delivery programme. they have to invest a lot in infrastructure space and the Green Belt, there needs to be 4. 658 units; 20% Affordable Housing; and 6 and find other partners. Sir John Callcutt a greater focus on mobilising, aggregating year delivery programme. asserted ‘The vast majority of house builders and preparing land in multiple ownership follow the ‘current trader’ business model for development. This must address the which consists, in essence, of cycles of land uncertainties in planning policies, limited acquisition, development and outright sale. resources for planning large schemes, Profit is the margin between sales price and resistance to development, and a shortage fundamentally different from most forms of 25. Though modern economic text books development costs; the developers retain no of skills and capacity summarised in 22 economic capital. A respect for ‘private tend to neglect land economics, there is long-term interest in the property.’ 25 Appendix A. property’ dates back to feudal times and large literature on the subject, usefully 28. The Review called instead for an ‘investor 32. There is scope to support this by sharing Royal land grants. However the history of summarised in a recent book from the model’ that secured profits from efficient between the public and private sectors Britain, and hence its legal system, differs New Economics Foundation Rethinking construction rather than land-dealing, some of the uplift in land values that from that of the rest of Europe, although the Economics of Land and Housing.24 In which is particularly relevant to London. occurs when land is unlocked, allocated for all countries obey something similar to the brief, land values are shaped by past history As most of the ‘shovel ready’ sites in single housing and subsequently developed. European Convention on Human Rights. and geography, as well as the densities ownership may well have been used up, and uses permitted in local plans. For 33. A better land assembly model combined 24. Similarly all countries grapple with the the best development sites in London are greenfield development volume turnover with more proactive planning would open problem of how to share land values now likely to be in multiple-ownership and is highly influential on setting land values up sites to a wider range of developers, and resulting from development, and how to require new infrastructure. Land assembly and reflecting the demand side of national hence offer the prospect of building much avoid ‘speculation’ or ‘free riders’ who hold is therefore vital to the London Housing housebuilding. For urban locations there faster and possibly better. London therefore back until values have risen before putting Strategy, and its importance has been is a strong correlation between house needs to learn from what worked in the land forward. Viability should not therefore endorsed by other major reviews such prices and land values and in London this is past (Exhibit 4, p. 13); it should also examine be seen as a party political issue, but rather as by Kate Barker and Sir Michael Lyons prevalent in both the short and long term practice in growing cities in other countries, a question of how to value different forms on ‘addressing dysfunction in the land trends. which form the subject of the next two of capital in different types of location.23 market.’26 sections. 22 Shelter, New Civic Housebuilding: a better way Country Planning, May 2017 25 The Callcutt Review of Housebuilding Delivery, to build the housing we need, 2017 24 Josh Ryan-Collins et al. New Economics Foun- 2007, HMSO 23 Nicholas Falk, Location location location: fund- dation, Rethinking the Economics of Land and 26 Kate Barker, Housing: where’s the plan, Per- –Update report 2016 ing investment in local infrastructure, Town and Housing, Zed books 2017 spectives, 2014, Lyons Housing Commission 27 Fixing our Broken Housing Market, CLG, 2017

10 11 3 The relative change in values during land assembly. 4 London’s growth Source: Gerald Eve over the past two centuries Source: URBED

2000

1900

The chart [above] illustrates the potential relativity of changes in value and costs between: the Market Value of the schemes proposed(1); the costs of acquisition (land assembly) both pre compulsory acquisition and if a compulsory purchase order (CPO) is required (2); and statutory value (compensation)(3). The chart removes market related movement over time and any improvements to an owners landholdings hence the static position of the Market Value of the scheme and statutory value (compensation) over time. It can be seen that pre the CPO and compensation process there is an opportunity for private landowners to enter into negotiations for agreements to unify landholding through a pooled arrangement. This process starts with an “opportunist period” whereby land and interest may be acquired relatively cheaply. This potentially changes over time once the prospect of a major development proposal is more widely understood. This however may still result in agreements at higher levels of capital cost of acquisition / pooling. As the CPO is made the cost of acquisition would fall reflecting the ability of the acquiring authority to negotiate deals with the backdrop of paying statutory value (compensation) to be determined if needs be by the Upper Tribunal.

1800

12 13 2 WHAT LONDON CAN LEARN FROM ITS PAST

1. London needs to draw lessons from house prices were a much lower multiple earlier periods when we built to scale. of people’s earnings, and people travelled A series of books have chronicled the much shorter distances to work. Hence story, most notably Peter Murray, who development was a less risky business for applauds the model of the Great Estates the typical house builder. in , Tristram Hunt in 4. Land assembly today presents much greater Building Jerusalem, who extols the role of challenges as sites are scarcer and land municipalities, especially in the provincial values are much higher. However there cities, and Alan Jackson in Semi-Detached are some important lessons and tools that London who praises the role of the small need to be relearned if land assembly is to builder between the two World Wars. 1 Here be increased. A combination of leasehold we summarise what has worked in the past development, available finance, good public and a fuller history is set out in Appendix B realm, and public infrastructure investment on how London has evolved.2 were responsible for the great periods of 2. London has historically grown in surges, house building, for example in the late as areas of land were opened up by the Victorian period or after the Second World availability of transport, and finance was War. made available for housing construction 5. Despite the lack of any clear overall plan, and occupation. Each century is roughly the footprint of London grew physically associated with a different model and urban by 60% in the last hundred years, largely form.3 London can learn a great deal as a ‘City of Villages’ around a polycentric from when land was developed 3. The process can be said to have started network of town centres, industrial estates fastest, and from how value has 4 been created from investment in when aristocratic landowners, sometimes and business centres. (Exhibit 5) known as The Great Estates, secured infrastructure and the public realm. 6. Key aspects of this development are set property rights from the Crown, and made out below and expanded on in Appendix B. This section considers in turn sites available to private builders on leases. the shift from development Some seminal case studies from Croydon, When land values were relatively low, frameworks commissioned London Docklands and King’s Cross provide housing was largely privately rented. When by landowners, to piecemeal useful precedents for future land assembly. development, which gave rise home ownership took off in the 1930s, to comprehensive development under a national planning system, 1 Tristram Hunt, Building Jerusalem: the rise and Development frameworks (19th century) fall of the Victorian City, 2004 / Alan Jackson, and most recently public led Semi-Detached London: suburban life, devel- 7. Planning underpins much of what we opment and transport 1900-1939, Wild Swan partnerships through development value today. The Great Estates in central corporations, and the present Publications 1991 / Peter Murray and Sarah Yates, How London’s landowners shape the city, London used building leases and what is situation. New London Architecture, 2013 2 We are grateful to Professor Michael Hebbert now the Landlord and Tenants Act to lay out and Sarah Yates for commenting on this paper. Case studies of the redevelopment 3 David Rudlin and Nicholas Falk, Sustainable of Croydon, Docklands and King’s Urban Neighbourhood: building the 21st century 4 A City of Villages: promoting a sustainable future Cross illustrate key features. home, Routledge second edition 2009 for London’s suburbs, URBED for GLA, 2002

15 5 London grew up around town centres on transport links 6 The conurbation expanded fastest in the 1930s. New homes built in Greater London, 1971 to 2014 400m (dark blue) 800m (light blue) Ped Sheds based upon local centres and rail stations. Source: City of Villages URBED for GLA

Private sector

Housing Association/ other public sector

Local Authorities

Total (dashed line indicates figures estimated from national data

developments that have stood the test of Piecemeal development (1930s) New Towns (1950s-90s) • Demand was much more secure than time and give central London much of its today, with most homes there at first 9. The high rate of building in London before 12. Abercrombie’s London Plan of 1943 enabled being for rent and going with a job. character. They used what we now would the Second World War was helped by eight New Towns to be built rapidly on call development frameworks with design the availability of cheap farmland and farm land within 50 miles of London, codes for four different classes of house.5 mortgages, through a rapid growth in the acquired at close to agricultural values. Comprehensive development Long leases (99 years) controlled the mix function of building societies that turned This took some of the pressure off inner 13. (1946- c.1980) Following the Second and density of uses, as well as providing for workers’ savings into new homes. areas, which could then be restructured. World War, in Britain as well as the rest of amenities such as central ‘garden’ squares, New Town Development Corporations with Europe, land was assembled for town centre which are maintained through service 10. Simple to build semi-detached houses land assembly and planning powers had a schemes and large housing estates. Local charges on the surrounding houses. could be built by small builders from number of advantages: pattern books. Infrastructures such as authorities used the ‘Blitz and Blight Act’ 8. Concerns about over-crowded and arterial roads and tube line extensions were powers of Comprehensive Development unhealthy ‘slums’ led to experiments at funded by the government as measures to • Low cost ‘patient funding’ came from the Areas (CDAs) to compulsorily acquire the turn of the 20th century with ‘co- tackle the Great Depression, and meant that equivalent of bonds via the Public Works and clear damaged land. Large parts of partnerships’ to develop ‘garden suburbs’, Loan Board. house-builders could get on with building. , and Poplar, for such as Garden Suburb in • Farm land was cheap at the time, (for example, were made available for the 11. However, rapid growth also created sprawl Barnet and Brentham Garden Suburb in example, initially land was only 1% of London County Council to redevelop, and along the main roads that led to the sales value in Milton Keynes). . These provided models for the clear away the ‘muddle’, as Lord Patrick subsequent introduction of Green Belts expansion into outer London between the • Land was acquired at ‘existing use value’ Abercrombie described it, to make London aimed at separating one town from another (but after the passing of the 1961 Land two World Wars. ‘Fairest of Cities all.’6 and providing recreational space. Compensation Act, which reversed the principles of the 1947 Act, land assembly had to take account of likely 5 For a fuller explanation see, for example Donald 6 County of London Development Plan 1951 Olsen, The Growth of Victorian London, 1976 development or ‘hope value’). Analysis

16 17 14. Special Purpose Vehicles (SPVs) were also developers and public / private partnerships, used for slum clearance and town centre which has continued to this day, with a few LESSONS FROM LONDON’S PAST schemes in other parts. Croydon provides notable exceptions where development an example of where the local authority corporations led the way. The London 20. While land assembly today presents much last hundred years, it has expanded very little in the last thirty.9 built a whole town centre to cater for Docklands Development Corporation took greater challenges than when London built offices relocating from the over-crowded over land from the Port of London Authority at scale in the past, some useful lessons can d) Comprehensive Development Areas City. Outside these areas, a new generation and the Gas Corporation and then followed be learned from how London has evolved. enabled sites in different ownerships to be rapidly assembled, as did the of property developers took over bomb- the American principle of ‘leveraging’ as setting up of a development corporation damaged property in inner London, leading much private investment as possible. a) A combination of leasehold for the London Docklands. The use of development and public infrastructure to the gentrification of large areas of the Landlord and Tenant Act enabled investment were responsible for the former smoke-blighted terraces, such as in landowners to take a long-term The present situation great private development ‘surges’ that perspective and enforce covenants Primrose Hill, where terraced houses were have taken place, for example in the 18. Considerable effort is going into making thus attracting institutional investment. converted into flats. In some cases, private early 19th century or the 1930s. the most of municipal owned land, development funded public improvements, Today public-private partnerships are including the redevelopment of major b) The high rate of building in the used to achieve something similar. such as the traffic gyratory around Centre 1930s is sometimes attributed to Council housing estates in inner London e) Successes such as the London Olympics Point. fewer planning controls, but just as such as Woodberry Down in Hackney, and and subsequent development in importantly included the availability 15. The CDA principle was also used for East London are quite unlike most in . Many of cheap land and finance, simple- complex regeneration projects. In Covent of Outer London, and also were at a local authorities are setting up development to-build ‘pattern book’ houses, and high cost in terms of land assembly. Garden, the GLC took over all the former companies to build housing for their own public funded infrastructure aimed at Hence London needs to consider not market buildings and brought the two residents, with notable successes, such as in tackling unemployment and the Great just how land can be assembled, but local authorities together with a large 8 Depression. Croydon and Barking. also how the infrastructure needed to degree of community engagement c) After the Second World War, and 19. However as attention focusses on the open sites up and get house building to draw up a new plan. This used the the Town and Country Planning Act, going can be funded, and joined up potential in the Opportunity Areas and powers of a Comprehensive Development public measures such as the use of with development, especially in areas Housing Action Zones in Outer London Area, combined with restrictions on Comprehensive Development Areas benefitting from public investment, (Exhibit 7a and 7b, pg. 20), where land redevelopment imposed by listing key (CDAs) and the designation of a New such as Crossrail. ownership is more fragmented and land Towns and the London Green Belt were buildings and the designation of large values are often lower, interest in different used to mobilise land in a strategic Conservation Areas, to transform the area. 9 Animated maps of London’s evolution since forms of partnership will undoubtedly grow. and planned way. Whereas London’s Roman times have been prepared by the Bartlett footprint grew physically by 60% in the and can be seen on https://www.youtube.com/ 16. The result were to double the amount This means not only understanding what lay watch?v of municipal housing and increase the behind the ‘successes’ of iconic schemes residential population from 3,000 to 6,000, such as London Docklands or King’s Cross, with the largest amount on the old Odhams but learning from suburban developments printing works site, while the area as a in other countries. whole became known as a creative centre and major tourist attraction. 7

Public-Led Partnerships (1980-2008)

17. House building rates have been much lower over the last 30 years, and much of the private investment took place outside London in building small new

housing estates. The recession of the early 1970s and the consequent Conservative government led to a reliance on private

7 Covent Garden statistics, Covent Garden Com- 8 Janice Morphet and Ben Clifford, Local Authority munity Association, 2,000 Direct Provision of Housing, RTPI, 2017

18 19 7a Opportunity areas in London CROYDON TOWN CENTRE CASE STUDY 1 Source: London.gov.uk Creating a major employment centre

The 1947 Croydon Reconstruction Plan and 1951 Development Plan led to the Croydon Corporation Act of 1956, which gave the local authority planning and compulsory purchase powers. This, coupled with national government incentives for office relocation out of London, led to the building of new offices and road schemes throughout the 1950s and 1960s and the town boomed as a business centre in the 1960s. Some 600,000sq metres of office floor space was built on some 13 different sites. In the 1950s and 1980s, the centre of Croydon underwent significant change, and in the period 1963-73, 20% of the office capacity and 30% of jobs which moved out of central London went to Croydon.

The Corporation identified 45 acres in the north and east part of the town centre, occupied mainly by Victorian houses and a school. The Croydon Corporation Act allowed the town centre to transform faster than any other location in England at the time. Instead of development outside the centre, the council acquired the land necessary to upgrade infrastructure and release the remaining parcels to private developers to construct office blocks. Croydon quickly became known as a ‘mini- Adopted Manhattan’ with 45 buildings towering over 25 metres in height in the Lower Lea Valley 1950s. In progress Over the last 30 years, however, Croydon’s prominence declined as a Not started result of a decrease in demand for ‘back-of-house’ office space in the area and the emergence of and Outer West London as alternative office locations. Significantly whereas in 1984 office rentals were three times higher in Croydon than , by 1997 the position had been reversed. This has led to an increase in vacant office space and a fall in the numbers of people working, and travelling into, 7b GLA Housing Zones the centre of Croydon, and the promotion of housing where offices GLA housing zones (purple), possible Future Housing Zones (pink), and once stood. Croydon is also benefitting from the first tram line in Opportunity Areas (light pink). Source: Savills London along with a programme of environmental improvements.

A joint venture with a private developer has lapsed, and instead the Council is building new homes itself through a subsidiary company Brick by Brick, along with a growing number of local authorities, on land they own. The Croydon Corporation Act gave the local authority the kinds of powers exercised by new town development corporations, such as:

• Acquisition of Land: The Corporation could enter upon, take possession of and use some of the sites in the borough delineated in plans for various purposes including development, street works and the improvement and development of frontages abutting on or adjacent to any street. The powers of the Corporation to acquire land ceased after the expiration of five years from the Act coming into force.

• Power to expedite: At any time after serving a notice to treat the Corporation could enter on and take possession of the land compulsorily.

• Development: The Corporation could lay out and develop the entire or any part of the lands designated

• Loans: The Corporation could advance money to the purchaser or lessee of any land acquired from or leased by the Corporation. Source: Gerald Eve

20 21 KING’S CROSS CASE STUDY 2 LONDON DOCKLANDS CASE STUDY 3 Securing high quality mixed use development by a Regenerating a former industrial area major station

One recent landmark development is the highly acclaimed Disappointed by the slow rate of development in the 5,000 acres Many developers were attracted to regeneration of the Kings Cross railway lands. Attention was drawn (2,000 has) of former docklands, Michael Heseltine as Secretary of build private housing on the scheme to the sites potential in the late 1980’s. The London Regeneration State for the Environment personally persuaded Margaret Thatcher, because they had confidence in Consortium was the first developer to promote a scheme in this area, then Prime Minister, to establish a development corporation in 1981 for the area’s future, and could literally and was made up of companies that went bankrupt in the mid-1990s. the London Docklands, and areas like it in cities such as Liverpool. The see the ‘signs of transformation.’ This enabled Argent to take over the combined land from the National funding allocated alongside this designation enabled preparation of Significantly the best sites were Freight Corporation and British Rail on deferred purchase terms. The sites at London Docklands and the installation of the Docklands Light held back to the end, when more- site was truncated when High Speed One was terminated at St Pancras, Railway and subsequently the Jubilee Line out to Canary Wharf and complex sites could be brought to cutting off the Northern part of the site. Stratford. Land owned by the Gas Corporation and the Port of London market. When the LDDC was wound Authority was transferred to the Corporation, and other private land up in 1998, the proceeds went to the The World Bank in their book of international case studies argues alongside acquired. Treasury, but the local authorities for the merits of participating in land ownership rather than simply such as Southwark and Tower tapping the uplift in land values through Tax Increment Financing. The To overcome the problems of land assembly, the London Docklands Hamlets secured an improved and development of the railway lands at Kings Cross forms one of their case Development Corporation (LDDC) was given three powers to buy land extended public realm. studies, as the British government has retained an interest through its by the Local Government, Planning and Land Act, 1980: subsidiary company London and Continental Railways (LCR). The case The LDDC managed to shift the study explains the complex funding deal that made the new scheme centre of balance in London viable.1 The key has been the transfer of the land to LCR. In addition • Vesting of public bodies’ land by Order of the Secretary of State for eastwards by enabling a new financial to a capital grant of £2 billion, LCR was granted property development the Environment, scrutinised by Parliament. Used extensively, it was centre at Canary Wharf to grow, rights around Kings Cross and Stratford Stations. insufficient on its own because land was often subject to third party despite the original developer going tenancies, licenses or prescriptive rights. bankrupt. It provided a precedent The Department for Transport was to receive 50% of LCR’s net profit for subsequent development after deducting the costs of the Kings Cross redevelopment scheme, • Compulsory purchase to acquire privately owned land and to sweep corporations, notably the London with the first income expected between 2016 and 2020. LCR owned a up rights not secured by vesting. Legacy Development Corporation, 73% share of a 27 hectare land parcel, which became a 36% share in the • Negotiated purchases, used whenever possible to accelerate land which inherited the role of the new partnership with Argent. The planning permission sets floor space assembly, frequently leveraged by the threat of vesting or CPO – Housing and Communities Agency maxima, for example 1,900 homes or up to 195,000 sq m. of housing. e.g. after the LDDC’s first vesting order in July 1981, British Rail, in developing the site of the London Section 106 agreements have been used to secure community benefits British Gas, Thames Water and the Central Electricity Generating Olympics. But it also enabled such as open space. 40% of the housing in the agreement with Camden Board all agreed to sell voluntarily rather than risk settlement of adjoining private landowners to make Council was to be affordable. compensation through the vesting process. vast gains from public investment The community benefits at Kings Cross were estimated (in the book in the Jubilee Line out to Stratford, from which this case study is largely drawn) to be worth £100-200 which led to criticisms that the A dedicated team of surveyors managed purchases. They worked with million in total. A flexible form of planning permission has allowed the approach did little to make housing the LDDC’s legal, development and planning teams to decide the developers to respond to changing market conditions, as relatively few more affordable.2 buildings have been built speculatively. Argent was originally funded acquisition programme and ensure the land was necessary to meet the LDDC’s statutory objectives. They also relocated businesses and by the BT Pension Fund, which enabled it to take a much longer-term 2 Don Riley, Taken for a Ride: approach than other developers, for example putting in high quality residents from development sites. trains, taxpayers and the Treas- landscaping at the start, which helped it secure additional investment. ury, Centre for Land Policy In total, the LDDC bought 879 hectares – around a third of the 2,200 Studies, 2001 hectares of land and water in its Urban Development Area. By 1992- 93, its twelfth year (of seventeen), the LDDC had bought 872 hectares of land and water at a cost of £169 million. This represented 11% of total public investment and 2.8% of private investment, so the public investment triggered many times the initial cost. 16,700 homes had been built and there had been a 64% growth in population. 40,000 new jobs had been created in 2.3 million sq. m. of commercial and industrial redevelopment. There had been massive investment in transport and the public realm, and while this did not all happen on LDDC land, its holdings were an enabler and a catalyst for others’ investments. The pace of new land purchases slowed after this, but what had been bought continued to contribute to growing outputs that have expanded up to the present and will do so for some years to come. 1

The LDDC was initially tasked with maximising ‘leverage’ by attracting in private investment, though later it took on more of a social remit. 1 H Suzuki et al, Financing Transit-Oriented Development with Land Source: Richard Values, World Bank Group 2015 Source: Nicholas Falk 1 We are indebted to Richard Simmons for this information. Simmons

22 23 3 WHAT LONDON CAN LEARN FROM ELSEWHERE

1. This section examines the lessons that Netherlands London could learn from international • Portland, Oregon and Toronto, North precedents, drawing on a number of fresh America. case studies as well as published research: 2. We have also incorporated some lessons from the way land is assembled and metros • As we have seen, despite ambitious plans and penetrating reports, the number of are financed in Denmark and Hong Kong. homes built in London remains far below 3. Our brief was to establish both the statutory targets. framework and the conditions that made • Research studies into rates of land assembly easier elsewhere so we could development tend to agree that the main difference is local authorities playing recommend what action the GLA might a more proactive role and not relying take. Dentons’ review of land assembly on private developers to bring land powers in Appendix C shows that public forward.1 authorities in Germany, France and the • As a review of international planning Netherlands all have legal frameworks that systems points out: ‘There has been a enable the purchase and assembly of land tendency in other countries to promote development at desired locations as well at, or close to, existing use values, and Continental cities that have kept up as restraining it at others.’ 2 that are much more powerful than their house-building rates and suffered • Published studies tend to focus on North American counterparts. French pre- less from the effects of house- legal systems, and not on how land is emption rights, for example, give public price inflation have adopted more actually assembled. Our international authorities a ‘first call’ on the purchase of case studies have sought to fill this proactive approaches to land land where it is identified in a local plan as assembly. gap by telling the stories of successful developments that could provide models required for public needs, with price paid Local authorities, often assisted by for comparable parts of London. reflecting that which would be paid had it municipal development agencies, • These case studies were selected from been compulsorily acquired. This is much have identified where growth a much longer list because of their closer to its Existing Use Value (EUV) than should or should not take place, similarities, as well as the availability to its eventual value once development has acquired the land or helped private of useful information. In each country taken place. developers to pool it, and have we have a primary case study and a ploughed back some of the uplift in supporting example to check that the 4. As well as strong compulsory acquisition example was not unique: values into local infrastructure in powers, land readjustment (also termed advance of the housing being built. land pooling) is seen as a key tool in these • Freiburg and Frankfurt, Germany This has been helped by the countries as a way of assembling land and availability of long-term finance • Paris and Montpellier, France encouraging development. In Germany and either through state investment • Amersfoort and Amsterdam, The the Netherlands, land readjustment has a banks in Europe, or through tax legal basis, whereas this is purely voluntary incentives for private investors 1 Sarah Monk in ed. Tony Crook and Christine Whitehead, International Review of Land Supply in France. However, France has specialised in North America. This section and Planning Systems, Joseph Rowntree Foun- summarises lessons from eight dation, 2013 land assembly agencies, such as Grand different case studies. 2 Michael Oxley et al, Review of European Plan- ning Systems, NHPAU 2009

25 4 London grew up around town centres on transport links 400m (dark blue) 800m (light blue) Ped Sheds based upon local centres and rail stations. Source: City of Villages URBED for GLA

undertaken by a task-specific team based Ijburg, Amsterdam: planning for 6 Dutch VINEX housing suburbs. housing growth in Amsterdam called Projectbureau IJburg that focused resources and efforts solely 1. Built on a series of seven artificial islands Source: Han Lorzing on Lake IJmeer along the city’s eastern on the delivery of Ijburg in conjunction side, IJburg is Amsterdam’s new residential with the support of a national framework district and has been built entirely from of urban growth. The key national bodies scratch. Land, infrastructure, and services aiding delivery here were the Ministry of have been developed upon what was Urban affairs (which initiated Ijburg as a previously the seabed in less than 10 years. VINEX location) and the Ministry of Housing, The project began in 1999, with housing Spatial Planning and the Environment construction beginning in 2001 with the aim (VROM). of producing 18,000 dwellings for 45,000 people. The project today is now close to completion and has been a large success, with the neighbourhoods containing vibrant mixed-uses and being showcased by Amsterdam’s tourist board as a must-see place to visit.

2. The development had been a corporate undertaking delivered by the Municipality of Amsterdam, with the Department of City Planning (Dienst Ruimtelijke Ordening) taking the lead. The delivery however was

Paris Aménagement (AFTRP before 2016), finally how the process of land assembly is whose role is to support municipalities resourced adequately. in implementing their plans. The German Umlegung model enables municipalities to assemble land in fragmented ownership PLANNING FOR STRATEGIC and designate some of that space for streets HOUSING and public space. The remaining land area 6. To counter challenges such as fragmented is then returned to the original land owners and problem sites, and sluggish owners or according to their share of either the speculators, in most of Northern Europe original value or land area.3 land for development is identified through a spatial planning process, so that the wider 5. The stories and lessons from the case and longer-term public interest can prevail. studies are set out under four main topics. As the case studies illustrate, a number These cover firstly how local authorities of models are possible, but they all share plan for strategic housing and secondly common characteristics. acquire the land. We then consider the way landowners and developers are incentivised to assemble land and compensated, and Dutch VINEX housing policy:

7. The Dutch example of an urban extension 3 Clarke, E., Nohrová, N., Thomas, E, Centre for Cities, Delivering Change: Building homes where to Amserdam is useful in illustrating aspects we need them, 2014

26 27 of the strategic land assembly process, to implement the plan. the French national library and the 7 The masterplan for Périphérique - illustrate how their including land pooling, as well as the 11. Because land values are ‘frozen’ after Vauban, concise system works. A similar approach has benefits of a strong national housing policy designation, there is little danger of enough to ‘fit on a also been used in Montpellier, France’s that designated clear areas for growth, speculation leading to their escalation. sheet of paper’. fastest growing city, and so is not only In other words, a developer or which the Dutch called VINEX (Exhibit 6). confined to the capital. landowner cannot sell land for more A similar approach occurred in developing than it is worth at that point. 21. The process starts when the French the new settlement of Vathorst in a medium equivalent of district councils 12. The German planning law Urban sized town, which forms our main case identify land for development and Development Measures (Städtebauliche study. propose which sites are allocated for Entwicklungsmaßnahme 165-171) allows development. These are then approved speedy public assembly of under-used in territorial plans that ‘tie together German Urban Development Measures: land, but also enables the municipality urban policies in such policy areas as to recover the costs of land preparation. 8. As a report for the National Housing low-income housing, transportation,

and Planning Advice Unit (NPHAU) 13. The municipality can ‘pool’ the land, and infrastructure’. Mayors provide

explains: and resell serviced sites either to the leadership on strategic sites, and indeed

previous owners or small developers, the former President of France, Nicolas ‘The German planning system is a mixture of plan and development- unless the landowner is able to Sarkozy, played a leading role in the led approaches. It is characterised by undertake the agreed plan themselves project for Le Grande Paris, the future hierarchical planning powers among and within a specified timescale. metropolitan railway system. the three levels of the government: the 14. German cities can take over land that is French spatial planning: 22. The Greater Paris Express is the federal state (Bund), the local states ‘poorly or under-utilised’ and are able 18. Parts of outer Paris offer direct upgrade of the municipal rail system (Länder) and the local municipalities to deduct the costs of remediation and comparisons with old industrial areas that underpins plans to regenerate (Gemeinde)’.4 local infrastructure from the uplift in in London, such as the Lea Valley, and peripheral areas in the outer suburbs land values. These are ‘frozen’ at the of the city).A 200 km automatic metro 9. Power is effectively devolved to the there are also areas bordering the point of designation in the ‘preparatory system is being built with five lines and lowest possible level. Though Germany main railway terminals where lines plan’ (equivalent to the allocation of 68 new stations at a cost of 38bn euros is a federal state, which means that have been built over. The French adopt sites in the UK’s Local Plan) to avoid in 2018 prices over the period 2019-35. cities and regions have a greater degree clear spatial plans called Schémas de speculation. This is in addition to the RER system, of independence, a similar system cohérence territoriale (SCOT) to ‘join which extends further from the city, and is followed in terms of prioritising 15. The local authority commissions the up’ transport with development. There is was a precursor of Crossrail.The funds the better use of ‘poorly or under- masterplan and installs the basic a regional masterplan (Schéma directeur for investment come from the State- used land’. So, whilst very different, infrastructure. It then resells serviced regional -SRDIF) covering the Île de Region Framework (Contrat de Project both Freiburg and Frankfurt follow plots to a variety of developers. France in the case of Paris. A SCOT is Etat-Région), currently 2014-2020. similar planning systems, as the case being drawn up for the area covered by 16. Such a system enabled the fast growing the Métropole of Le Grand Paris, which studies illustrate. Research suggests City of Freiburg to develop exemplary broadly equates to the Greater London that ‘a stronger, more active role for urban extensions at Rieselfeld and area. the local state, in land assembly and Vauban on the edges of the built-up in development, would lead to more area. Though the schemes are quite 19. A metropolitan council of nominated extensive brownfield development’.5 complex, the main development rules members, The Métropole de Grand for Vauban are set out on one large Paris, was established in 2016 ‘in order 10. Public support in Germany is established before designation and land sheet of paper, called the Bauplan. to define and implement metropolitan

acquisition through a variety of forums, (Exhibit 7) action to improve the quality of life as power rests with the municipality. of its residents, reduce inequalities 17. A similar system has also been used between regions within it, to develop Indeed the master-planner is often by the City of Frankfurt for an urban an urban, social and economic selected after a competition in which satellite of 6,000 units at Riedberg, sustainability model, tools to improve the public can comment on or vote for and enables the city to benefit from its attractiveness and competitiveness their preferred scheme, and one of the investment in new infrastructure. The short-listed designers must be selected for the benefit of the entire national city-owned development company has territory.’ 4 Michael Oxley, Tim Brown, Vincent Nadin et also led the redevelopment of former al, Review of European Planning Systems, De industrial areas near the centre of the 20. Our case studies of two regeneration

Montfort University, 2009 city at Rebenstock Park. areas in Paris- ZAC Claude Bernard in 5 Ed Turner, Developing brownfield land: Argu- ments for a more active local state, Journal of the poorer North East, and Paris Rive Building Survey, Appraisal and Valuation, volume Gauche - an area like Euston between 5, number 3, 2016

28 29 an extended State transit system (the accepted by private developers and their 8 Frankfurt pooled land from different owners Metropolitan Area Express, or MAX, plus professionals.9 to build new housing at Riedberg a new tramway), and our case study examines the redevelopment of an area of railway yards and warehouses known as ACQUIRING LAND the Pearl District. Portland used a series of 30. Land can be assembled through Special overlays on top of its zoning plan to provide Purpose Vehicles and ‘land pooling’ is guidance on policy goals such as uses, specifically put forward in the Housing densities and urban design. White Paper for consideration. Both the Dutch and the German models offer 29. In this respect, the plan seems similar to the lessons for London, while the French German Bauplan for a development area system of ZACs has similarities with the such as Vauban. Architects have said that Comprehensive Development Areas such plans are easier to understand and that were used in London.10 A review of indeed regulate than the complex ‘design guides’ produced by local authorities in the 9 Beyond Ecotowns: applying the lessons from UK, and are consequently more likely to be Europe, PRP URBED and Design for Homes, 2008 10 Fixing the Broken Housing Market, CLG 2017

US Urban Renewal Areas: social mobility and environmental benefits by building urban villages that avoid large 23. Our case study of Portland, Oregon, shows Conclusions segregated areas. Others are following its that in North America, as in mainland a) Strategic planning is used to join transport concept of ‘poorly or under-utilised lead, such as Pittsburgh in Pennsylvania, Europe, progressive cities promote and development together. In Northern land’ is used to identify locations for branded recently as the ‘miracle city’ for the intensification around transit nodes and Europe, municipalities develop strategic planned intensification as a prelude to renaissance of its central area.7 Pittsburgh is through positive spatial planning. North spatial plans that specify where growth or applying ‘Urban Development Measures’ praised for creating a new urban economy America generally has a weaker system regeneration should and should not take to recover the costs of infrastructure from and identity largely thanks to making the of planning than the UK and the rest of place. The French differentiate between development. Something similar applies most of its property assets.8 Europe, and instead greater use is made ‘urbanisme’ and ‘L’aménagement du in the Netherlands, where locations are of tax incentives to private investors. This 26. Other North American cities such as territoire’, that is between development classified in terms of their connectivity. is backed by a positive planning system in Toronto in Canada also make the most of management and spatial or regional d) Higher quality standards are achieved, the more successful cities where zoning is municipal land. They negotiate with private planning. Transport is integral, not kept in thanks to greater municipal power. Though practised. developers, using Floor Area Ratios (FARs) silos. planning powers are weaker in North to achieve greater community benefits such 24. The case study of Portland, Oregon b) Local leadership is critical. While guidelines America, spatial sub-regional plans also as open space or affordable housing. This was selected because the city is widely may be set nationally, as in the Netherlands, have greater force in some progressive process, which can be called intensification, acclaimed for its record of pioneering the agreement is reached at a regional or states such as on the West Coast, backed 6 has also been used with great success in principles of ‘smart growth’. The state of metropolitan level to link transport and up by tax incentives and public private Hong Kong to develop the areas around, Oregon established an elected body for development, rather than relying on central partnerships that mobilise the support of and thereby fund, Metro stations. the metropolitan region, the only one in government. Priorities are resolved locally, private landowners and investors behind the USA, which then designated an Urban 27. These different examples show that such thanks to the greater devolution of powers what the municipality is planning. North Growth Boundary, somewhat similar to, and an approach is not alien to British legal and resources to local authorities (as has American cities as well as Hong Kong use indeed inspired by, the British Green Belts. traditions. been recommended for London1 ). FARs to negotiate community benefits, such as affordable homes, in return for greater 25. Interestingly, Portland, as a relatively 28. Portland planned intensification around c) Local infrastructure can be funded out private development. Their Urban Renewal ‘exclusive’ city, has not done as well on of land value uplift. Spatial plans provide Areas focus the benefits of tax incentives social mobility as nearby Seattle, which has 7 See the Charter of the Congress for New Urban- the certainty that investors, both public combined outstanding performance in both ism www.cnu.org on priority areas, thus incentivising private 8 Dag Detter and Stefan Folster, The Public and private, are looking for. The German Wealth of Cities: how to unlock hidden assets to investment where it is most needed. 6 We are particularly grateful to Troy Haynes for boost growth and prosperity, Brookings Institute 1 Tony Travers et al. London Finance Commission, the information he provided 2017 Devolution: a capital idea, 2017

30 31 alternative methods of land assembly states can also enable the state to capture led to developers acquiring and holding on 42. The Vathorst development in Amersfoort ‘Land pooling is when landowners combine land value uplift for reinvestment to potential sites. Consequently, the law shows how land pooling can work in their interests in order to participate in in infrastructure and services. But was changed to give local authorities not a relatively prosperous area where an even without being deployed the land assembly, servicing and disposal in only the responsibility for bringing forward entrepreneurial local authority sets up a very existence of strong compulsory 11 accordance with a plan.’ Land pooling purchase powers can also help shift development land, but also the ‘rights’ or joint venture company (JVC) that assembled offers the benefits of an integrated landowner incentives in favour of ‘first choice’, as it is also known, to take over land from farmers and developers. An development approach to land where long-term investment models that land that had been approved for housing in important incentive was that funding was ownership is fragmented and where the deliver better public benefits.’15 their plans. available at preferential rates for installing risks are too great for any one developer to advance infrastructure so that serviced 33. Such an approach is credited with 38. The results have sometimes been take on (as in much of Outer London, for plots could be sold off to a multiplicity of achieving a surplus for the Treasury from controversial, but they did result in what example).12 builders, including housing associations. the development of Milton Keynes on was planned, being achieved. Also some 31. Land pooling or urban land adjustment former farm land in Buckinghamshire. Dutch local authorities have suffered from 43. In larger cities, such as Amsterdam, has been widely adopted in European Similar principles were applied in London being over-committed to development municipally owned development countries such as Germany and Spain, as Docklands and subsequently by the Olympic after the down-turn post 2009 and also corporations greatly speed up the well as Asian countries such as Japan and Legacy Development Corporation, and from illegalities on the part of a few housing development process by taking away the Korea.13 The German Umlegung model should help in the development of the land associations, so there are real risks if risks associated with land preparation, such is explained in Appendix C. It enables the around Old Oak Common and Ebbsfleet, experience is lacking. as remediating contaminated land. Thus local authority to retain a proportion of the the Amsterdam Development Corporation where major public investment has been 39. Dutch cities entered into contractual land as ‘betterment’ of not more than 30% brings together the city estate department made in transport infrastructure. agreements with the government under its in greenfield areas and 10% in inner city and its housing department in an agency VINEX programme to build new housing, locations after accounting for streets.14 that can build long-term partnerships with The Dutch ‘Building Rights’ model and VINEX: and the average scheme was around 1500 private developers. The VINEX Atlas state 32. Simply designating areas of opportunity units. To benefit from support, this had to 34. The Netherlands is recognised as offering that: is not in itself enough to overcome the be close to existing cities, so as to minimise valuable lessons for the UK due to the problems of land assembly, especially when the loss of green space, in locations that ‘Once the plan is in place, the local success of its VINEX programme in avoiding authority can exercise the right of faced with the high potential costs and risks were linked to jobs and services by high house price inflation, building sustainable ‘first choice’. This means that from and limited financial returns associated quality public transit systems. Public-private suburbs, and expanding the nation’s then on the owner is unable to sell it with many brownfield sites. Almost every partnerships were set up, within which housing stock by some 8% over a ten year at will but has to offer it first to the country therefore has some method for land was pooled. After early problems municipality... Through the revamped period.16 compulsory purchase (frequently referred with speculation, these now use the Dutch Municipal Preemption Rights Act to internationally as the power of ‘eminent 35. This is largely due to contractual Building Rights model, in which land owners of 2008 the procedures have been simplified… the Land Development Act domain’), where the state may override agreements between the government and get back an equivalent amount in the form (Grondexploitatiewet) makes it easier private interests to achieve a greater public local authorities following the country’s of serviced plots with planning briefs. for municipalities to recoup a share of fourth ten year housing development plan, good. Such a principle is accepted by 17 40. This model enables the local authority to the costs from landowners’. almost all economists as ‘agglomeration called VINEX, which gave its name to some acquire land designated for development benefits‘, which can be foiled by what are ninety new settlements. from landowners, (rather as if it had graphically known as ‘free riders’, that is French ZACs: 36. As well as their successes with the VINEX compulsory purchase powers), and thus owners who hang back until others have programme, Dutch cities such as Rotterdam avoids speculation. 44. Public-private partnerships have been removed the risks. A recent book on land and Amsterdam have also succeeded in utilised in France for particularly large and 41. The case studies show how the process economics argues: regenerating old industrial areas through complex sites, where the development worked in two contrasting situations: a ‘As the example of the UK New relatively high-density housing. function is exercised through a ‘societe sustainable urban extension to Amersfoort Towns shows, compulsory purchase mixte’ with similarities to the Urban 37. Initially, the ambitious plans set out in VINEX - a prosperous medium sized city North of Development Corporations used for the 11 Ed, Owen Cornellan, Land Value Taxation in Utrecht - and the example of Ijburg, which Britain: exoerience and opportunities, Lincoln 15 Josh Ryan-Collins et al op.cit.333 development of London Docklands. Institue of Land Policy, 2004 16 Peter Hall with Nicholas Falk, Good Cities Better included former industrial land as a series of 12 Erwin Heurkens in Squire and Heurkens op.cit. Lives: How Europe discovered the lost art of 45. ZACs (Zone d’Aménagement Concertée) are 13 David Adams and Stephen Tiesdell, Shaping urbanism, Routledge 2013 chapter on Building islands on the River IJ in Amsterdam, where Place: urban planning, design and development, Sustainable Suburbs in the Netherlands. See initially 8,000 dwellings were planned, but Routledge 2013 also URBED and Joseph Rowntree Foundation, 17 Jelte Boeijenga and Jeroen Mensink, VINEX 14 H Dieterich et al Urban Land and Property Mar- report of the Sustainable Urban Neighbourhoods since increased. Atlas 010, Uitgeverij 010 Publishers, Rotterdam kets in Germany, UCL 1993 Network, Learning from the Netherlands, 2011 2008

32 33 as far as securing quality is concerned. 9 Paris Rive Gauche Montpellier: organising rapid growth Serviced sites are now much smaller than they used to be. As an example part of the 1. Montpellier has built on a huge scale (moving from the 28th to 8th largest French area around the recently refurbished railway city in just a few decades), constructing station has been the subject of competitions over 2,500 new homes a year, and at one for a 0.4 ha site. Architects and planners time over half the population was involved in the municipality had drawn up the brief, in construction. in terms of uses and massing, and then architects were invited to come up with 2. The key has been assembling the land and schemes, for which they were reimbursed. ploughing most of the uplift in land values The land is then sold to a developer at back into infrastructure. Development was a prearranged price, and the winning promoted by a private company called architect(s) have to be taken on. SERM owned largely by the municipality. The Caisse des Depots, the state investment bank, took a 15% share, and as they scrutinise investments carefully, this helped 10 The Mayor’s vision for in attracting finance from commercial Montpellier banks.

3. Private developers were happy with the role played by the municipality, as risks had been reduced, and funds were raised at lower cost than they would have had to pay.

4. SERM employs a staff of some 120, of whom used to align the interests of different public public buildings. a fifth work for the energy subsidiary. Their organisations, for example local authorities 48. SEMAPA in Paris Rive Gauche provides work is focussed around a series of ZACs in adjoining districts, by providing effective an example where the development (Zones d’ Amenagement Concerte) where project management. They are backed by extends over the railway lines into the extra powers are available to acquire land if the rights of pre-emption. Gare de l’Austerlitz. (Exhibit 9) The related required.

46. Eminent domain on behalf of French organisation of SEMAVIP has undertaken 5. The City has been assembling land for 30 municipalities is such an accepted part the development of a mixed-use scheme years, which puts it in a powerful position of French culture that less than 10% of in ZAC Claude Bernard in a relatively poor acquisitions are challenged in courts, and peripheral part of Paris, along with schemes most are settled by negotiation prior to in five other areas, with aims including formal process. developing diversified housing and reducing 50. Local councils put forward proposals for As well as securing higher standards of design, territorial inequalities. As a French report development areas. Once they are agreed private developers who were questioned 47. As land assembly and development for puts it: ‘The strength of the Plaine Saint as part of the territorial plan and the there said they were happy with the strategic schemes can take decades, an Denis approach (an area like the Lea Valley) financing strategy orSchéma Directeur for system, and there is clear and agreed plan independent organisation is crucial. Land is that it is not a single flagship project, but a the Metropolitan area, the councils may get which reduces the risks. Montpellier’s assembly is assisted by the technical agency, coherent spatial vision and strategy’.18 funded to work up designs and feasibility. development company employs 120 Grand Paris Aménagement, formerly the people, and plays a leading role in securing Land and Technical Agency of the Paris 49. French cities have invested extensively 51. A similar approach was also taken in high quality design as well as integrated Region (AFTRP), which was set up by the in new light rail systems to open up Montpellier, the fastest growing city in transport.19 State in 1962. Its territorial jurisdiction development in inner city areas, such as in France, where the City acquires land

covers the whole of Île-de-France, now the North East Paris around St Denis, which had far in advance of development, and the Paris Metropole. There are four functions: lost jobs and residents. Metropolitan authority then invests in 19 Nicholas Falk, Postcard from the future, Post- studies and land assembly, land and extensions to its extensive tramway system card from Montpellier: a visit to assess Montpel- 18 Paul Lecroart, Cahiers, Large Scale Urban De- lier for the award of Great European City by the property engineering, development, and velopment Projects in Europe, 2010 to open the sites up. (Exhibit 10) Academy of Urbanism, 2016

34 35 it is taken from private owners before Urban Development Measures readjustment all property owners are

Conclusions infrastructure and planning permission is (Städtebauliche Entwicklungsmaßnahme ‘invited’ to temporarily transfer the available. 165-171): property rights of their properties a) Researchers agree that planning is much to a self-governing body for the “The urban planning law enables the less adversarial in most of Continental 53. One solution used by local authorities in redevelopment, also referred to as the speedy assembly of unused land. It is both France and Scandinavia is to acquire urbanisator. This urbanisator can be a Europe than in the UK, where a stronger used to mobilise land for development special purpose vehicle established by tradition of collaboration between all land for possible expansion on the edge and to finance municipal development the owners in the area of just one of the stakeholders for historic reasons is of cities many years in advance, and then costs. It can be used in situations the property owners. The urbanisator supported by government planning policies rent it back to farmers until it is needed, where there is an increasing demand will reparcel the land into building for housing, workspace, or public which neatly avoids the problem. But this plots that match the transformation b) Land pooling helps overcome the barriers facilities and the land is ‘unused or is not so easy in the more crowded South project. Consequently, all owners will to complex schemes where the local used wrongly’: that is not according to East of England where private sector then receive a building plot to build authority does not already own the land. the approved spatial plan. housebuilders and long-term funds take on. The value increase as a result of Joint ventures or municipally owned out options. Hence in a complex urban area The measure is financed from the urban transformation will first be development companies reduce reliance on the uplift in land values following used to cover the public infrastructure such as London, other methods are needed, private developers to take the lead. development. The municipality costs. The rest will go to investors’.24 particularly given the amount of capital buys land at existing use value, and c) Joint venture companies can also align required and the probability of rentals not then sells the land when it has been 57. In both countries the measures were or adjust the interests of different land covering holding costs. There needs to be planned and serviced for the price of introduced to combat possible speculation owners by providing a dedicated project what in law is called ‘equivalence in a no undeveloped plots. The difference when sites have been identified in plans management team with planning and scheme world’ if it is not to conflict with the is used to fund social infrastructure for housing development. However, the such as schools, parking and green development skills. European Convention on Human Rights or compliance of land owners or developers areas, and other costs involved in lead to potentially inflated values. d). If London were to follow the Dutch Building planning and development. Owners is also encouraged by other factors, as the Vathorst Amersfoort case study brings out: Rights or ‘First Choice’ model, developers 54. Dutch and German models: Thinktanks such can fend off the purchase if they are would recoup the proportion of the as Shelter and the Centre for Progressive willing to carry out development in accordance with the plan, in which • Firstly, the provision of infrastructure site’s value or area that they put in, with Capitalism, as well as the Town and Country case the municipality gets some using finance at rates available to local the sanction that the municipality could Planning Association, have all called for compensation.” 22 authorities cuts the costs that a private undertake the plan it has drawn up, which changes in the 1961 Land Compensation Act developer would have to pay. would speed up cooperation. to bring the UK more in line with countries 55. Urban Development Measures have also • Secondly, the greater speed of 20 been applied in the very different city development, thanks to a multiplicity e) The availability of ‘patient capital’ for such as Germany. Both Germany and the Netherlands have adopted similar systems of Frankfurt, Germany’s main financial of builders and buoyant rental sector, installing local infrastructure, such as roads secures an earlier return on investment, centre. In an article on German experience and utilities is also a strong incentive for to ensure cities grow in a sustainable way. which is important when profits are collaboration, as it has been in London in As the value of land is shaped by the cost of Councillor Ed Turner comments: ‘Although made from building rather than from the past. bringing it to an agreed use, it is reasonable these measures are useful as a means of dealing in the land. to deduct these costs from the sales value encouraging recalcitrant landowners to get • Finally, the practice of disposing of eventually achieved. Compensation to sites developed, that have also been used serviced sites as a proportion of the land owners needs to offer‘an equitable quite extensively since their introduction in expected or achieved sales value means that developers can be chosen on the INCENTIVISING LAND ASSEMBLY 1971, for instance around 6,000 units in the balance between the public interest and basis of the quality of their proposals 52. Much of the inflation in land values and the interests of those affected’, which is Frankfurt district of Riedberg were delivered rather than the financial offer, and this delays in development can be blamed on not necessarily linked to market value, and using this measure.’ 23 feeds back into lower land prices but ‘speculation’ about the prospects of rising can be lower. Advice to URBED from the quicker returns for the land owners. 56. A similar process takes place under the house prices, which can lead to landowners Legal Department of the City of Freiburg Dutch Building Rights model, as the Dutch 58. Estimates suggest that land values are a ‘holding out’ from development. Hence explained how what in Germany is called academic Erwin Heukens explains: lower proportion of final sales value than in some form of compulsory purchase may be Urban Development Measures have helped 25 ‘In the case of urban land the UK: around 25-30% for serviced sites. required. Though the threat of compulsory the City to grow in a sustainable way21: purchase may restrain land values, exactly 22 We are indebted to Wulf Daseking, formerly 24 Erwin Heurkens in Squire and Heurkens, Inter- the opposite can occur. There is therefore 20 Centre for Progressive Capitalism, Market Prices director of development in Freiburg, for making national Approaches to Real Estate Develop- the question of how land should be valued and the Housing Crisis, 2017 this explanation available ment, 2014 21 Nicholas Falk and Barry Munday, The Housing 23 Ed Turner, Developing Brownfield Land: argu- 25 Information on the costs and returns from for compensation purposes place when Forum, The ABC of Housing Growth and Infra- ments for a more active local state, Journal of strategic housing development is set out in two structure, 2014 Building Survey Appaisal, vol. 5 no 3, 2016 URBED reports: Beyond Eco-towns – the eco-

36 37 occur building large scale new settlement the degree of independence enjoyed by planning. Frankfurt Riedberg: Pooling land on greenfield even if land is cheap. While German cities. But it should also look to 1. The urban extension of Riedberg was 66. The much higher levels of public investment developments closer to the centre have the financial mechanisms used in French started in 1999 by the City’s development in infrastructure in the past in the rest been much more popular, many of those and North American cities to fund local company HASEG, but by mid 2012 was only of Western Europe has made transport working in Frankfurt’s financial district infrastructure, as well as, of course, its own half complete, creating a financial deficit. infrastructure, or the lack of it, less of commute from towns elsewhere in the past history. This was due to the delays in connecting a barrier to development. Also, as we region. the extension with the centre until a Metro 61. The key in short is having development have seen, much of the local cost can be extension was opened in 2010. By 2014 agencies with the staff and expertise to recovered from the development. Larger there were about 1,500 residential units, drive complex projects to completion over a municipalities, such as Frankfurt, not only with many of the higher priced homes being period of time that usually outlives any one control their transport operators, and in taken by elderly people, while the rents of politician’s term of office. many cases energy suppliers, but also have experienced development agencies. apartments were below the inner-city level. This example shows the problems that can German municipal independence: French transport charge: 62. Freiburg, with a population similar to a London Borough, takes care to arrange 67. While it is not directly related to land assembly, French provincial cities as A notable feature and incentive in the agreed plan under the ‘building rights’ or finance through an arm’s length trust that well as Paris have all benefitted from the Netherlands is that social housing is cross- ‘first choice’ model. In other words, the provides the investors with security against transformation of their public realm as cars subsidised using a ‘value gradient’ which is rights of the private owner are constrained political change. Funding for house building have been taken out of city centres when set so as to recover the investment. Bids can by the wider public interest. is readily available through local savings light rail systems have been introduced. then be evaluated on the basis of the quality banks or Sparkassen (the equivalent of what c) The local authority or a specially purposed of the proposal rather than the amount British building societies used to be before 68. Part of the secret has been the Versement vehicle set up as a partnership with private offered, thus achieving a higher standard they turned into banks). Transport, a charge on the payroll of developers, plays a more proactive role in of development which also speeds up sales employers of more than ten staff of enabling development on complex sites, 63. These are well-positioned to judge the and hence boosts viability. 2.6%, which in 2008 contributed 70% with landowners getting a share of the uplift need for development and also the capacity of the funding of the regional transport in development value. Note, with faster of individual developers. This is one of authority in Paris. This is hypothecated to rates of development speculators lose out, the factors that explain the greater use of local transport, and can be used to keep but genuine investors may well do better, as cooperative building groups or Baugruppen, CONCLUSIONS fares down as well as to extend transport financing costs will be lower. of which there were 130 in the urban a) Land values are generally lower in the services. extensions of Reiselfeld and Vauban, as Netherlands and Germany than in the UK raising finance for an unproven project or 69. The huge investment in ZAC Claude Bernard and housing is much more affordable than 26 developer is much less of a problem. was explained by the confidence that the in London. Lower house prices and hence RESOURCING LAND ASSEMBLY 64. German municipalities employ multi-skilled main private investor, BNP Paribas, had in land values are helped by faster rates of 59. The final obstacle to speeding up the development teams that take on the some the implementation of the City’s spatial and development, the availability of suitable house-building process is the skills and of the roles played in the UK by national investment plans, in that case involving both land with planning permission on which to finance needed to prepare and service the organisations such as the Environment light rail and an RER extension. build, and a wider variety of house-builders, land for development on the part of both Agency and Historic England. This probably which are mutually reinforcing. developers and local authorities. Not only 70. A French development agency (Société makes collaboration easier. Publique Local d’Aménagement) operates b) A compromise is secured over who gets does this involve reaching agreement with a 65. One of the most difficult obstacles can with the flexibility of a private company what from development. Land prices are variety of different owners who may have no be securing access to sites, as transport without loans being counted as public ‘frozen’ on ‘under used or poorly used land’ incentive to sell their land, but also dealing undertakings in the UK seek contributions debt. The agency takes out the equivalent designated for development under the with a number of national organisations from developers, which are often said to of options to acquire the land so that German system. They have also been kept responsible for the provision of utilities and create greater delays and uncertainties than they do not have to pay for sites until it is down in the Netherlands by the introduction transport infrastructure. It also calls for the capacity to protect different environmental developed. of powers for the City to implement an 26 More information on how the financial system interests, and relocate existing occupiers. works is set out in Nicholas Falk’s report for The Smith Foundation, Funding Housing and Local nomic issues, 2008, and Steps to Quality Growth 60. London can possibly learn most from Growth: how a British investment bank can help, for Cambridgeshire Horizons, 2010 2014

38 39 American development commissions 76. All great cities aim to reduce the space they have invested, private banks tend to given over to private cars, and want to follow their lead. 71. The US is known for public-private concentrate or intensify development partnerships, and a climate of cooperation 83. The greatest advantages from sharing around transit nodes, such as railway or city boosting is created by agencies made in land value uplift (a more acceptable stations. up of business and academic leaders. This term than land value capture) have been is comparable to London First, but with the 77. Hong Kong and Copenhagen have both in countries such as Hong Kong and powers and resources to make projects used high density development to fund new Singapore. 28 There, state ownership of most happen. metro systems from the uplift in land values, of the land has enabled the value created by such as from the building of Orestad, a new housing and commercial development to 72. The Portland Development Commission, town on the way to Copenhagen Airport. fund much improved transit systems, which now called Portland Prosper, recently then enable significantly higher densities.29 played a key role in relocating the US Post 78. As with proposals for Crossrail 2, this Office depot away from the city’s main provides a further rationale for more 84. German and French cities, where most regeneration area to nearer the airport, thus proactive and ‘joined-up’ forms of planning land is privately owned, or Dutch cities releasing a large central site for housing than were used in building the Elizabeth that recover land from under water, have development. Line. benefitted from much greater national investment in local infrastructure. 73. Build Toronto, which describes itself as 79. The costs of acquiring and servicing large a municipal real estate value creation areas of land can be very considerable, and 85. This has helped cities such as Amsterdam company, mobilises ideas and expertise so require some form of ‘patient capital’, and Freiburg to compete with more that might otherwise be lacking, and is where interest and repayment takes place suburban and less dense and more rural another example of how private sector over several decades or more. areas by offering a better quality of life in support can be secured. The property tax ‘compact cities’. 80. All development involves risk and so a system in the USA helps land assembly in rigorous form of appraisal system is needed. 86. In turn, higher rates of house building complex situations, such as the reuse of The US bond system involves an evaluation have limited house price inflation, though historic buildings, and to fund advance of both the project and the borrower, possibly, some argue, at the cost of higher infrastructure. Municipalities raise bonds to as well as a vote on whether a particular levels of personal taxation. acquire and service land, as well as to invest project should be promoted. Tax incentives in transit systems, ‘packaging’ the finance help attract private investment, and are from public and private sources. targeted at urban priority areas. 74. The starting point is their power to borrow 81. Continental municipalities in contrast tend against the expected increase in property to access low-cost, long-term capital from taxes resulting from development. These state investment banks. This comes from are charged on the landowner, not the Caisse des Depots in France, BNG in the occupier. Netherlands, KfW and also the Sparkassen in 75. The designation of Urban Renewal Areas Germany.27 where land values are low and uplifts 82. Similar organisations exist in Sweden and can be high encourages land owners to it appears that the UK may be unusual in collaborate when they know that the tax its reliance on private banks to fund land revenue is hypothecated to funding transit assembly. These loans may not be counted systems that will boost the demand for their against public borrowing requirements. properties. A necessary corollary is that the They have another advantage over the municipality has to be able to raise the tax British Public Works Loan Board as state rates if the investment fails to perform, or, investment banks employ staff expert in in the worst instance as in Detroit, file for 28 Note, this term is now preferred by UN Habitat, assessing investment proposals so once and is being taken up by TfL bankruptcy. The process supports state and 29 H Suzuki, J Murakami, Y-H Hong and B Tamayo- se: Financing Transit-Oriented Development with city independence so long as the economy 27 Nicholas Falk, The Smith Institute, Funding Land Values: Adapting Land Value Capture in Housing and Local Growth: how a state invest- Developing Countries. World Bank Group, 2015 is growing. ment bank can help, 2014

40 41 LESSONS FOR LONDON 11 Hong Kong rail development triangle a. The main message from North America viable, for example in pooling land from is that cities generally benefit from local different owners or developers. private developers with the capacity and commitment to support their cities, assisted e. Case studies have shown that successes in by tax incentives at a State level, and skilled building affordable and sustainable housing negotiation over development rights and are achieved by ‘winning teams’ working densities by the municipalities, aided by together over many years (over a decade) public development agencies. to create sustainable new neighbourhoods, and with greater collaboration between the b. Larger European cities such as Paris or different sectors and professions than is 1 Amsterdam intervene more directly in land, usual in the UK. and employ some form of development agency that can act independently from the f. Instead of public funds being spread local authorities that set it up. They have thinly and dependant on bids to central long benefitted from the popularity of living government, investment is concentrated near the city centres, and have had less in places with the most growth potential competition from the suburbs; hence even and more is raised locally thanks to with lower property values development is municipalities being able to identify and still viable. mobilise the necessary land. c. Smaller cities (the size of a London g. Compensation reflects a balance between Borough) tend to set up joint venture public interest and the interest of the companies with landowners or private original owner, while offsetting the costs developers. These companies have full-time of providing local infrastructure. Effective staff dedicated to implementing the project partnerships between the public and private that outlive any political change, who can sectors succeed where they are supported cross the boundaries between different by national policies with long lives so authorities, and who supplement the skills investors know where development will and resources of the private sector. occur and when infrastructure investment will be made. d. State investment banks are able to supply long-term loans at lower interest rates than Hong Kong: Rail Plus Property that high standards can be maintained. The a private developer would have to pay, Programme 1 URBED for Joseph Rowntree Foundation, Re- 1. Hong Kong is now well-known for funding leasehold system enables the freeholder, which helps make more complex schemes generation in European Cities: making connec- tions, 2008 its extensive metro system from the uplift in in this case the community, to benefit from land values. The zoning plans and Floor Area the long-term success of an area, rather like Ratio system provides a clear and flexible the Great Estates in London continue to do. system to encourage private investment At its best it can secure longer-term value in locations around new transport nodes from development than selling land to the located in areas of high demand and where highest bidder. land for development is scarce. The role of the transit authority in managing the public realm and collecting property rentals means

43 VATHORST, AMERSFOORT CASE STUDY 4 ZAC CLAUDE BERNARD CASE STUDY 5 Building a sustainable urban neighbourhood Regenerating a run-down inner-city area

Vathorst is a developmment of 9,500 homes located on former The report of a study tour by the TEN Group of London planners to meadows at the junction of two motorways to the North of Utrecht. It Paris in 2012 summarised the possible lessons from ZACs under seven is linked with the rest of Amersfoort through a new railway station built headings, which together explain the success of major regeneration at the start of development. After an earlier experience ‘The Alderman projects such as Paris Rive Gauche and ZAC Claude Bernard. leading the project (Tom de Mann) persuaded four developers that it would be better to combine forces through a joint company (OBV). ‘After 7 LESSONS FROM ZAC DEVELOPMENT an unhappy earlier experience, The municipality learned it was more profitable to work together with well-known builders in the region’. He • municipal leadership; won community support in the face of initial opposition by showing the • advance installation of infrastructure; results would be better for all. • integrated and proactive development planning; An agreement was drawn up with the Dutch government in 1993 on the size of the extension, the contribution they would make to reclaiming • a leading role for public development agencies; derelict land, and how the settlement would be connected to the two • concerted investment in priority areas; motorways it adjoins. • intelligent procurement and development frameworks; Tom de Mann explains that ‘the developers that had a good connection with the municipal administration…organised a combined effort in • urban ‘greening’ and what are called ‘open blocks’ acquiring as much land as possible.’ ....’Voluntary pooling only came after all the agreements’. This was necessary before OBV could get a The Zac Claude Bernard case study features a high density mixed loan from the municipal investment bank (BNG) to draw up plans and use scheme around a transport node just off the Paris equivalent of install the infrastructure. Developers received back the same volume the North Circular. The total floor area is 103,000 m2 on an area of of serviced land they had contributed, and the Chief Executive, who 14.6 hectares, with 34,000 m2 of housing (300 apartments of which was from a commercial property background, decided who got what. 50% were social), and 40,000 m2 of offices, plus a cinema, shops and Typically serviced sites were parcelled up of around two hectares. The schools and a care home for the elderly. municipality received back 30% of the land for social housing, and a balance has been achieved at a neighbourhood level of 500 units, Detailed planning started in 2005 and the scheme was completed ten with four different price ranges. Most of the social housing is sold to years later. The land included an old hospital (4.2 ha) and the banks of occupiers, but when resold a proportion of the uplift goes back to the the ring road and canal 10.4ha, which included areas of light industry. housing association involved. Initial funding came from the state investment bank to prepare the With building rates of some 6-700 units a year, by 2017 the new land for development. One of Paris’s development agencies, SEMAVIP, settlement has grown to 9,500 homes out of a planned 11,000 in then appointed as private sector partner BNP Paribas to carry out a number of distinct neighbourhoods, plus a shopping centre and commercial parts of the plan, with social housing provided by housing business park, schools and cultural facilities. 40% of the land is given associations. The French planning system makes it easier to secure over to green space. collaboration between public bodies, as well as to engage the support of private investors.

ZAC CLAUDE BERNARD

Source: P. Lecroart – Source: Tom de IAU, and Learning from Mann, Trudy de Paris 2012 Mooy, and others at Vathorst.

44 45 PEARL DISTRICT, PORTLAND CASE STUDY 6 BUILD TORONTO CASE STUDY 7 Urban renewal areas in Portland Oregon Establishing a municipal ‘real estate value creation company’

US cities such as Portland raise funds for development through bond Build Toronto was set up in 2008 to deliver ‘enhanced value’ to one issues. They repay the borrowings through Tax Increment Finance (TIF), of Canada’s most dynamic cities. This is achieved by delivering more where private finance is borrowed against the expected property tax affordable housing and making better use of land already owned by the returns from intensification. Developers are encouraged to take forward City. This enables the intensification of land near transit nodes, and the projects in designated Urban Renewal Areas, backed up by public company then sells of investments when the risks have been removed private partnerships such as the Portland Development Commission. at appropriates stages in the development cycle. A report Build Toronto: strategic direction 2015 2019 sets out the achievements Community benefits are secured by negotiating higher densities through ‘overlays’ on the zoning plan following the principles of Transit-Oriented Development or Smart Growth. For example density in the Pearl Area was increased from 15 to 87 units an acre after a viaduct • The Board of Directors is made up of experienced leaders from both was demolished, to 100 units when a new tram line was started, and 131 the private and public sectors units when the first neighbourhood park was built. • The vision is to create a ‘centre of excellence’ and generate a net Extra development made possible by improved infrastructure, for financial return in dividends and increased property taxes example a new tram line or the extension of the suburban Metropolitan • The idea is ‘unlock value of surplus real estate’ by supporting Area Express (MAX), generates higher property taxes which are then projects that the City has an interest in used to service and repay loans over 20-25 years. Bond issues have to get support thxrough ballots at election time, and are also scrutinised -- Reducing the various risks e.g. zoning, tenants, by investment agencies. No more than 15% of the total land area can construction) be designated for TIF purposes, which helps to focus demand and thus -- Creating ‘livable neighbourhoods’ ensure the success of the incentive model. -- Developing sites around transit nodes to help the city The American system relies heavily on entrepreneurial real estate become more sustainable in the long term developers, often local. The land assembly process in the Pearl District started in 1992 when a group of riverside property owners presented their vision to the city council, which included new residential districts The company can tap a $160 million city guaranteed loan facility, and in what had previously been a purely industrial and commercial zone. aims to build up sufficient assets to cover its running costs. Its role in The plan identified various projects for the Portland Development housing include: Commission to undertake, such as removing an intrusive viaduct in return for increased densities on land acquired by a private property • Embracing density especially close to railway stations company from the railways. An analysis of the projects undertaken in the Pearl River District suggests that only a small proportion required • Supporting mixed use with good public realm the direct involvement of PDC, but undoubtedly it played a key role at • Providing affordable housing both for rent and owner occupation. the start when the future was unclear. • Selling a majority of a project while retaining a material interest

• Partnering with first-class organisations

• Promoting development around future light rapid transit stations, including collaboration with Metrolink on city owned land near stations.

Source: www.buildtoronto.ca Source: Troy Hayes

46 47 RIESELFELD FREIBURG CASE STUDY 8 Aerial view of Rieselfeld Infrastructure-led development on poorly used land

Rieselfeld is an urban extension where some 12,000 people now live in 4,200 homes in an area of 72 hectares. The main site was a former sewage works on the edge of a relatively poor housing area.

The City of Freiburg believed that the first step should be to decide what kind of city is wanted. It had learned from the mistakes of earlier high rise flats which had proved unpopular, and wanted a built form where families could call their children from their own flat on whichever floor. The public wanted variety, limited areas given over to parking, a denser form of development with green wedges to bring people together. The density was high enough to pay for high quality infrastructure (around 60 dwellings per hectare). Design competitions for Rieselfeld were organised and the judges included local groups. The process brought people together.

Development started in 2006 and was complete about ten years later) A notable feature has been the provision of infrastructure such as shops and schools in advance of the housing along the spine of a tram line extension. These made the new development more attractive to its new residents than moving away from the City.

The finance was assembled through a separate trust so that the municipality could recover its investment without any loss. Roughly a third of the housing would count as ‘affordable’ (there is no German equivalent to ‘social housing’), but four-fifths of the housing in Freiburg as a whole is rented.

Much of the housing was commissioned by its occupiers, through what are called Baugruppen, and 130 groups were active in both Rieselfeld and Vauban (which was on the site of an old military barracks).

Source: Wulf Daseking

48 49 4 HOW ALTERNATIVE MEASURES COULD BE IMPLEMENTED

1. While the prevailing national political mood 5. The pressures to build more housing and may not favour drawing lessons from other fund local infrastructure have led to some European cities, there is evidence to suggest commentators supporting reforms of that they are succeeding by following property taxation, to reduce the burden principles that British cities used to apply, on small businesses and raise more from but may have forgotten. London cannot wealthier private households. Land Value simply rely on the market to fill the gaps. Tax and Zoning, as in Denmark and parts of the USA, are being advocated by a range of 2. Following the financial crash of 2008, the interests. number of private developers and builders fell, leaving only a few with the capacity to 6. Some have argued that there is scope to take on very large schemes. make better use of the landlord and tenant relationship by structuring partnerships 3. While foreign developers have provided when high density developments are outlets for international finance seeking involved, as for example in Kings Cross. relatively safe locations, such as in Nine Elms, , much of the land with 7. Our research identified policies, strategies planning permission is said to be owned and procedures that have been applied by ‘traders’ rather than builders. Outside positively on the Continent and elsewhere established locations, development to facilitate land assembly and accelerate A better land assembly model is progress continues to be slow, even in the pace of housing delivery. Informed needed to speed up house building areas with major potential; developers, by those findings, this section identifies by adapting the measures that work well in other countries to the understandably, prefer to go for the ‘low ten measures that are the ‘best fit’ for the particular challenges and culture hanging fruit’, while investors avoid areas pressures facing London to ensure that land of London. with multiple uncertainties and high initial is brought forward for development in the costs.1 right locations at the right time. Much can be achieved by making better use of existing powers, and 4. There is no shortage of proposals for 8. To assess the impacts on the speed we have explained how this can speeding up development. The widening and quality of delivery of the proposed be achieved. There are also some of the Nationally Significant Infrastructure measures, two test sites in very different measures that require government Projects (NSIPs) regime to allow “related parts of London were selected. The support or even legislative change. housing development” to be included application of the proposed measures to The recommendations are within a development consent order and the test sites, and the benefits of applying structured around the four themes the efforts of the National Infrastructure these, are covered in the final section on the of the report, some of which Commission may open the door to advantages of a better model. are already being implemented, innovation through changes to the and start with the fundamental 9. The boroughs and the GLA already Compensation Code, and more inventive proposal of introducing Land have a broad range of powers at their and wider use of compulsory purchase Assembly Zones (LAZ) to make the disposal which can be used to support whole process easier and faster. In powers for housing. housing delivery. We have considered all there are ten recommendations, which have been summarised at the how those existing powers can be used end of each part. 1 Interview with former Redbridge Planning Officer.

51 with more force and with more focus to being actively encouraged, for example importance of tackling the housing crisis, and local plan targets is expected; larger facilitate land assembly, and some of our close to transport nodes. In summary we there needs to be a focussing of resources parcels would allow an economy of scale recommendations are consistent with the recommend: on those sites which are likely to yield that permits developers to deliver both direction of travel of the Mayor’s housing the most substantial returns in terms increased housing numbers, higher quality policies, set out in the draft London Housing 1) Introduce a new planning designation of housing output – both in numbers development and public realm, and an Strategy. termed ‘Land Assembly Zones’ (LAZ). and quality of build. To facilitate that appropriate contribution to affordable 2) Require Land Assembly Zone focus we recommend the introduction housing. 10. We have also identified those areas where, designations to be accompanied by of a new planning designation for use in to achieve the full potential of the measures 21. The same optimisation is unlikely if an ‘in principle’ resolution to exercise development plan documents, underpinned proposed, statutory changes are needed. compulsory acquisition powers. development takes place on smaller parcels, by strategic policy support in the London At the core of the recommendations is the providing a real incentive for land-owners 3) Identify a lead body with responsibility Plan. We term these designated areas ‘Land need for a more interventionist approach to amalgamate ownerships. The boroughs for land assembly in each Land Assembly Zones’. by both the GLA and boroughs to land Assembly Zone. should be emboldened to reject piecemeal assembly. This means intervention in 18. Ideally this designation would be supported development where it does not offer setting the planning policy framework for Land assembly often happens voluntarily in the emerging review of the National the wider planning benefits of a larger land assembly, the exercise of compulsory if it is clear that it is encouraged, there is a Policy Planning Framework (NPPF). The scale development. The policy wording acquisition powers to bring sites together commercial benefit and there is a plausible designation would be used to identify designating the LAZ should make it clear and supporting delivery, both in terms of threat of compulsory acquisition. While the sites or areas for land assembly enabled that piecemeal development will be resisted. finances and resource. Netherlands has a land pooling mechanism development in the same way as Zones We do not propose a minimum size for Land d’Amenagement Concerte (ZACs) have been Assembly Zones. 11. Voluntary land assembly does, and should, which is backed up by compulsory identified in French spatial or territorial have a key role to play, but more than purely acquisition powers, the voluntary 22. The critical difference between the plans. voluntary measures are needed to tackle participation of landowners means that proposed Land Assembly Zone and existing the scale of the housing crisis. We make compulsory powers are rarely exercised. 19. Unlike Opportunity Areas or Housing Zones, regeneration and housing designations is recommendations as to how voluntary the purpose of the designation would be to the underlying “in principle” approval to 15. The same has been true historically in initiatives can be supported and encouraged facilitate land assembly and any designation exercise CPO powers to support delivery. England, with the majority of land in alongside the interventionist measures. would be underpinned by a commitment When designating a zone, the local planning the former new towns being acquired on the part of the local planning authority authority should, at the same time, confirm 12. Our recommendations cover each of the by voluntary agreement against the to exercise compulsory acquisition powers. that it is willing to exercise CPO powers topics: planning for strategic housing; backdrop of a clear willingness to use CPO This approach ‘bakes in’ from the outset and that this will have implications for acquiring land; incentivising land; and (Compulsory Purchase Order) powers if of a designation the clear message that compensating landowners (see below). resourcing land assembly: necessary.2 interventionist measures will be used to That willingness would be demonstrated . 16. Assembly occurs more readily if there is a bring that land forward. We suggest that by either an “in principle” approval to the direct economic benefit to land owners in these should be zones where: exercise of CPO powers or a resolution to PLANNING FOR STRATEGIC participating, part of which benefit might be HOUSING use CPO powers subjct to conditions being at risk if compulsory acquisition takes place. • housing density can be significantly fulfilled. 13. The public sector should identify strategic Where the ownership is fragmented or increased if land is assembled into larger sites or areas where land assembly will 23. As the case studies demonstrate, especially where the interests are very different, as in development parcels; be supported, through interventionist Portland, where there is a clear policy the test cases explored in the next section, • there is fragmented ownership and that measures if required. We term these requirement then the use of coercive land land ownership patterns can hold back fragmented ownership is a development designations Land Assembly Zones (LAZ). constraint; and assembly powers is often unnecessary. Site comprehensive development and delay owners, and developers, will self-assemble. 14. The aim is to provide a focus and to building appropriate housing in the absence • initially at least, they are within either a short distance of existing or planned of an economic motivator. 24. The intention is that Land Assembly Zones encourage land owners to self-assemble, transport nodes, on the basis that signalling a presumption that compulsory should be the exemplar areas in which the 17. Land assembly has a role to play in intensification can best be justified powers will be used if necessary. It within these areas. new models of land assembly and different facilitating development at all scales and recognises that limited resources are approaches to compensation addressed in for all types of use. However, given the 20. Within Land Assembly Zones, there would available for public intervention, and that the recommendations will be used. Within be a policy recognition that comprehensive they will be focussed towards the areas Land Assembly Zones, the full suite of land 2 Anthony Alexander, Britain’s New Towns: Garden development in line with the London Plan where greater intensification of uses is Cities to Sustainable Communities, Routledge assembly recommendations in this report 2009

52 53 should be brought together to maximise Assembly Zones to go further. In the authority could be introduced. This would that local authorities and the GLA should output. However, undesignated and longer-term we recommend that the give developers greater clarity on when a take the lead on the delivery of Land smaller sites are also important in delivering process of designation should remove the local authority may be willing to exercise Assembly Zones, with flexibility and open- housing. need for a further public inquiry or hearing its powers, opening the door for more mindedness regarding future arrangements. into any compulsory purchase order in collaborative working between developers 25. The land assembly issues faced by small 38. The intention is that the designation of a respect of the designation land. Any and local authorities on sites which may be sites are often no less complex than Land Assembly Zone and a lead authority objections would be dealt with by written too small to be considered for designation, those faced by large sites. Many of the should encourage private land assembly. representations, resulting in a streamlining but would otherwise be sustainable housing recommendations in this report can be There are many success stories of the of the compulsory acquisition timeline sites. applied equally to such sites, but we see private sector assembling land, as illustrated without prejudicing the independent the Land Assembly Zones as areas of focus, 33. A strong lesson from the case studies is in Appendix B. They are often able to interrogation of the process. where the public sector expresses a clear that having a single body, or lead body, acquire land cheaper than the public sector, willingness to intervene more directly to 30. Provided that there remains an independent with responsibility for land assembly is and are better able to balance the additional make land assembly happen. determination of whether a LAZ related beneficial, a good example being the costs of an early acquisition against the CPO is in the public interest - including Vathorst Development Company set up longer-term benefits. 26. The success of Land Assembly Zones having regard to any objections - we do by the municipality of Amersfoort in the relies on greater internal resource at the 39. They need to be encouraged to take on not foresee any human rights implications. Netherlands. In most cases this should GLA and in the boroughs, but also the the ‘messy sites’ rather than sites that can We suggest that the Secetary of State (or be the local planning authority – they ‘skilling up’ of local authorities and the be brought to the market more quickly. the GLA if powers are devolved) retains already have both planning and compulsory private sector to understand the potential They are more likely to do so if they know the discretion to require a public inquiry or acquisition powers. benefits of the proper use of CPO powers. that CPO powers will be used to assist hearing. Any compensation disputes would We see that “skilling up” as a critical part 34. In sites or areas where there are cross them. As an example, the GLA’s promotion be dealt with via the usual channel of a of building the motivation and confidence boundary influences, or for particularly of a compulsory purchase order at the reference to the Upper Tribunal. within local authorities to use the CPO large or complex sites, the GLA or an former gasworks in has enabled powers already within their armoury more 31. As part of any zone designation there identified subsidiary delivery vehicle, such development of the site and delivery of widely to facillitate housing development. should be a high-level viability review. Areas as a Mayoral Development Corporation, 3,750 new homes. The final paragraphs in this section makes should generally only be designated if there should take the lead role. 40. As referred to above, we recommend that suggestions regarding resourcing. is significant value uplift as a consequence 35. In the longer term, it may be appropriate to at the point a local authority designates a of intensification and land assembly. Where 27. A Land Assembly Zone designation needs to create a cross-London single purpose body Land Assembly Zone it should be required, land is drawn together privately the whole have ‘teeth’ if it is to act as a real incentive whose remit is to facilitate land assembly alongside that designation, to publish a of that benefit attributable to the land to self-assembly land. We also recommend across the Land Assembly Zones, on a policy detailing the criteria that it will apply assembly will accrue to the landowners. that at the point a local authority designates model such as Grand Paris Aménagement. when deciding to exercise compulsory Where there has to be public intervention, a Land Assembly Zone it should be The need for more homes applies across acquisition powers. then the value to the landowners will required, alongside that designation, to the entire capital. That means all parts reflect existing statutory levels of CPO 41. In deciding to exercise compulsory publish a policy detailing clear criteria that of the capital and all scales and types of compensation, which would disregard any acquisition powers, the local authority or it will apply when deciding to exercise housebuilders play their part. uplift in value attributable to the enhanced GLA would need to be satisfied that this compulsory acquisition powers. scheme that could be delivered as a 36. A pan-London approach would facilitate would deliver an enhanced development 28. A programme should also be outlined. This consequence of the land assembly. the cross-fertilisation of ideas and good that could not be delivered as programmed would give land-owners and developers practice, combined with the efficiencies but for the intervention. 32. A policy detailing the criteria that will be certainty as to when such powers will of experience. Such a body could be an applied when deciding the exercise of 42. The local authority would support be used and the ability to challenge an agency within the GLA (for example allied compulsory purchase powers could have whichever land-owner or developer best authority’s failure to do so in accordance to the Homes for Londoners Team), a new wider application beyond designated met the published criteria. In order to make with those criteria, which in turn provides agency with local authority ownership or land. While the policy underpinning a the process of requesting a CPO as easy more certainty for investors. It will also a public-private partnership – perhaps a Land Assembly Zone designation would be as possible, the GLA should introduce a signal that if the market fails to assemble public interest company. Depending on the tailored to the specificities of that site, a suite of template CPO contract documents the land within the programmed timetable form of the body, legislative change may be more general policy detailing the ‘threshold’ that could be used by local authorities and then the public sector is willing to do so. needed. tests for intervention by the local planning developers. The backdrop to every CPO is 29. There is scope for the support for Land 37. In the meantime our recommendation is different. However, we consider that there

54 55 is scope to prepare template or skeleton 5) Allow Mayoral confirmation of London impediments to implementation in respect Recommendation 3: documents to guide local authorities. This local authority CPOs of the grant of planning permission, . Identify a lead body with responsibility could include an outline of a Statement the need for land assembly to deliver for land assembly in each Land 6) Introduce ‘Use CPO land or lose it’ of Reasons which identifies the matter provisions greater and quicker growth, and the Assembly Zone to be covered and template settlement appropriateness of the site for that purpose, 47. In this section, we make recommendations agreements, again guiding the detail to 44. Statutory and policy implications: The being demonstrated effectively by the about processing a CPO, what land interests be included. There is scope to introduce starting point of any designation is the designation. should be acquired, and how to manage the standard form documents, for example identification of appropriate land. Allied compulsory purchase process. Presently, 50. We recommend that the GLA / local indemnity agreements (governing the to the introduction of the new planning CPOs normally follow planning permissions. planning authority be willing to promote relationship between the acquiring authority designation, a duty will need to imposed on That has, incorrectly, become an assumed a CPO, in the interests of “good planning”, and developer). Adopting and publishing boroughs to identify land which is suitable procedural requirement. ahead of any planning consent as the a standardised approach would provide for designation as a Land Assembly Zone. diagram of land value gain against timescale greater transparency for developers and 48. The Guidance on compulsory purchase 45. To deliver Recommendations 1, 2 and 3: illustrates. (Exhibit 12) limit the scope for protracted negotiations. process3 does not posit planning permission These would strike a fair balance between • The NPPF, and accompanying guidance, as a pre-requisite to the exercise of 51. This approach will motivate any sluggish the interests of the parties and should be would be amended to include support compulsory purchase powers. Instead, the landowners, who are otherwise capable for Land Assembly Zone designations available for public scrutiny. Guidance provides that acquiring authorities of delivering, to bring their sites forward • In the longer-term, an amendment need to be able to show that the scheme for development. In practice, it may mean 43. Together with the first recommendation, it would be needed to the Land is unlikely to be blocked by impediments the GLA/local planning authority taking would be clear that, within a Land Assembly Compensation Act 1961 and Acquisition to implementation, such as the need for control of the site for the medium-term to Zone, CPO powers will be used either to of Land Act 1981 to limit any inquiry into a compulsory purchase order in planning permission, and is clear that where ensure that it is only released to the market support private land assembly efforts or respect of land within a Land Assembly planning permission will be required, but once the proper planning consents are in independently, and that there is a clear Zone. Depending on the approach has not yet been granted, the acquiring place. The public sector can control the process for doing so. adopted, amendments may be required eventual land use by preventing the land to procedural legislation such as authority should be able to demonstrate The Compulsory Purchase (Inquiries that there are no obvious reasons why it being acquired until an acceptable planning Recommendation 1: Procedure) Rules 2007. might be withheld. permission is in place. . Introduce a new planning designation • Given the fundamental change proposed 52. This would be in line with the situation in termed ‘Land Assembly Zone’ (LAZ). 49. Planning permission, or a fully worked up it may be sensible to have a transitional both Germany with Urban Development This will provide the focus and arrangement where consideration of a scheme, in advance of the exercise of CPO Measures and in the Netherlands with the incentive to encourage land owners CPO is limited to a hearing or written powers is unrealistic when dealing with Building Rights model. Inevitably there to self-assemble by establishing the representations procedure for a period areas of significant change as a developer of, say, three years before requiring would be upfront costs which would only acceptability of using compulsory ideally needs to know at the beginning of written representations only. The be recovered once the land is sold. The powers in priority areas for housing CPO Guidance would also need to be the project that the entirety of the land will £250 million initial revolving credit facility development or intensification. amended to reflect this. be available, even though it may not be developed for many years. Land Assembly announced by the GLA to support land Zones will only be designated where that assembly could be used for such purposes. Recommendation 2: ACQUIRING LAND site is considered appropriate for housing . Require Land Assembly Zone 53. If no permission is secured, the local 46. We make recommendations about the in land use planning terms and high-level designations to be accompanied by planning authority/GLA will have the ability better use of statutory land assembly viability testing has been undertaken, as set an ‘in principle’ resolution to exercise either to acquire the land themselves or to powers, and identify possible new models out above. As such, there will be a level of compulsory acquisition powers. In acquire it for another party. As mentioned for delivery, both within the proposed scrutiny behind the designation. Reflecting the longer-term, the process for above, if there are multiple parties willing Land Assembly Zones and more widely. We that, the present Guidance should be CPOs relating to the designation land to develop the site then the promoter encourage more imaginative use of land updated to recognise that weight that should be streamlined by requiring all who best meets the Zone criteria should assembly powers, and a greater involvement should be afforded to LAZ designations compulsory purchase orders in respect succeed – a quasi-auction process for by the private sector. In summary: when considering whether there are any of LAZ land to proceed via the written the right to acquire the site based on the representations procedure. 3 Guidance on Compulsory purchase process planning benefits of the scheme proposed. 4) Allow confirmation of CPOs in the and The Crichel Down Rules for the disposal of Where compulsory purchase powers are interests of ‘good planning’ ahead of surplus land acquired by or under the threat of compulsion (October 2015) (“The CPO Guid- used to support a private sector partner, and planning consent ance”)

56 57 development does not occur then all land that they should be approved in the acquired should be held by or returned to absence of planning permissions or firm 12 Land value and timescale gain - present system (top) and as the local planning authority/GLA to ensure development proposals where the proposals proposed (below) that it is brought forward for housing. This align with the planning framework. PRESENT SYSTEM would be a condition of the public sector 55. The ability to confirm CPOs at the Mayoral Master Make CPO Confirm Site being willing to offer support. Plan CPO Inquiry CPO Acquired level would incentivise the use of best Agreed (S o S) (Valuation 54. In order to facilitate these practice in assembling land. This would Date) recommendations, we believe that the also give the Mayor a more intimate power to confirm local authority CPOs in understanding of compulsory acquisition Land value with London be delegated to the GLA as the in practice in the capital. Innovative benefit of scheme authority responsible for preparing the approaches could then be rolled out more spatial plan for London, as in Paris, for rapidly due to that closer oversight. Any

example. Better than anyone, the Mayor GLA-made CPO would require independent Land value ‘no understands the housing and wider planning determination and should be referred to the Land scheme world’ Value (Compensation) potential and challenges of London. Secretary of State. £m Delegating this power to the Mayor would 56. Too often, compulsory purchase powers enable London to take more of a lead in are exercised unimaginatively. There is solving its own housing problems. If that a tendency to assume that the freehold occurred then the GLA would also have the interest is required when a lesser interest ability to issue guidance on the conditions may achieve the same goal. required for CPOs to be confirmed – and could address, for example, the proposal

Inception Timescale (Years) The impact of a better land assembly model These two diagrams on the next page Date (for compensation) in contrast AS PROPOSED (Exhibit 12) show the potential to to being at the end of the present reduce the time frame and save on land process (above). The time frame for LAZ Master Make CPO Confirm Site Designation Plan CPO Inquiry CPO Acquired acquisition. The diagrams are essentially pursuing the CPO would be the same (Valuation Date) Agreed (Mayor) overlays that demonstrate the value over as putting a masterplan in place. In time of speeding up the land assembly other words the authority must get on

process, as well as possible cost savings. with the process, which encourages Land This is in line with the Continental case landowners to start pooling, for value with studies and harks back to the example of commercial reasons prior to the benefit of scheme the Croydon development corporation in making of a CPO. the 1950’s. Benefits: As the CPO process is one Land Present System: the first is a familiar which is ultimately confirmed by the Value Land value ‘no masterplan-led process where in a Mayor, as in the Continental case £m scheme world’ (Compensation) CPO follows and proceeds through its studies, we would expect the land to various stages until confirmation and be assembled faster notwithstanding land value is fixed at the point when the the pooling process prior to making land is acquired (the Valuation Date) the CPO. The light brown block after the CPO has been confirmed by the therefore shows both the time and Secretary of State. cost savings when compared to value uplift as a result of freezing the Land A better model: the designation of land value. Some of that in certain value frozen a Land Assembly Zone ‘freezes’ land cases would be shared back with the values at the point of designation landowners who have pooled in the which in turn becomes the Valuation first instance. Inception Timescale (Years)

58 59 57. The GLA should develop a “best practice” be given to the LAZ allocation when existing compulsory purchase regime to manual that addresses issues such as: considering if the confirmation of CPO be more innovative without legislative • A Co-operation Agreement which would is in the public interest. change. As best practice emerges, the CPO include suggested drafting to govern the mechanics of the land pooling, the basis • acquiring air rights (including air rights Guidance should be amended to reflect this. for the re-distribution land and how the above rail tunnels and above buildings) Recommendation 5: uplift will be shared • acquiring freehold interests, leaving . Allow Mayoral confirmation of London • Draft transfer forms to ensure that each occupiers in situ, if the land is required INCENTIVISING LAND ASSEMBLY local authority CPOs. CPO confirmation parcel benefits from the same reciprocal in the medium/long term; 65. Too often disagreements about value, powers should be delegated to the GLA rights and restrictions • acquiring options and/or pre-emption and sharing value, prevent land being • Appointment documents to govern rights as a way of encouraging land for London for CPOs not promoted assembled. We suggest equitable ways in the joint appointment and payment of onto the market and/or acquired at the by the GLA, and to promote CPO which this might be addressed both in the specialists (for example, valuers and appropriate phase of development. guidance in relation to CPOs within short term, without statutory changes, surveyors). LAZs, and, assuming the delegation and also when Parliamentary time can be of confirmation powers to the Mayor, 69. Those template documents should draw 58. As detailed above, we support, in the found to modify the Compensation Code. In more generally within London on the Dutch Building Rights model of appropriate circumstances, the acquisition summary we recommend: uplift being shared in proportion to the of land ahead of planning permission. Recommendation 6: geographical land owner’s possession or the 59. The more innovative use of compulsory 7) Introduce statutory land pooling . ‘Use CPO land or lose it’. If value of their interest. Guidance should also acquisition powers can ensure that land development on land which has 8) Freeze land values in LAZs be offered to voluntary land assembly on is not sterilised until it is developed. For been acquired compulsorily does not 9) Introduce a planning application sites which are designated for housing, but example, the acquisition of a freehold proceed, the GLA or local authority moratorium not underpinned by Land Assembly Zones. interest but not the leasehold interest, should step in to hold that land to The template documents are intended as a enables tenants to remain in occupation 66. The approach to land compensation in ensure that it is brought forward for guide to potential approaches; landowners until the land is required for that phase of the UK creates much more division and development. should still seek independent legal advice. development. delay compared with their Continental counterparts, as the case studies of Vathorst 70. In the longer term, this voluntary approach 60. This can allow occupiers a longer period of 62. This section highlights where guidance in the Netherlands or ZAC Claude Bernard could be underpinned by a new statutory time to relocate, minimising any business would need to be updated to reflect the in Paris illustrate. The difference between mechanism to cover two types of land or personal disruption, as well as ensuring approach in policy terms. the cumulative value of fragmented parcels pooling arrangements, depending on the the land is used sustainably in the interim of land in the “no scheme” world and the level of developer interest: period. In many cases the GLA will have to 63. Statutory and policy implications: The marriage value of an assembled site can establish these practices. existing CPO Guidance recognises that be significant as the diagram illustrating a) the first, a private sector model, would planning permission may not be in place in allow the majority of owners within 61. The ability for the Mayor to confirm CPOs the impact of time and location shows. advance of the exercise of CPO powers but an area to require “hold out owners” will assist in embedding ‘innovative’ in order to implement Recommendation Overseas models in both Germany and the to contribute their land to a scheme approaches as the norm. More generally, we 4 changes to the CPO Guidance would be Netherlands provide for a more certain in accordance with an assembly zone advocate a more interventionist role for the needed to: assessment of value and a more equitable designation. We suggest that 75% would boroughs and the GLA. Both the GLA and basis for sharing the uplift in land values be an appropriate threshold – this could be based on site area or number of boroughs have a comprehensive and robust • explicitly acknowledge that confirmation attributable to planning permission and landowners, depending on the degree set of powers that enable it not only to in advance of planning permission is development. of fragmentation. This would need to set the market conditions to facilitate land acceptable in Land Assembly Zones and 67. As part of the proposed toolkit, the GLA have protections for certain types of use assembly, but also to intervene to do so. that appropriate weight should be given to that designation should prepare template documents to and to prevent large or valuable owners The legislative powers are already there: it is support the voluntary bringing together abusing the tool. The existing English a question of using them more muscularly. • support the exercise of the compulsory Business Improvement District model purchase powers in the interests of of interests where land owners wish to offers a precedent (which was originally ‘good planning’ work collaboratively together to deliver drawn from practice in US cities such Recommendation 4: a development, for example in a good 4 64. In order to implement Recommendation as Philadelphia). BIDs have to be the . Allow confirmation of CPOs in the practice guide or toolkit. interests of ‘good planning’ ahead of 5, amendments would be need to the Acquisition of Land Act 1981, and the 68. We anticipate that the suite of documents 4 Town Centre Partnerships: a survey of good planning consent CPO. The Guidance practices and report of an action research pro- Guidance. But there is scope under the would include: ject, URBED for the ATCM and the Department should allow for appropriate weight to of the Environment, 1997.

60 61 subject of a vote and can only be put in compensation should include part of the applications, without the consent of the compensation paid to landowners place if a majority of those voting, by value uplift (or what is referred to as the planning authority, for twelve months in should include part of the marriage number and by rateable value, vote in ‘marriage value’.) Compensation on that order to focus efforts on land assembly. value of the assembled site, perhaps favour. If approved then a mandatory This would avoid the diversion of local basis will be more generous than if assessed with graduations depending on the BID levy can be raised applying both to authority resources to the processing those voting against and non-voters. on a market value basis. of planning applications motivated time at which participants contribute solely by the prospect of increasing their land. Once in place, a land pooling 73. In a public-sector interventionist model, land values. A Land Assembly Zone mechanism would compel owners to put there still needs to be an incentive for designation carries with it a recognition their land into a single delivery vehicle landowners to participate at the outset. Recommendation 8: that comprehensive development is via an automatic vesting process. Each . Freeze land values in LAZs. In any Early contributors could receive more in required but without the land being owner would have a pro-rata share in compensation than later contributors, brought together, any such permission statutory land pooling model, the land the delivery vehicle. Reflecting the building on the idea that there should be would not be deliverable. values should be set at the market principle enshrined in the existing CPO value on the date of designation and guidance, the delivery vehicle would incentives for bringing land together, and Local authorities should be empowered need to demonstrate sufficient funding disincentives for hold-outs. In both cases – to decline to determine applications crystallise any hope value for the to pay out compensation for any owner voluntary and statutory land pooling - there lodged within 12 months (or more) purposes of fixing the share of the pool. or business being displaced. Relecting could be a right to require landowners to of a designation where it appears the Dutch model, an owner’s share take any excess above existing use value that, because of the underlying land Recommendation 9: could be returned to them in the form ownerships, that consent is not as equity in the development vehicle. Both . Introduce a planning application of serviced plots land with that land not deliverable. necessarily reflecting the geographical the Compulsory Purchase Act 1965, Land moratorium. This would enable local b) Second, where pooling is proposed extent of their original land interest. Comepensation Act 1961, and the CPO authorities to defer the consideration it should ‘freeze’ land values for CPO Guidance would need to be amended to of planning applications in a designated b) the second arrangement would be a compensation purposes at the market public-sector model led by the GLA allow for more creative and innovative value as at the date of designation Land Assembly Zone for one or more or a local authority, possibly through forms of compensation. so that the ‘hope value’ element of years, depending on the complexities. a Special Purpose Vehicle, in which the CPO compensation component is 74. There is a need to ensure, over the longer the properties would be acquired fixed. The land owner will be entitled term, that the designation of Land Assembly 78. Statutory and policy implications: The and the owners paid out, initially, at to a further payment from the pool in a percentage higher than existing Zones does not adversely affect the viability due course, assuming that the land is introduction of a statutory land pooling use value plus disturbance costs. The of development. In practice, since the successfully assembled and available mechanism would require new legislation. owners would then be entitled to a designation and the use of CPO powers will for development. The land owner Where, as we suggest, the pooling provides share of the marriage value or the often be ahead of the development of a would remain entitled to any market for a sharing of the marriage value and residual value post development. formal scheme, and as land assembly will be uplift. As this would be in line with graduated compensation, changes to the the system used in Germany and other required and planning quality requirements Land Compensation Act 1961 and the 71. In most case study examples, land pooling countries, it will not be in breach of will be clear, the effect on value should be Guidance would be required also. has been used on large sites. This does not the European Convention on Human limited. need to be the case. It could be encouraged Rights. We recommend that the freeze 79. A freeze on land values from the point is effective from the date that the to allow, for example, a group of neighbours 75. However, for clarity it would be sensible that a draft designation is published draft development plan containing the in a suburban area to bring together small to amend section 6D Land Compensation would similarly require changes to the designation is published. groups of homes where that would allow Act 1961 to include a Land Assembly Zone Land Compensation Act 1961, and the for a greater number of dwellings, as has as a “scheme” for the purposes of the 77. In advance of the legislative changes CPO Guidance. The introduction of a been proposed in a number of urban design no-scheme world. This would ensure the required for these mechanisms to operate, moratorium on the submission of any studies. 5 widest possible definition of scheme is the GLA could develop a quasi-contractual planning applications within 12 months adopted. model. of designation would necessitate an 72. At all scales of development, there are a amendment to the Town and Country range of options for how land value uplift 76. As a separate issue, if Land Assembly Planning Act 1990. could be shared between landowners Zones are designated, the statute should Recommendation 7:

and the public sector. To create a strong be amended so that it has two statutory . Introduce statutory land pooling.

incentive for private landowners to effects: Develop a contractual basis for land

assemble land voluntarily, land pooling pooling and introduce a statutory

a) First, it should act as a bar on model for land pooling. Where

5 Supurbia: a study of urban intensification, HTA the submission of new planning land pooling takes place then the Design LLP, 2014

62 63 of SEMAPA, which has handled the support that. Yet, the list of specialist skills they are working; RESOURCING LAND ASSEMBLY development of a site of over 100 hectares identified above goes beyond that of Homes 80. Land assembly is difficult and complicated. c) Packaging finance for complex capital with 40 staff, or of Montpellier, where for Londoners. We recommend the creation projects, including potentially designing Additional skills and capacity are required transport and development planning of a team – or the expansion of Homes for and launching bond issues for projects within the private sector, within public for growth are undertaken by a team of Londoners – with a broader development that use land value uplift to help fund bodies and at the Planning Inspectorate. 120. In the Netherlands the joint venture brief. local infrastructure; We support the GLA’s proposal, as set company that developed Vathorst employed d) Managing a fund for the promotion out in the draft London Housing Strategy, 84. Any such team would need to be given 15. We therefore propose assembling of CPOs and also for holding land, for a dedicated centre of expertise for appropriate authority and independence teams to focus on the specific challenges or options, until interests have been compulsory purchase. However, there is as well as employ some relevant previous aligned and development starts; in different areas of London, where a need within London government for a experience. A budget and cash flow would economic challenges and key players are e) Taking a small share of the value created team with a general development brief to also be required. very different. The specialist skills required from land assembly when schemes ensure that sites are not only assembled, secure planning permission include: 85. The findings of the case studies highlight but developed. The Mayor’s strengthened a material disparity between the funding 89. The current centralised model of control in Homes for Londoners team is a positive available to support land assembly in a) Handing relationships with local the UK, leaves London reliant on negotiating step forward in achieving this but the Europe, and that of the UK. If the GLA authorities and a panel of developers periodic deals with central government, skill base needs to be wider and we make and the boroughs are to become more where there are complex land assembly on continually changing terms as political recommendations on this. issues that may require the use of interventionist they need significantly more power shifts. Solving London’s housing compulsory purchase powers capital funding than at present to do so. 10)Create a multi-disciplinary team to crisis is both an immediate and a long-term b) Identifying and mapping poorly used The £250 million revolving credit facility support the boroughs and developers project. land announced by the GLA to support land in tackling strategic and difficult sites, 90. Any funding support for land assembly underpinned by additional finance for c) Promoting site allocations through the assembly is a significant step forward. needs support across political party lines, a long-term revolving fund to support development plan process 86. The Draft Housing Strategy states that the land assembly to ensure it has the continuity needed to be d) Researching land ownership and Mayor will provide “a financial and planning effective. Certainty of funding avoids many interests environment that helps more land come 81. The research team believe there is a need of the initial risks involved in development. e) Understanding development economics, forward faster for development”. That for the spread of land assembly skills Furthermore by cutting the time and cost of including dealing with contaminated is positive, but the financial challenge is throughout the development industry. land assembly it will make more resources land and historic structures, and The necessary skills and experience are considerable. packaging funding from owners or available for wider social benefits, including currently in short supply, except in a few government 87. All the measures in this report require improved quality of development and exceptional authorities, such as Barking f) Working with community and other some form of capital commitment, increased affordable housing. and (though many authorities interests on environmental concerns and we would recommend significant 6 are starting to develop themselves again). additional investment be made available by g) Dealing with transport undertakings and Recommendation 10: There the Council have invested in setting utilities and their capital programmes Government to support this. . Create a multi-disciplinary team to up a development company to deliver over 88. In addition, the specialist team could support the boroughs and developers 50,000 homes and 20,000 new jobs over h) Commissioning masterplans and urban design studies generate revenue that could support capital in tackling strategic and difficult sites, a 20 year period.7 Drawing on the success outlay. The detail and source of any such for example by producing a good of French experience in particular, and i) Forecasting market demand funding goes beyond the remit of this study, practice toolkit, and supported by the the case study of Paris and the example of j) Negotiating joint ventures but some ideas for generating revenue devolution of additional finance to Montpellier, we propose that the GLA goes k) Exercising compulsory purchase include: provide a long-term London revolving beyond the current proposals, and builds powers. fund to support land assembly. up a multi-disciplinary team to support the a) Running training programmes for public bodies, including the Planning boroughs and developers that are tackling 91. Statutory and policy implications: There are Inspectorate, to roll out the best 83. The Draft London Housing Strategy no policy or legislative changes required. complex and strategic sites. practice learned from the London promotes a strengthened Homes for experience; 82. London can learn from the experience Londoners team at City Hall, with new funding and policy approaches, together b) Charging fees for services, such as 6 Janice Morphet and Ben Clifford, Local Authority handling CPOs on behalf of boroughs Direct Provision of Housing, RTPI 2017 with close collaboration with other levels 7 Funding Crossrail2, a report from London First’s and potentially developers with whom Crossrail2 Task Force, February 2014 of government and the housing sector. We

64 65 5 THE ADVANTAGES OF A BETTER MODEL

1. The GLA wanted to see what difference our for land values supplemented by the team’s recommendations would make to specific views on likely outcomes. We also consider situations and what contribution they would the wider community and social benefits make to delivering the policies set out in the arising. GLA’s draft London Housing Strategy. 6. Possible land value uplift comes from 2. The impact of the recommendations in the various reports including the TfL report previous section, such as Land Assembly ‘Land Value Capture’ (January 2017) and Zones can include: from London First on Funding Crossrail 2 using financial analysis from KPMG.1 These • Adding to single-ownership sites by calculations suggested that the lower cost creating larger sites thus increasing estimate of £12 billion might be met in part potential aggregate output; by developer contributions of around £1 • Shifting to plan-led development and million, plus £2.4 billion from intensification away from opportunistic and fragmented of development. Most of the remainder over development; and above the fare revenue depends on • Overcoming site constraints such as fiscal devolution. limited access; • Improving site layout to reduce 7. Surveyors GVA expect an uplift in capital impact on neighbouring land uses values in central London of 10% over or to reinforce boundaries between the next decade, with residential values settlements. immediately around stations increasing by 25% in the centre and 20% in the suburbs, 3. The benefits of a new model for land with most of the benefits coming from assembly would come largely from the the first half a mile. The report put the This section tests our recommendations for a new model impact they can have on land values and the incremental effect of Crossrail as around for land assembly in London to help speed of housing delivery. £4.8 billion for the residential, but only £0.7 billion for the offices. A study by CBRE came overcome the barriers to delivering 4. To test the value of changing the current the Mayor’s draft Housing Strategy. to similar conclusions. None of that uplift business model for housing development, is being collected except through national We examine two strategic two places were selected in very different taxation, largely resulting from transactions opportunities (one in West and parts of London, but connected by stations of properties. another in East London) to assess on the Elizabeth Line. Both had been the overall impact of alternative identified as Opportunity Areas and Housing 8. measures for land assembly in Economic benefits are considered to be real terms of financial considerations, Zones in the London Plan, and are similar to where the result would not otherwise have delivery and risks. many others across London. taken place, such as building the extra new homes London needs. The KPMG report Finally we summarise the general 5. Our aim was to assess the impacts on timing (faster delivery), risk (reduced uncertainties), benefits from adopting a better 1 Funding Crossrail2, a report from London First’s model for land assembly on sites and financial considerations using a model Crossrail2 Task Force, February 2014 large and small.

67 suggested assessing the opportunities for 12. Opportunities: The former gasworks site access by reintroducing passenger services new office accommodation would need developing housing around stations, for is one of the most important development along a freight-only branch. There is also to be provided for the borough’s staff; example on branch lines with poor services, opportunities in West London, and in all potential for developing housing on the • Developers who expressed interest as well as opportunities such as along the occupies 36 hectares (90 acres). It was other side of the railway. concentrated instead on projects that offered higher or less risky return; Upper Lea Valley. The potential has been beset by a range of constraints including explored in depth in a Centre for London lack of road access, proximity to a busy • Banks refused to make loans unless 2. The commercial edge of a town centre in over half the space had been presold, report which identifies a range of possible rail line, industrial legacy and the presence East London which was difficult to achieve in such a locations, which include areas of low of the remaining gas infrastructure of location, even though studies had shown 17. Background: The East London test case is density industrial land as well as areas used underground pipe lines and gas holders. redevelopment to be viable; and classified as a metropolitan town centre, for parking and storage. 2 13. Following extensive consultation dating • A more comprehensive scheme was with a number of 60s office blocks that required than all but the largest 9. The two test cases have been anonymised from 2002, a planning application was are now under-used or empty. Recent developers could contemplate, who but the characteristics of both are set out in submitted in 2005 for 4,500 residential units development around the station is high- tended to have better prospects order to provide an illustrative context from together with retailing, leisure, office space, rise or high density (residential). The town elsewhere. which to test our recommendations. The a secondary school, health and community centre serves a predominantly residential 20. Current Status: The town centre location financial, timing and risk analysis is however facilities and airport parking. After the suburban area. will benefit considerably from the opening based on the actual locations in order to developer went into administration, the 18. Opportunities: The potential for housing of the Elizabeth Line, as the site will provide present a realistic outcome. site was eventually sold to a residential growth was first identified in the borough’s homes one quarter of an hour from the City developer, and a fresh team of consultants Action Plan back in 2008. A leaflet and only a few minutes more to the West prepared a new plan. produced by the council referred to the End. THE TEST CASES 14. Expensive remediation was required, as town centre as offering in‘ excess of 20 21. There is already significant on-going well as dealing with the pipes running development sites ranging in size from 500 1. An old industrial area in West London construction immediately around the through the site. The biggest constraint was square metres to over 2 hectares, while the station. But there are almost too many 10. Background: This area was developed in access. Like many former industrial sites Crossrail Corridor Action Plan identifies 45 opportunities for any of the current players Victorian times for industrial purposes and it is wedged in between busy railway lines sites with development potential’. With an to make a further move. This creates connected to by the Grand and waterways, and cut off from adjoining anticipated capacity for 5,000 new homes uncertainty and perceived risks in the Union Canal, and then by the Great Western residential areas and shops. There are very in the area as a whole, a great deal of effort location. In addition, some major planning Railway. The area comprises a large former few crossings over or under the railway line, was put into promotion with the hopes applications, particularly in tertiary/edge- gasworks on one side of a railway line, and little space around the station for it to of securing mixed-use development of of-centre locations, have been slow to be and a mixed industrial area on the other. A serve as a modern transport interchange. housing over commercial uses at ground approved or have been subject to appeals. residential redevelopment of the gasworks 15. In addition to the gasworks site, a broader floor level. was proposed and promoted over a number 22. In general, the impression is of an area was identified following a planning 19. A designated Housing Zone was identified of years. In 2002, the site was being used for inconsistent and uncoordinated approach study by the local authority concerned to comprising some nine different sites, half of car parking following the demise of the gas to bringing forward development in bring forward new housing and associated which were owned by the local authority. operations. planning and regeneration terms. development. This involved multiple While the ‘low hanging fruit’ owned by 11. Delays resulting from securing a suitable ownerships and crossed the boundaries the local authority were readily picked up developer and the market cycle have of two boroughs. Ultimately a CPO was by housebuilders, including an innovative POTENTIAL IMPACTS meant that the first housing will only be promoted, in tandem with the developer, twin tower block of apartments by an 23. The advantages or benefits of the new land completed in 2018, or nearly 20 years after and subsequently confirmed. entrepreneurial new firm of developers, assembly model depend on the location, planning began. Two London boroughs, 16. Current Status: A new access road is being others remain undeveloped. There were five and the effects of infrastructure investment Network Rail, British Waterways (now the opened as a planning obligation, which will main reasons: on housing and land values. These have Canal and Rivers Trust), TfL and the GLA also greatly increase the marketability of the been estimated for both situations, using a either had land interests or were statutorily housing. A scheme is now being promoted • The office buildings do not lend themselves to conversion into attractive financial model that draws on research into involved in bringing the area forward for with 3,750 quality homes, together with an homes, and would only provide small the impact of the Elizabeth Line on housing comprehensive development. affordable element. The station is being apartments, not the family homes that values. extended to handle Elizabeth Line trains, are in demand; 2 Nicolas Bosetti, Ideas above your station: ex- ploring the potential for development at London’s and there is scope for further improving • Most are occupied, if under-utilised, so 24. Railway lines, major roads, rivers and canals stations, Centre for London, September 2017

68 69 can create barriers to local movement at the and keyworkers to live there, whilst also well as access to green space. Test Case 32. Conclusions on Land Value Uplift: Test same time as they make it easier to move appealing to wealthier households, who One has the added potential for making Case Two seems to operate as almost the the most of the canal, a hitherto largely over longer distances. Transport investment, tend to live elsewhere in the borough in opposite of Test Case One in relation to neglected opportunity, which could form such as the Elizabeth Line or a new station, Test Case Two. By contrast, Test Case One part of a new ‘web’ of green and blue distance from the station. In Test Case Two raises the image and makes it more will be creating a totally new place, and space. values rise as you move away from the attractive to live further away from Central will expect to attract more of its initial station into established residential areas London so that demand is likely to spill occupants from further afield. Before we whereas in Test Case One the greatest over hence raising house prices and land consider how each of our recommendations TESTING THE IMPACTS uplift is immediately (within 500m) close values. Incidentally, travel to work patterns will make a difference from a financial, 29. We now assess the impacts of the new to the station – and then fallaway quite in the outer suburbs are just as likely to be timing and risk perspectives we look at the model on the test cases. We consider firstly significantly before increasing again after outwards or orbital as inwards and radial, five main types of impact that are likely: land value uplift over time and distance a kilometre. This results from the clear and the impact will vary according to the from the transport node (see appendix differences between the nature of the local property market area. • More homes: Defining a Land Assembly D). Secondly, we consider the results of two areas: Test Case Two is an established Zone (LAZ) of say half a mile or one this modelling in terms of the potential town centre with a densely populated area 25. A larger site, with better access to amenities kilometre around either station, would to create additional housing and increase immediately surrounding the transport such as water or green spaces, will raise include sites with significant potential the pace of delivery. Thirdly, we use the node where house values are greater the interest from other builders if sites are for assembly and housing development. For Test Case One, these sites will underlying quantitative analysis to assess further the distance from the station, while parcelled out. This in turn will widen the largely be in industrial use, compared to the impact of our ten recommendations in Test Case One is a location that needs to market, for example allowing self-builders residential uses in Test Case Two. terms of financial, timing and mitigation of establish itself before a significant uplift or ‘empty nesters’ to acquire homes, in the • Faster delivery: By ‘freezing’ land values, risk benefits (see Appendix D for detailed would be realised. latter case releasing large under-occupied and reducing the impact of speculation analysis). homes. on property prices, more of the land 33. Additional Housing and Pace of value uplift can be for public benefit 30. Methodology: in Test Cases One and Two, Delivery: From the above analysis it is 26. A faster rate of delivery would then bring or to incentivise land pooling. The role we considered the uplift in residential possible to assess the pacts of creating earlier returns on investment, thus reducing of public sector statutory powers in capital values as a proxy for land value LAZs, in terms of potential additional risks and financing costs, as well as making assembling land in Test Case One has already proved crucial to the scheme uplift as a result of being designated as housing and increasing the pace of a higher proportion of affordable homes moving ahead. Land Assembly Zones (LAZ) (being a 12 delivery. Whilst this analysis is predicated viable. Both test cases therefore have the • Wider choice: With the new model, minute walk or a kilometre radius around upon the implementation of all of our potential for significant increases in land especially if a land bank were created, the transport node in each case). There is recommendations, some of the benefits and property values over the next five to ten a much wider range of builders could a strong correlation between house prices may be achieved without statutory changes. years compared with values in surrounding be attracted, such as the self-builders discussed in the Freiburg model, or and land value in urban areas. In each case areas, which reduces risk for investors. 34. The two test cases exhibit different builders of private residential for short- we considered the combined impact of the characteristics in terms of development and 27. Permitted development rights on office- term lets while the area is redeveloping. Elizabeth Line and the designation over This is likely to have most benefit in land value uplift and therefore will result in to -residential conversions make it hard a period of 7 years, being a medium time a situation such as in Test Case Two, different outcomes in terms of additional for local planning authorities to influence where there is no master developer period for development to have occurred, housing and pace of delivery. In order quality or demand better housing and active at present. albeit not completed. General market to put this into some context, we have amenities. Unsurprisingly, sites closest • Better social balance: The benefits of movements were removed in order to adopted a high-level base case for London to the Test Case Two station are of most better transport services such as the analyse the net “abnormal” effect on the as a whole showing pace of delivery and interest to developers, but fragmented Elizabeth Line in Test Case Two will LAZ and Elizabeth Line. Therefore, it is the be spread more widely, and so there additional housing. The base case London ownership has made it difficult to uplift in values, not absolute values, which is more potential for cross-subsidising diagram below shows two axes: housing plan and deliver this ‘new quarter’ in a social housing. The housing will be more are being measured. units on the vertical and time to deliver on comprehensive fashion. Tertiary town affordable anyway, relative to other 31. Results: The results are presented in the the horizontal. H1/T1 indicates the point centre sites, even where they are in public areas of London, thanks to lower values in East London compared with West form of a “surface” chart which measures at which currently a medium sized scheme ownership, are the greatest challenge for London. the effect over the 7-year testing period of could be built out. The curve shows that it development and housing production. • Community benefits: In both test cases, uplifts in value throughout the LAZ in the takes longer to implement and construct 28. Rebranding areas/quarters as providing better linkages across the respective form of distance from the transport node. than in the case of H2/T2through a LAZ, railway lines to the surrounding area homes for a range of needs may be (Exhibit 14) following the recommendations of this could support improved infrastructure necessary for attracting young professionals such as schools and cultural facilities as report.

70 71 35. As can be seen, the LAZ curve shifts in this case could potentially increase to upwards and to the left meaning both an between 20% and 30% with an overall 13b Test case 1: West London increased yield on overall housing delivery saving on the delivery of housing of 5 years and time saving. The former also may plus. benefit from the proposed design-led 37. So far as Test Case 2 is concerned, the approach to site density, as set out in the opportunities in overall terms are less than draft London Plan. We therefore conclude for the base case (although individual sites that in overall terms the alternative may have great potential) given the more measures for London as a whole could complex nature of the town centre and result in increasing housing yield by infill sites. Nevertheless we estimate that between 10%-15%, as well as significantly housing yield may increase between 5% speeding up the delivery of that housing, by and 10% with a commensurate time saving between 3 to 5 years. of between 2 to 3 years. Delivery may be 36. As can be seen in Test Case One this base significantly speeded up dependent upon position improves even more where large the town centre circumstances and degree brownfield site opportunity areas are of land fragmentation). designated through a LAZ. Housing yield

13a Base case: London 13c Test case 2: East London

72 73 confirmation of a CPO before the valuation both the test cases illustrate, this means 48. By taking away the uncertainties involved BENEFITS OF THE RECOMMENDATIONS date can be established. assembling land in both public and private in land assembly and local infrastructure, sector ownership to achieve ‘marriage investors and developers could settle 38. Finally we consider the benefits of each value’ and better outcomes. Given the for lower profit margins, thus bringing of our recommendations for the two THE ADVANTAGES OF A BETTER seemingly inevitable upsets of the property down the overall cost. Indeed, there are test cases. We would stress that it is MODEL and business cycles, it is vital to cut the time believed to be a mass of private investors the combined effect that will have most 41. This report started by summarising the between granting consent and having new who would welcome the chance of impact. Therefore the purpose of the tables barriers to delivering the new housing homes occupied. investing in inflation-proofed assets in Appendix D is to highlight the relative that London needs, and the potential for such as development for housing if the impacts having regard to financial, timing applying lessons from both past experience 45. A simple four stage flow chart shows how opportunities were made available, for and risk considerations. Risk mitigation is a and international exemplars. the process can work (p. 77). Indeed the example through bonds. simple way of summarising the benefits in time in getting to building the first home 42. The new model for land assembly we terms of the relative size of the effect, and on a complex site such as Test Case One 49. One of the important aims of the draft are proposing would respond to the therefore the value of adopting alternative (which would apply to much of the Upper London Housing Strategy is diversifying the conclusions of the Callcutt Review, and measures for land. Lea Valley) might be cut from 15-20 years home building industry, including building recommendations in the reviews by to less than five once the interests of the more ‘in outer London where homes can be 39. There is not necessarily a consistency of Kate Barker and Sir Michael Lyons. Our different stakeholders are aligned. On built faster and at more affordable prices.’4 model approach to any given situation recommendations will also go a long way easier sites, building starts might be cut The sharp decline in the numbers of smaller as LAZs are all going to be different even to meeting the concerns of those who from five to two or three years.By ‘freezing’ builders and the general lack of experience where situated near transport nodes. have been pressing for radical reform.3 As land values, and reducing the impact of of ‘going to scale’ means that some form of We can assume there will be value uplift development consumes economic and speculation on property prices, more of public agency or development corporation (leaving aside general market movements), environmental resources, a faster rate of the land value uplift can be used for public needs almost literally to ‘pave the way’. This but the nature and distribution of it will vary delivery should make London stronger and benefit or to incentivise land pooling could then utilise lower cost sources of quite considerably both within and between better for everyone. In summary, there are capital in the process as the international LAZs. Value uplift is demonstrably shown six main advantages of improving the way 46. The role of public sector statutory powers case studies such as Vathorst have done. in both case studies, which will affect land is assembled: in assembling land in Test Case One has how landowners react to a LAZ in terms already proved crucial to the scheme 50. Public leadership would also help in moving ahead. But with the new model, ensuring that the ‘social infrastructure’ of potential pooling agreements. Where 1. Building extra homes faster land has the largest uplift (Test Case One), especially if a land bank were created, of schools, shops and other services are 43. While cities expand and grow over time, early stage pooling is more likely in order a much wider range of builders could provided up front and not at the end of the the delays in bringing sites forward impose to realise development potential. In Test be attracted, such as the self-builders development. Again the effect should be huge costs on those who cannot get Case two, where there are smaller scale discussed in the Freiburg case study, or raising the rates of delivery or absorption, on the ‘housing ladder’ or are stuck in uplifts, particularly around the transport builders of private residential for short- and also rebalancing local markets by unsatisfactory rented accommodation. node, reverting to statutory processes may term lets while the area is redeveloping. matching supply with potential demand. It will always take time to align the plans be required to implement LAZ and achieve This is likely to have extra benefits in a and interests of different public agencies, development. situation such as the edge of a town centre 3. Joining-up transport and development but the difficulties of engaging with these (Test Case Two) where there is no master 40. In addition, LAZs in existing established 51. The UK planning system is often criticised should not be an excuse for delaying developer active. town centres are likely to be subject to development that would create real for not making the most of public acquiring multiple interests (freeholds, economic and social value. investment in improved transport services, 2. Reducing costs and risks to investors/ leaseholds and other land-related interests) for example to develop land alongside 44. The GLA’s draft London Housing Strategy housebuilders in order to realise development, which improved or new railway lines.5 By states that ‘To protect the Green Belt, the means that CPO is likely to be necessary 47. Even where sites do not require expensive concentrating on the most accessible Mayor will promote higher density schemes despite major landowner willingness to remediation work, the costs of local places and maximising opportunities for and prioritise development on brownfield enter pooling agreements. The surface infrastructure may be higher than most growth, the use of public transport should sites, in and around town centres.’ As charts clearly demonstrate the need to developers are prepared to take on. Roads freeze values at an early stage in the and other utilities are required up front, 4 London Housing Strategy, GLA 2017 3 See for example i. Thomas Aubrey, Centre for process rather than, as at present, awaiting 5 Nicolas Bosetti, Centre for London and Arup, Progressive Capitalism, Funding the Infrastruc- and the investment only pays off over many Ideas Above Your Station: exploring the potential ture and Affordable Housing for the East West for developing stations in London, September Link, October 2017. ii. London First, Funding years. Crossrail 2, February 2014.

74 75 increase and hence reduce car dependence recommended here, should therefore, if or commercial developer working with life being offered in competing cities. They and pollution, especially in parts of Outer properly led, result not only in achieving an equity investor. The GLA’s land share would apply principles that have been used London where congestion can be high. the aims of the GLA’s draft London Housing could either be retained as a long term in the past to create and renew some of the Strategy, but also creating a much better, equity investment for income, or sold on parts of London that are most valued today, 52. Designating zones for land assembly around fairer and stronger London for everyone. as investments to release capital back into for example providing and maintaining new or improved stations should make further land assembly programmes. open spaces without the costs falling on the it easier for London to compete with its public purse. continental rivals in attracting financial 5. Diversifying development and investor investment in the wake of Brexit. There partners 6. Tackling ‘free riders’ 60. If development is more like a game of is now evidence of significant gains in dominoes than completing a jigsaw, 55. New sources of land assembled by the GLA 58. Assembling land to meet London’s property values around the outer London joining up development with infrastructure can open the way for innovation in the housing using the approaches and powers stations of the Elizabeth Line, for example, will enable much faster progress in procurement of contracting, development recommended in this report, would truly with only 5% being recovered. TfL have implementing agreed planning policies. A and investment partners. The GLA would be generate ‘capital gains’ for all in social and been exploring how to capture some of better land assembly model is therefore able to derisk the purchase of land, clean environmental as well as economic terms. the uplift in transport improvements, for crucial to ensuring the aims of the GLA’s and combine titles, decontaminate and example to help fund Crossrail 2, and similar 59. As we have argued, these changes would draft Housing Strategy are achieved. service sites, (as English Partnerships were work is being undertaken by the National help London to keep up with the quality of originally established to do) as well as being Infrastructure Commission in its proposals able to offer a range of onward land sale for the Cambridge Milton Keynes Oxford arrangements, (build now/pay later, long arc.6 Our recommendations would respond term lease payments, equity shares etc). to concerns that have been raised. SUMMARY: LAND ASSEMBLY ZONE PROCESS (ILLUSTRATIVE ONLY) 56. This could help create more development opportunities on larger sites that were Land (LAZ) with: 4. Creating stronger communities nevertheless still accessible to small and Duty to identify • Poor uses relative to the surrounding area 53. Planning needs to ensure that the main medium sized commercial enterprises underutilised land • 2-5ha (total) • Multiple Ownership/interests concerns of local people are met so that and registered providers, as well as, or • Capable of sustainable development the new housing is seamlessly integrated sometimes in partnership with CLTs, coops, • Fragmented or no current proposals with the old, even where the densities and cohousing groups, as guaranteed may be much higher. Many communities buyouts on completion, both for market have become sceptical about plans and and permanently affordable community • Designation (LAZ) not subject to prior consultation architects’ visions and so are more likely housing (PACH). This would extend the • Notices served requesting information within a prescribed time period to respond positively to development in scope of the new procurement practices Designation and Masterplanning • Indvidual planning applications not allowed the hands of an organisation known to currently being developed through the GLA/ • Masterplanning exercise for LAZ possess not just the ambition, but also TfL Small Sites Programme, and capitalise • Inspectior confirms or rejects designation within 3 months the capacity and continuity to see the on the GLA’s investment in setting up the project through.7 Such a process can build London Community Led Housing Hub.8 both social and environmental capital, for 57. The GLA’s derisking and enabling role example turning underused or poor-quality could also attract significant volumes of land close to a canal into a valued amenity, • Negotiating and membership of statutory Pooling Agreement within LAZ equity investment into a new rental market: • Agreement becomes binding on all owners once 75% agreement reached and achieving the ‘marriage value’ where Land Adjustment what the community housing sector in • Owners who do not agree excluded from benefits several ownerships are involved, as our case London is calling a ‘Not-For- Profit Civic • If overall agreement is not reached, continue with CPO process studies have illustrated. Housing’ rental sector9 , at a wide range of 54. A more proactive approach, of the kind sub-market rental levels, but which could be promoted by any affordable housing 2017 6 Partnering for Prosperity: a new deal for the • Agree promotion and indemnity agreement with appointed LAZ master Cambridge-Milton Keynes-Oxford Arc, NIC 8 https://www.clhousinghub.london/ developer October 2017 9 ‘Making Housing Delivery Models Work for Lon- Development • Promote individual planning applications in accordance with Masterplan 7 See, for example, the review of the work of the don’ Future of London, November 2017 p10. • Implement individual schemes in accordance with Masterplan Group in Duncan Bowie, Radical Solu- https://www.futureoflondon.org.uk/2017/11/27/ Implementation tions to the Housing Crisis, Policy Press 2017 housing-delivery- models-press- release/

76 77 Appendix A Limited resources for planning large schemes Finance for putting schemes together can be a real constraint as long term BARRIERS TO SPEEDIER HOUSING DELIVERY ‘patient’ capital is rare, and land assembly necessarily takes time with a long wait before cash from sales arrives. Large and fragmented sites have multiple risks (demolition, movement of services, ground condition etc.) Consultants can be expensive (e.g. £2 million for a large scheme) and hard to share when several different owners are involved. Developers have to consider cash flow, which is This paper summarises findings from some of the research we have reviewed to made difficult by the ups and downs of the housing market and property cycle understand the conditions that affect land assembly and the speed with which every ten years or so. housing supply responds to demand. It starts with planning and the resources to execute larger schemes before considering the objections that are often raised, Even the largest developers lack funding to promote more than a few complex and the skills and capacity to respond to them. schemes (e.g. English Partnerships had to pump-prime Barking Riverside; Berkeley Group required £150 million before starting building at Blackheath).4 Speculation is a major concern. The Callcutt Review suggested that developers make the most Uncertain planning policies from land dealing, not building, and speculators or ‘free riders’ abound, especially Land assembly inevitably takes time but the National Policy Planning Framework where there are ‘ransom strips’ and owners ‘hold-out’ on the final parcels. focus on a five-year land supply forces a shorter term approach, leading Smaller builders can be invaluable in keeping costs down and responding to new potentially to piecemeal development. The government has tried to ‘cut red-tape’, markets, for example housing for the elderly. However they complain they cannot but few developers now have the cash to acquire complex sites and obtain all the compete for sites, and their numbers have fallen drastically since the financial permissions. House builders prefer to go for the ‘low hanging fruit’ and to hold on crash, as many were swallowed up by volume housebuilders for their land banks. to their land banks. They naturally avoid sites where ownership can be uncertain. Possibly too much land is owned by traders who sell on to house-builders, and Though planning is blamed for being largely reactive, many local authorities are 45% of permissions were to developers who had not built anything, but simply sell now starting to play a more active role again, but with limited experienced staff the land on when the timing is ripe.5 to cope with a multiplicity of applications. Furthermore a planning inspector will not allow a local authority to allocate a site in its plan unless it can be proven Speculation is also a problem. Owners can make more by sitting on land and to be deliverable, which usually means having a developer lined up. Hence large avoiding risks where holding costs are low.6 Developers take out options to keep complex sites, especially those which straddle local authority borders, are left in costs down and to benefit from land deals. Development is governed by the favour of what appear to be smaller or easier sites to develop. speed of sales. For example Peninsular was developed at less than one fifth the rate of Hammarby Sjostad in Stockholm, though it is in a similar location. The Urban Task Force encouraged masterplans for key sites in order to provide The reasons are that in Sweden many more builders are engaged, each supplying 1 greater certainty and also to raise quality standards. But these have not been a slight different market.7 They can do this because the infrastructure had already enough to secure development (e.g. over 75 masterplans for Royal Docks). It is been funded Also many companies are building for rent as well as for owner possible that some plans have suffered from being over-prescriptive, and that it occupation, and there is a ‘master developer’ who can negotiate good deals with would be better to agree Development Frameworks that enable a greater degree infrastructure suppliers such as utilities. of flexibility, as in the Kings Cross railway lands, for example, where there is agreement on overall uses, densities and community benefits, but flexibility over Where sites have occupants then land holding becomes possible, as there is a timing. cash flow, but is more difficult on sites that are vacant and underused. Financial institutions may say they have funds available for investment if only the sites Many have criticised the centralised nature of decision making in the UK, which were available. But insurance companies and pension funds prefer ‘risk free’ leads to transport and housing being planned in ‘silos’. While the flexible nature commercial developments or large blocks of housing that can be rented out of British planning can yield substantial sums from developers towards ‘planning (though a few such as L&G are starting to get involved). gains’, it also can drag the process of agreement out, and impose substantial ‘transaction costs.’ Even when there is apparent agreement, these may be later The final resource problem is the capacity to manage urban change. Most local revised on the grounds of viability, making it hard to achieve ideas such as ‘new authorities have lost key staff, especially ‘deal makers’ and CPO specialists. So garden settlements’.2 Consequently, there is support from research and housing have housebuilders and other developers, as most large developments in the last experts such as Kate Barker that ‘land banking’ would offer real benefits, and that 20 years in London have been on single ownership sites. As a major development well-negotiated Section 106 agreements and positive planning add value.3 is likely to involve not only several owners but also statutory undertakers such as the railways or water boards, the risks become excessive and the rewards too uncertain to make it worth the bother. This is where development corporations can have a great advantage. 1 Richard Rogers et al, Urban Task Force, Towards an Urban Renaissance, 1999 2 See for example https://www.conservativehome.com/.../lord-taylor-and-chris-walker-the-case-for- 4 Case studies in Nicholas Falk and Barry Munday, Housing Forum, The ABC of Housing and Local garden villages Growth, 2014 Also David Rudlin and Nicholas Falk, Uxcester Garden City: the 2014 Wolfson Economics Prize 5 Molior, Affordable Housing Development in London, 2010 submission, www.urbed.coop 6 Daniel Bentley, Civitas, The Land Question: fixing the dysfunction at the root of the housing crisis, 3 See preface to Ed Tony Crook and Christine Whitehead, Planning Gain: providing infrastructure and 2017 affordable housing, Wiley 2017 7 PRP URBED and Design for Homes, Beyond Ecotowns: applying the lessons from Europe, 2008

78 79 Wood in Merton, which is built on former railway land that had been leased to hundreds of scrap yards. The other type of success story is where there is a Resistance to development deadline such as the Olympics site in East London. The Homes and Communities Development of new housing in the UK is not helped by the tendency of people to Agency has also been active in Milton Keynes, where English Partnerships prefer old homes and locations, while opposing any new development near them inherited land owned by the New Towns Commission, which gave it more freedom. or on open space. House builders believe that the majority of potential buyers Successive governments have been reluctant to trust municipal enterprise, prefer to live in houses not flats and away from denser areas where schools are preferring instead to have direct control. Significantly the London Docklands 8 9 perceived to be better. Old homes are valued higher than new ones. This could needed to assemble land and provide new infrastructure in the form of the be changing as better quality apartments are built and occupied, and research Docklands Light Railway and a new access road to Canary Wharf before it could 10 for the GLA suggests that higher densities are viable in London. But exemplary capture land value uplift. Since the financial crash of 2008, master developers/ schemes are still rare, making it harder to change attitudes in the suburbs. When partners are much rarer. Much of the decline in the rate of house building has CABE (the Commission for Architecture and Built Environment) was wound up, it been attributed to the restrictions placed on local authorities, and the cuts in became harder or more expensive for communities to find out about best practice. funding for social housing (see chart in exhibit 1) Most of the publications on new housing tend to be critical of the standards achieved by the major house builders.11 A few authorities are again acting as entrepreneurs, borrowing against their assets, but the process can be controversial, as the situation with LendLease in Haringey New housing is also criticised for the way the benefits are distributed. The greatest illustrates. Large scale (or strategic) housing could be seen as ‘infrastructure’ by uplift in property values can take place when a previously neglected location the Treasury and the National Infrastructure Commission, and treated differently gets ‘discovered’, often as a result of transport improvements, such as Crossrail. (as seems to be under consideration in the Oxford/Milton Keynes/Cambridge But changing the image of a location is difficult even when it is accessible, and corridor.) can take several decades. Regeneration takes a generation! Attitudes are slowly changing towards private renting, community self-building, and new Civic housebuilding. But finding the right ‘urban pioneers’ can still be a challenge, and the main house builders understandably prefer to stick with what they know best. Conclusion Development rates fail to match demand because of factors such as uncertain Local authorities are generally considered reactive and service-oriented. They planning policies, limited resources for planning larger schemes, a resistance can be reluctant to use CPO powers because of the complexities, uncertainties to development, and the skills and capacity of the development industry. To be and costs. However a growing number are developing land they own rather than viable, development requires foresight and commitment, sometimes over decades selling it to the highest bidder through a multiplicity of arrangements.12 The in the case of strategic or large scale housing sites. Yet obligations are often lessons of Comprehensive Development Areas may need to be relearned, which uncertain, especially for larger sites, and the costs and returns cannot be fully were used to get reconstruction going in areas of inner London that were bombed anticipated or quantified. Even when expected values appear to exceed costs, in the Second World War. the risks can simply be too great. Hence most developers and particularly house builders naturally prefer to concentrate their limited resources where the risks are least unless the public sector takes some of the risks away or offers incentives.

Shortage of skills and capacity Furthermore land owners public and private may well wait until areas have taken Because of the risks and skills involved, governments prefer private sector off, while utilities and transport undertakings are notoriously hard to engage. involvement, often through public private partnerships, to reduce risks. This makes it harder to secure the ‘marriage value’ from putting adjoining land Partnerships also enable government involvement and hence enable politicians to together. Compulsory purchase, or the threat, is often essential, but may be seen share the credit! But they can be unwieldy and take a long time to put into place, as too complex. The European Human Rights Convention is sometimes blamed even before land assembly can start leading to disappointment. Croydon’s recent for not acquiring private land (but does not seem to halt house building in other experience is relevant, where they have opted for direct development through a European countries.) The nervousness about expropriation has become deeply fully owned subsidiary company after a partnership with a major builder. The loss embedded, and requires a better approach and a new business model. of small builders in each market downturn, and especially after the financial crash of 2008, has left only 7 or 8 volume house builders accounting for most of the market.

There are some exceptional schemes where government has taken a long-term interest, for example Kings Cross through London and Continental, a subsidiary company owned by the Department of Transport. Another type of situation is where a profitable end use reduces risk, such as the Savacentre near Colliers

8 Home Builders Federation, Home Buyer Intentions and Opinions, 2016 9 See research quoted in Beyond Location: a study into the specific components of the built environ- ment and value, Create Streets, 2017 10 Three Dragons et al, Lessons from higher density development, GLA 2016 11 Future Homes Commission report, RIBA 2014 12 Janice Morphet, RTPI, How local authorities are helping to fix our broken housing market, 2017

80 81 prosperous moved further out and poorer families moved in.5’ As most rented Appendix B where they lived, change was quite rapid. HOW LONDON EVOLVED The decay of the inner suburbs was attacked by social reformers like Charles Booth in his poverty map, and ridiculed by authors such as the George Grossmith in Diary of a Nobody. By the end of the 19th century some philanthropic landlords such as Peabody or the East End Dwellings Company built tenement blocks, famously financed by loans at 4% to show that social housing could pay. Municipal landlords such as the London County Council were also starting to Great and small estates build for the ‘deserving poor’, and the new Borough Councils at the turn of the The early growth of London in the 18th century was made possible by Royal 20th century started a ‘municipal renaissance’ with new Town Halls and some Grants that enabled aristocrats like the Duke of Bedford or the Duke of slum clearance and rebuilding. to start building planned estates in and respectively. The financial key was the provision of building leases to contractors who took on elements in a plan, which typically included a large landscaped Garden suburbs square to create the sense of living in the country in the town. As Peter Murray A flurry of utopian writing at the end of the 19th century resulted in proposals for has shown in the Great Estates, this system accounted for a large proportion of building away from pollution and over-crowding, with the costs of infrastructure central London North of the Thames, and is being partially replicated by Argent on funded out of the uplift in land values from development. The most influential the old railway lands at Kings Cross.1 was Ebenezer Howard in Garden Cities of Tomorrow, who publicised the ideas of Henry George by differentiating between the ‘landlord’s rent, which funded The leases were for a period of 99 years and required compliance with a number the loan, and the ‘rates rent’, which should go to the community. The architects of conditions, for example specifying the height of the buildings and the type of of Letchworth went on to design . This was a notable house. Some of the estates sought to limit the amount of smaller or mews houses example of a ‘land swap’ in which the land owner, Eton College, agreed to in order to preserve long-term values or to keep out public houses. The landlord safeguard part of Hampstead Heath, now called the Heath Extension, in return for was looking not just to ground rents, but to the value of the reversion when building on land further away from Station, which was the terminus the lease was over. This system built the areas of London that have the highest of the Northern Line at the time. property values and that are most visited by foreign tourists. Where shorter leases were granted, as in the East End, less was invested, and the areas subsequently ran Henrietta Barnet sought to create a balanced community, with dwellings for down, as Simon Jenkins points out in Landlords to London.2 artisans as well as fine houses for the middle classes. Almost all were rented initially, but the leafy winding streets soon attracted wealthier residents, including Further out in what is now Inner London, speculative builders acquired land Labour politicians such as Harold Wilson and Herbert Morrison’s family. Some of that was in agricultural use, and developed terraced streets a few houses at a the earliest housing was developed by Co-Partnership organisations that enabled 3 time, as Donald Olsen shows in The Growth of Victorian London. The new groups to collaborate in commissioning their own housing. This became popular neighbourhoods were opened up by the coming of the suburban railways, and before the First World War, leading to other new estates with idealistic principles from the 1880s onwards, by the Underground railway and electric tram. Houses such as Brentham Garden Suburb in Ealing. were clustered around local centres and stations, but industry and housing was mixed up, leading to noise and dirt. Unsurprisingly those who could afford to moved out to new suburbs. Dyos in a classic account of the Victorian suburb Semi-detached London analysed what happened in .4 By the 1880s London covered a hundred The garden suburb may not have achieved Howard’s aspirations for ploughing square miles with 2,000 miles of streets. He explains that the ‘unearned increment’ from development back into social facilities, but they ‘A building agreement made between the landlord and a contractor for the did create a pattern for the great inter-war building boom. (Exhibit 5) Though granting of a lease for completed houses at a certain house rent or for an overall the first attempts which relied on local authorities as developers were not all ground rent. The latter arrangement permitted the builder to create a leasehold ( that successful, in the 1930s London built more housing than at any other time. or ‘improved’) ground rent which he or his assigns received from the occupiers of The formula relied on cheap land, with many farmers having to sell in a time of the houses’. general depression, the availability for the first time on any scale of mortgages from building societies, and above all on a large number of small builders, such as This was what built most of the London that we value today. At its best large Frank Taylor, who later formed Taylor Woodrow, building pattern book houses.6 estates granted long (99 year) leases with covenants restricting what could be Low interest rates certainly helped, but so too did the growth of well-paid jobs in done, for example preventing building in back gardens, while at the worst small modern factories. areas of land were sub-divided and soon decayed into slums, ‘as the relatively The mushrooming of the new suburbs was only physically possible because of large scale public investment in infrastructure. To tackle unemployment, the 1 Sarah Yates and Peter Murray, New London Architecture, Great Estates: how London’s landowners shape its growth, 2013 5 Harold Dyos, Victorian Suburb: a study of the growth of Camberwell, Leicester University Press, 2 Simon Jenkins, Landlords to London: the story of a capital and its growth, 2015 1061 3 Donald Olsen, The Growth of Victorian London, Peregrine Books, 1979 6 Alan Jackson, Semi Detached London: suburban life, development and transport 1900-1939, Wild 4 H J Dyos, Victorian Suburb: a study of the growth of Camberwell, Leicester University Press, 1973 Swan Publications 1991

82 83 government funded new arterial roads such as the Great West Road through The Greater London Council replaced the LCC in 1965, and took on a number or the Kingston Bypass, or the extensions of the Underground Railway of Comprehensive Development Areas, such as in Bermondsey or South of out to and . The most iconic development was promoted Kings Cross. The 1947 Act has allowed local authorities to acquire property in as Metroland, the bi-product of building the Metropolitan Railway from rural a designated area, using powers of compulsory purchase in order to replan and areas such as Amersham to a new terminus at Baker Street. The directors of the develop urban areas suffering from war damage or urban blight. The results are railway were very canny, buying up land near the new stations through separate associated with large areas of high-rise system built flats, many of which went companies for the housing developments that made the railway a financial from being very popular with their initial residents to being criticised for being success. The posters promoted healthy living in the country away from city smog inhuman and subject to anti-social behaviour. Interestingly there is much on the and commuting by train to central London. internet about Glasgow but little about London, and the beneficial impacts of CDAs seems to have been largely forgotten. But the surge of development along the main roads led perhaps uniquely in the UK to a backlash that sought to contain the towns and keep the countryside The Analysis for the 1951 County of London Plan identified 100 areas in need sacrosanct. In polemical books, London was described as an octopus by architect of reconstruction but ‘due to financial and manpower limitations only eight Clough Williams-Ellis, who attacked ‘ribbon development’. Tristram Hunt goes areas where war damage or obsolescence is most extensive can be undertaken further in saying: at present.‘ The land designated comprised 337 areas containing 660 acres in addition to 1,662 acres covered by Declaratory Orders and therefore liable ‘The English were no longer regarded as an urban race, who had created some of to compulsory purchase in areas of the City of London, Stepney/Poplar and the great civic wonders of Europe, but as innately semi-rural tribe who felt most at Bermondsey that has been worst hit by bombing. ease in the burgeoning suburb.’ Roy Porter points out in London: A Social History that ‘London suburbs suddenly stop, frozen at a point they had reached in 1939’, Comprehensive Development Powers were also used to achieve other and the NLA’s useful book and exhibition London’s Towns: Shaping the Polycentric developments considered strategic, such as town centre renewal as well as major City reveals the contrasts between the inner suburbs, well connected by public roads and even the regeneration of Covent Garden after the market closed. A transport, and the outer suburbs, that are much more dependent on cars. It is notable example is Croydon, where the Council promoted an act of parliament the outer suburban centres and industrial estates that may now have the greatest which gave it the powers to assemble the site for a new office development scope for intensification, as studies of places such as reveal.7 to take the pressure off the City of London (rather like La Défence in Paris). Importantly sites could be acquired without having to get the approval of the The paradox is that the electrification of the 1930s, and the mass production Secretary of State. The results were of their time, and are now the subject of of cars made it possible for growth to be exported beyond the green belt to a redevelopment schemes, made easier because the freehold of the land had been multitude of small towns in the Home Counties. London’s outer suburbs, which assembled by the local authority. Undoubtedly Croydon would have much less of represented the peak of ambition in the 1930s, were to end up choked with cars, a town centre today if the powers had not been used. and losing the local industry that had made their rapid growth possible. Their original inhabitants were eventually to be partly replaced by waves of immigrants. At the same time as local government was building housing estates, private developers took on the job of converting and improving older housing. Significantly building societies were often wary of funding conversions, and local Post-war reconstruction authorities then had to step in. Some developers became notorious for forcing The damage done by bombing, especially in the East End and around the River out existing tenants, such as in , and over time areas that were located Thames, called for special measures in assembling the land for building again. near transport links became ‘gentrified’. In many cases public private partnerships Another wave of development was orchestrated through the London Plan were used to assemble complex sites, such as Centre Point off Oxford Street, drawn up by at the end of the Second World War by Lord Abercrombie, which where the GLC secured a roundabout and Harry Hyams a large office block. At sought to disentangle the ‘muddle’ of housing and industry, as it was called. The that time local authorities not only had well-resourced planning departments and designation of Comprehensive Development Areas gave local authorities the employed architects, but also had powerful estates departments with people who powers to assemble sites with existing uses on them. As the Danish urban historian knew about property finance and had a genuine capacity for assembling land, Rasmussen wrote in London: the unique city: with CPO powers only being used as back-up.

‘Entire districts were demolished overnight. All traditional ideas of property The period between 1950 and 1976, Stephen Hill reminds us: ‘ …was the only became obsolete. A new thinking and a new planning was not only a possibility, it period since 1875 when Britain was not the lowest spender on infrastructure had suddenly become a new necessity.’ among the developed nations of Europe and North America.’8

The 1944 Greater London Plan was turned into reality though a new Town and This surge of rapid urbanisation and post-war reconstruction relied on Country Planning Act in 1947 which resulted in a green belt around the edge of Comprehensive Development Areas and New Town Development Corporations London to stop sprawl, first envisaged in the 1920s. The government funded eight to mobilise the land necessary for a surge in investment. In turn the public new towns that were far enough away to be self-contained plus several rings of investment in infrastructure enabled a huge investment boom not just in house new highways, only one of which was ever built. The wider public purpose or buying, but in acquiring all the appliances that make up modern life, from central benefit was considered sufficient to justify taking over property at close to the heating to refrigeration, as well a great increase in car ownership and usage. It value of the existing use, so long as the national government agreed. was also associated with Britain’s late entry into Europe and a financial crisis that

7 New London Architecture, London’s Towns: Shaping the Polycentric City, 2017 8 Stephen Hill, Town and Country Planning, It’s the land economy, stupid, January 2013

84 85 brought in a succession of Tory governments. The Leasehold Reform Act of 1967 were British. In London the escalation in values has made land assembly more was intended to free-up development, but threatened well-planned areas, such as difficult, as many property owners hold out for a substantial return on their Hampstead Garden Suburb, which had to set up a Scheme of Management under investment, abd in many cases there is a base income that in a low interest S.19 to maintain the qualities that created its ‘common wealth’. environment makes holding land relatively painless.

During that period outside London some major land assembly projects was In its interim report, the Commission for Economic Justice set up by IPPR undertaken, but only for city centre developments involving retail, for example concludes that radical changes are needed in the housing and other markets if in Liverpool for Grosvenor or in Derby for Westfield. These relied on CPO skills Britain’s persistent inequality and low economic growth rate is to be changed. The that were bought in from the private sector, with Birmingham being an exception report says where a CPO skill base was retained in house. ‘These insights can help to inform the approach taken to public policy today. They suggest, for example, that greater attention should be paid to the provision of ‘patient capital’ willing to finance investments with long-term returns, and to Post 2008 and the financial crash the role of public policy in directing innovation towards societal goals. In turn, The banking crisis and the subsequent policy of austerity has had long-run this needs to draw on new understandings of the role of demand in modern implications, especially as so much capital in the UK is tied up in housing as economies.’11 Thomas Piketty shows in Capital. While Asian investors may see London as the safest market in which to store finance, other investors look at the housing market This report has little to say about land assembly, and how to tackle growing as a bubble, which could drag down investors with too much unsold stock. So as spatial inequalities, or the role that cities play in more successful economies. It the infrastructure costs on a large development can exceed the building costs, points to two great periods of change in the 1940s and 1980s but misses out the and has to be funded up front, in recent years more attention is being given to the times when we built most housing in and around London, and the reasons for costs of infrastructure, and how to fund it.9 gentrification. Research shows that the neighbourhoods that enjoy the highest values tend to be ones where the public realm is well-managed over time.12 ‘The intention is to bring in new finance when the banking markets open again Private house owners have benefitted not just from far-sighted investment in for lending to commercial property. The investment figure was not available but green spaces, but also continual care in maintaining standards. an announcement is expected this week. No one from the partnership would comment in the meantime. The King’s Cross development would have had little The search is now on for space that has not yet been brought forward. The new problem in securing development finance before the recent banking problems, London Plan seeks to provide a vision for a City in the West as well as in the East, given its size, the collateral offered by the land around King’s Cross and the pre- with a large number of Opportunity Areas and Housing Zones. Much of that is lets agreed with occupiers such as Sainsbury’s.’10 already owned or optioned by private developers, and considerable attention is consequently being paid to land owned by Transport for London, or airspace Since the last financial crash the availability of finance for land acquisition and above railway stations.13 A report published by the London Society sought to development has changed enormously. Local authorities lost most of their show, by focusing on the ‘Western Wedge’ the potential of mobilising land that autonomy and much of their capacity to plan or build, (though the Localism Act had not yet been considered for development, such as Airfield, or under- and subsequent moves to set up local authority companies suggesting the trend used land along the Paddington Arm of the Grand Union Canal that was in close is being reversed.). Private builders have merged or collapsed after each periodic proximity to stations on the Underground system.14 recession In contrast foreign investors have become major players, especially from the Far East looking for safe havens for capital. There is also some interest from financial institutions to invest in development for the income that will come from leasing out Private Rented Sector apartments. But single large sites are few and far between, and there tends to be more focus on the lack of ‘oven-ready developments’ than the lack of finance.

The Elizabeth Line, the London equivalent of Paris’s RER, has been part funded by a levy on the Business Rate. But though the railway will be operated by the company who run the Hong Kong Metro, the benefits from development on land adjoining the stations will not be ploughed back. Research by Savills and others suggests that the main beneficiaries from improved accessibility are existing home owners. So whereas increasing demand in the 1930s led to a corresponding rise in house building in the South East, since 2000 it has largely resulted in higher house prices.

A presentation from CBRE for the South East Development Agency in 2009 after the crash found that no bank then would put more than £50 million into property 11 IPPR, Time for Change: a new vision for the British economy, 2017 12 Savills for the Cabinet Office, Completing London’s Streets, 2016, and Beyond Location: a study development and only 12 would lend more than £25 million, of which only two into the components of the built environment and value, 2017 13 Centre for London, Ideas above your Station: exploring the potential for developing stations in London, 2017 9 Nicholas Falk, Funding Large Scale New Developments, Town and Country Planning April 2014 14 Nicholas Falk and Jonathan Manns, The London Society, ReShaping London: Unlocking sustain 10 Financial Times, Kings Cross rescued at 11th hour’, August 22nd 2008 able growth in West London and beyond, October 2016

86 87 landowner possessed in total 15% of all former plots he would receive back 15% Appendix C of the value of the reallocated plots. The municipality retains land equal to the increase in value caused by the Umlegung process, subject to a cap of 30 Powers to assemble land in Germany, France, per cent in respect of greenfield land and 10 per cent in respect of inner-city 4 and the Netherlands land. If land is reallocated based on land value then the landowner has to pay the uplift in value between the original (i.e. undeveloped) and new land values (i.e. based on the value of the serviced plot after the procedure of Umlegung). The value retained by the municipality to is used to recoup the costs of Public authorities in Germany, France and the Netherlands each have legal infrastructure provision. The Umlegung approach facilitates the bringing frameworks that enable the purchase and assembly of land at, or close to, forward of land for the required infrastructure, whilst not affecting the existing use values. French pre-emption rights, for example, give public underlying ownership structure. By taking a lead in land assembly, the German authorities a ‘first call’ on the purchase of land where it is identified in a local planning authorities are able to better ensure the ultimate development of the plan as required for public needs with price paid reflecting that which would site, ensuring delivery to plan and at a lower cost to the municipality.5 be paid had it been compulsorily acquired. As well as strong compulsory acquisition powers, land readjustment (also termed land pooling) is seen as ‘Urban development measures’ (Städtebauliche Entwicklungsmaßnahme), a key tool in these countries as a way of assembling land and encouraging allow the municipality to assemble land for development by paying private development. In Germany and the Netherlands land readjustment has a legal owners the existing value of the plot, and then sell it on after redevelopment basis, whereas this is purely voluntary in France. The German Umlegung model, at the new, higher, value. There are, however, strict controls on the use for example, enables municipalities to assemble land in fragmented ownership of this measure. It is seen as a power of last resort and owners are able to and designate some of that space for streets and public space. The remaining prevent the compulsory purchase if they can evidence their ability to bring land area is then returned to the original land owners according to their share the land forward for development themselves in accordance with the plans. of either the original value or land area.1 Notwithstanding these controls, this power acts as an incentive for landowners to bring land forward for development.6 Although, in practice, these rights are rarely exercised.7 Germany A key difference in the planning systems of England and Germany is the extent to which the German state intervenes in bringing forward land for France development. German public authorities play a significant role in bringing land In France, as in Germany, the state is involved not only in setting development to market, and many purchase significant areas of land from the market directly priorities, but also in assembling and preparing land before selling off the to maintain a healthy supply of sites. development rights. There is a greater acceptance of public intervention in France than in the UK and consequently public authorities have greater powers Germany has a powerful, legally binding process of land pooling or ‘land to participate in land assembly. readjustment’ called Umlegung.2 This involves the assembly of land by the municipality with the uplift in value shared proportionately amongst Public authorities in France have extensive pre-emption rights, one of the the original landowners after repaying the municipality for any necessary most significant of which is the ‘droit de premption urbain’ (“DPU”). Where infrastructure provision. This can be done either by consent with the a municipality has implemented a legal pre-emption right, it has the first call landowners, or compulsorily if voluntary agreement cannot be reached. The on the purchase of properties in particular zones defined in the urban and process starts with the municipality determining the area of the proposed for land development plan up to a stipulated upper limit. The limit is linked to Umlegung. Once the rights and claims of all individual plots within this area the price that would be achieved were the land to be acquired pursuant to are ascertained, the interests are combined to form the site. Land which is compulsory purchase powers. This mechanism provides public authorities with designated for streets and other public space is appropriated from the total a potentially powerful land policy instrument. However, if the public authority area of the Umlegung. The remaining land is then returned to the original land does not exercise its option to acquire, then the local plan designation for the owners using a special standard of distribution according to either their share particular land in question will change to a normal ‘private land use’ allocation. of the original value or land area. Furthermore, if the public authority does exercise its right to buy, but does not develop the land within five years, then the original owner has a right to buy Redistribution according to land area will only be appropriate where the values of all the former plots are fairly similar.3 Reallocation on this basis takes 4 Royal Town Planning Institute, Delivering Large Scale Housing: Unlocking Schemes and Sites into account the former ratio of land ownership, so, that if, for example, a to Help meet the UK’s Housing Needs, 2013 5 Lord, A., O’Brien, P., Sykes, O., Sturzaker, J., Planning as ‘market maker’: How planning is 1 Clarke, E., Nohrová, N., Thomas, E., Centre for Cities, Delivering Change: Building homes where we need used to stimulate development in Germany, France and The Netherlands, 2015 them, 2014 6 Davies, B., Turner, E., Marquardt, S., Snelling, C., Institute for Public Policy Research – Ger- 2 Barlow, J., Bartlett, K., Hooper, A., Whitehead, C., Land for Housing, Current Practice and man Model Homes? A Comparison of UK and German Housing Markets, 2016 Future Options, 2002 7 Barlow, J., Bartlett, K., Hooper, A., Whitehead, C., Land for Housing – Current Practice and 3 Connellan, O, Land Assembly for Development, 2002 Future Options, 2002

88 89 back the land. While a powerful tool, and one which gives public authorities circumstances private property rights are temporarily transferred to a leverage in the development process, the pre-emption rights are rarely public development agency that proceeds to assemble the site. It is then exercised. re-parcelled, often into a greater number of smaller units, before installing infrastructure and thus raising the value of each plot. Property rights are France also has a system of land pooling and readjustment which operates on a subsequently returned to the original land owners. This model, where initiated voluntary basis rather than by a legally binding mechanism. Large housing sites voluntarily, reduces risk for the public sector, diminishing the need to engage are brought together with the infrastructure plan ensuring that infrastructure in resource intensive compulsory-purchase procedures. Moreover, the very is in place ahead of development. This reduces the risk for landowners processes involved in bringing private land-owners into cooperation often and developers and helps brings certainty over the size and scope of the creates healthy coalitions which have a stake in future development.9 development. To recover some of the costs associated with the infrastructure provision, France has a national employment tax which is used to finance these projects and also has a regional investment policy, the Caisse des Dépôts, where personal savings and pension funds can be channelled into specific long term investments, including housing and infrastructure.

The Netherlands The active land policy in the Netherlands enables authorities to purchase land at existing land values, often just a little above agricultural use value. Municipalities then service the land by putting in infrastructure, parcelling the site into smaller plots and subsequently selling the parcels to developers. The sale proceeds are used to cover on-site infrastructure costs, off-site infrastructure costs and plan making. The municipality will keep any surplus and any deficit will be subsidised by central or local government.8

If necessary, municipalities make use of their compulsory acquisition powers and pre-emption rights to assemble any land necessary. The Compulsory Purchase Act (Onteigeningswet) allows municipalities to use compulsory acquisition powers ‘in the interest of spatial planning and housing’ to implement the proposals in the land use plan. Compensation is paid based on the open market value of the property. In practice, municipalities rarely have to use eminent domain powers as most landowners sell voluntarily because they know that they will be expropriated otherwise. As in Germany, compulsory purchase is not possible if the owner can evidence that he is able to carry out the development [for which the land is to be acquired] himself.

Dutch public authorities also have a legal framework for implementing land readjustment in rural areas, known as the Building Rights model. As in Germany, land readjustment involves land rights being temporarily pooled to deliver infrastructure or area enhancements that could not be delivered by the landowners acting individually. The aim of land adjustment is to consolidate adjacent plots into a configuration more amenable to development. Land readjustment can be voluntary or by compulsion. Where a voluntary land readjustment is initiated affected property owners in a redevelopment district, have the power, by majority vote, to approve or disapprove the transfer of land rights to a self-governing body for redevelopment. Where approved, the agency invites property owners to become stakeholders and to contribute their real assets to the project as investment capital. After all properties in the districts are assembled, the combined land sites are then subdivided.

Alternatively, the municipality can purchase the land within the required area by consent or compulsorily, or a combination of the two. In both

8 Royal Town Planning Institute, Delivering Large Scale Housing: Unlocking Schemes and Sites to Help meet the UK’s Housing Needs, 2013 9 Lord, A., O’Brien, P., Sykes, O., Sturzaker, J., Planning as ‘market maker’: How planning is used to stimulate development in Germany, France and The Netherlands, 2015

90 91 APPENDIX D LAND ASSEMBLY TEST CASES One: West London Two: East London

RECOMMENDATIONS FINANCIAL TIMING RISK RECOMMENDATIONS FINANCIAL TIMING RISK CONSIDERATIONS (DELIVERY) MITIGATION CONSIDERATIONS MITIGATION (DELIVERY) 1 and 2: Designate ‘Land Would reduce financial Eliminates current sequential High 1 and 2: Designate ‘Land Reduces financial Eliminates current sequential High Assembly Zones (“LAZs”) speculation for land statutory delay Assembly Zones (“LAZs”) for speculation in the town statutory delay which will be for priority land assembly outside the gas works priority land assembly areas with centre. lengthy in a town centre context. areas with an in principle a principle commitment to use commitment to use compulsory purchase powers compulsory purchase power 3: Identify a lead body with Reduces public Remove the requirement Medium 3: Identify a lead body Reduce public sector Reduces the parties involved Low responsibility for land assembly sector costs. Would for multiple body local level with responsibility for land costs associated with and consequential delays for in each Land Assembly Zone provide consistency, involvement and consequential assembly in each Land the two Boroughs report approvals within the two coordination and overall delays for report approvals Assembly Zone taking alternative Boroughs and other statutory certainty. approaches land owners. 4: Allow confirmation of CPOs Reduces financial Eliminates current sequential Medium 4: Allow confirmation of Reduces financial Eliminates current sequential Medium ahead of planning consent speculation and statutory delay and creates CPOs ahead of planning speculation for land statutory delay. provides consistency, certainty in formulating consent outside the gas works coordination and overall comprehensive town centre plans. 5: Allow Mayoral Reduces financial The mayor will be more familiar High certainty. confirmation of London uncertainty as a result with the circumstances and able 5: Allow Mayoral confirmation of Reduces financial The mayor will be more familiar High local authority CPOs of speeding up the to make decisions quicker. The London local authority CPOs uncertainty as a result of with the town centre circumstances process compared to mayor may have also played speeding up the overall and able to make decisions quicker. confirmation by the a mediation role prior to any process. Secretary of State Inquiry thereby shortening 6: Introduce ‘Use CPO land or In effect Introduces Incentivises delivery through Medium Inquiry time. lose it’ provisions a financial penalty to penalising non-performance which 6: Introduce ‘Use CPO land Introduces a financial Incentivises delivery through Medium parties who do not will bring forward tertiary and edge or lose it’ provisions penalty to parties who penalising non-performance and perform which would of centre locations quicker. do not perform which bring forward land outside of be particularly useful may be particularly the gas works faster. in tertiary and edge of helpful for land centre locations. outside of the gas works site. 7a: Introduce statutory land Creates a time Provides a prescribed timeframe Medium 7: Introduce statutory land Creates a time Provides a prescribed timeframe Medium/High pooling limited mechanism for negotiation particularly useful pooling and allow owners limited mechanism for negotiation and speed up for negotiating land in tertiary and edge of centre to share the marriage value for negotiating land of land assembly outside of the particularly useful in locations. uplift in LAZs particularly helpful for gasworks site. tertiary and edge of land outside of the gas centre locations. works site. It may have helped the boroughs 7b: Allow owners to share the Provides clear financial Incentive to agree expeditiously Medium /High to collaborate marriage value uplift in LAZs benefits cooperating particularly useful in tertiary and landowners edge of centre locations. 8: Freeze land values in Reduces financial Avoids delay due to High 8: Freeze land values in LAZs Reduces financial Avoids delay due to disagreements Medium / High LAZs speculation disagreements of values and speculation for of values. This will be or particular arriving at an equalisation negotiating land relevance in the town centre but position between the Boroughs particularly useful in also further out in the LAZ. at an early stage. tertiary and edge of 9: Introduce a planning Reduces financial Avoids delay due to High centre locations. application moratorium on speculation disagreements of values on 9: Introduce a planning Reduces financial Avoids delay due to disagreements High designation of a LAZ particularly for land different bases, particularly application moratorium on speculation particularly of values on different bases. This outside of the gas outside of the gasworks site. designation of a LAZ for negotiating land will be or particular relevance in works site in tertiary and edge of the town centre but also further 10: Create a multi- Reduce public sector Reduces the number of parties Low / Medium centre locations. out in the LAZ. disciplinary team to costs associated with involved and consequential 10: Create a multi-disciplinary Reduce public sector Reducing parties involved and Low/ Medium support the boroughs and the two Boroughs delays for report approvals, team to support the boroughs costs at a local level. consequential delays for report developers in tackling taking alternative particularly between the and developers in tackling Reduces land overall approvals by streamlining strategic and difficult sites approaches. Reduces Boroughs and other authorities strategic and difficult sites and land assembly costs decisions. Assists in identifying and provide a long-term land overall land involved. Assists in identifying provide a long-term London to the public purse shortfall funding at an early stage London revolving fund to assembly costs to shortfall funding at an early revolving fund to support land and creates financial and will assist viability discussions. support land assembly. the public purse and stage. assembly. certainty creates financial certainty.

92 93 Exhibit 14a Better models will speed up delivery Exhibit 14b Better models will speed up delivery West London East London

2-3 years 2-3 years These charts show the uplift in land value in the 110% areas around transport 100% 45% 90% 40% nodes, which may 80% 70% 35% therefore influence land 60% 30% assembly. Gerald Eve tested 50% 25% 40% 20% the impact of uplift for two 30% 20% 15% very different possible 10% 10% Uplift in Capital Values 0% 5% 1000 Land Assembly Zones 1000 7 Uplift in Capital Values 0% 800 under three scenarios: 6 800 7 5 6 600 early (2-3 years); mid (3 to 4 600 5 3 400 4 400 4 years); and late stage (4 2 3 200 Distance (m) 2 200 to 5 years) value. 1 1 Distance (m) 0 2-3 years0 There is a clear difference between the case studies reflecting both location 3-4 years 3-4 years (east and west) and maturity of development 110% 45% in the zone around the 100% 40% 90% transport node: In the 80% 35% West London case - 70% 30% 60% 25% the redevelopment of 50% 20% a significant tract of 40% 15% 30% 10% brownfield land - the 20% 10% 1000 5% 1000 Uplift in Capital Values closer the distance to the 0% 800 Uplift in Capital Values 0% 800 7 7 transport node the bigger 6 600 6 600 5 5 the uplift. In East London 4 400 4 400 3 3 case, which is next to an 2 200 2 200 established town centre, 1 Distance (m) 1 Distance (m) 0 0 values are mature around the transport node and 3-4 years the uplift is greatest the 4-5 years 4-5 years further the distance away. The earlier the intervention in both cases the greater 110% 45% 100% the value of the uplift to be 40% 90% 35% captured or shared. 80% 70% 30% 60% 25% 50% 20% 40% 30% 15% 20% 10% 10% 1000 5% 1000 Uplift in Capital Values 0% 800 Uplift in Capital Values 0% 800 7 7 6 600 6 600 5 5 4 400 4 400 3 3 2 200 2 200 1 1 Distance (m) 0 Distance (m) 0

4-5 years

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