Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by Land Securities plc (AFH 32)


  1.1  Land Securities is one of Britain's major companies, bringing together property portfolio management, property development and total property services. We aim to be the UK's recognised leader in creating value through commercial development projects, demonstrating quality and innovation as well as economic and environmental sustainability. The property portfolio had an asset value as at 31 March 2001 in excess of £7 billion with a £2 billion development programme.

  1.2  Land Securities has a wide range of development projects throughout the UK from city centre retail led mixed use schemes, in locations such as Birmingham, Exeter and York; to major central London office developments and large scale "brownfield" regeneration projects in Kent Thameside and Cambridge. Kent Thameside is one of the two key development locations in the Government's priority regeneration area Thames Gateway. Many of these projects are undertaken either in partnership with Local Authorities and Government departments or in close consultation with them. The company has approximately 14,500 residential units within its development pipeline.

  1.3  Land Securities approach to residential development and mixed use developments in Kent Thameside is not typical. The company is not a house builder but acts as a "town developer". The company is undertaking, on a number of large sites in Kent Thameside, master planning and promotion through to the construction of strategic infrastructure. It will retain responsibility for the delivery of the planning obligations and community benefits including school building, community facilities, the public realm and affordable housing.

  1.4  One example of this is the development of Eastern Quarry. This site will provide a unique and exciting opportunity to create a high quality, public transport and community-orientated development based on the urban village concept. Emerging figures indicate capacity for approximately 7,250 residential units, up to (2.25mft2) 209,000 square metres of employment floorspace and circa (1.85mft2) 171,000 square metres of supporting retail, leisure and community uses. Discussions are taking place with the relevant bodies concerning the provision and procurement of affordable housing. Taking the local authority's current policy requirement, 1,450 or more affordable housing units are likely to be provided.

  1.5  Accordingly, Land Securities is a major consumer in respect of the UK planning system and a major promoter of affordable housing.

  1.6  The key issue from Land Securities perspective is the need for the planning system to provide certainty and clarity combined with realism and practicality at all levels.


  2.1  We recognise that there has been a wide interpretation on the definition of affordable housing. Planning policies for affordable housing are required, by current government guidance to be "tenure neutral" see Circular 06/98 (Planning and Affordable Housing). This guidance states that it is up to local authorities to define through policy what "affordable" is taken to mean, but that it should include both low-cost market and subsidised housing. We note more recent definitions (DTLR Reforming Planning Obligations: Consultation Paper) go further and state whether the subsidised housing is for rent or shared ownership. However we have experienced in negotiations that there has been a tendency to equate affordable housing with social rented housing.

  2.2  Circular 06/98 recommends that affordability definitions in local planning policy guidance should be related to local income levels and their relationship to local house prices and rents. In our experience this advice is rarely, if ever followed. This is, perhaps, through difficulties in keeping data sufficiently up to date to provide meaningful reference points.


  3.1  Clearly there is a particular requirement for affordable housing in the South East and in London. This has been well documented and is confirmed in the Regional Planning Guidance for the South East [RPG9—March 2001 particularly paragraphs 8.7—8.15] and in the initial proposals for the Mayor's Spatial Development Strategy [May 2001—pp 2.63-2.66]. Further technical work has been published to support the Mayor's emerging Spatial Development Strategy—Affordable Housing in London July 2001 and Future Housing Provision: Speeding up Delivery February 2002.

  3.2  Absence or shortfalls in availability of "affordable" housing seem generally to arise in areas and pockets of high economic growth and activity.

  3.3  Perversely, urban regeneration projects designed to improve the economic prospects of regions and localities can create situations where residential accommodation can become "un-affordable" to some sectors of the local population. It is extremely important for policies in general and local planning authorities in applying those policies not to create circumstances in which demands to provide heavily subsidised affordable housing could preclude otherwise worthwhile projects.

  3.4  Demands that developers wholly subsidise shortfalls in viability of affordable housing generally or particular tenures of affordable housing because Social Housing Grant is not available or is being applied elsewhere are counter-productive. This operates as a form of local taxation and as a deterrent to becoming involved in urban regeneration projects. The logical consequence is that companies such as ourselves, with a choice as to the sectors of the property market and areas of the country in which we operate may choose to invest our funds elsewhere. This needs to be recognised.


  4.1  As a major landowner and developer, with a commitment to achieving quality regeneration, urban renaissance and sustainable development, we are committed to ensure schemes with which we are involved will deliver quality affordable housing and a well managed public realm. It is in our interests to do so. We specialise in high density, mixed use urban development projects. Anything other than high quality development will impact on the investment value of non-residential and market residential elements of our schemes.

  4.2  It should be recognised that in dense inner urban and new urban mixed use projects, affordable housing can rarely be a separate, detachable element. It is rarely a collection of low density "homes with gardens" in the traditional suburban model but is integral to larger blocks of buildings. The skills required to develop and manage affordable housing such as this are different from those required for isolated homes with gardens within single-use residential projects.

  4.3  It is important to recognise, that the commitment to excellence in the developments that we and similar developers require, combined with the degree to which affordable housing is integral to our projects overall, necessitates our exercising close control over the development process and future management of affordable housing and the public realm. Choice as to those with whom we contract to deliver and manage that housing and public realm on our behalf is crucial. We find that some local authorities and their housing officers fail to appreciate this. The result is that projects, and hence regeneration, are delayed as a consequence of debate as housing officers try to impose partner housing associations and "standard" development and tenure structures which are at odds with the development in which the affordable housing and public realm is to be located.

  4.4  We support the Government's initiative to highlight many examples of residential development best practice in a wide range of areas in the supporting PPG3 companion guide By Design Better: Places to Live although it is important to recognise there are no specific examples of affordable schemes.

  4.5  Finally it is widely recognised that the existing management of private and public sector rented stock has to be improved. The future social and economic sustainability of "quality" relies on an absolute mechanism to deliver in perpetuity effective management not only of the affordable housing but also of the public realm.


  5.1  The adequacy of existing resources is crucial to this matter. In the context of the large regeneration sites with which we are involved within Kent Thameside, it is not just the cost of creating the serviced development platforms (especially where significant land remediation costs arise) which potentially require financial support for regeneration to succeed. Nor is affordable housing the only issue to be addressed. A heavy investment is required in sustainable community infrastructure, including education and skilling, health-care and leisure facilities in order to prevent social exclusion, as well as transportation infrastructure. Often this investment is needed over an area far wider than the immediate area of the development itself. Even though the site specific costs can sometimes be met by the developer, these additional needs, often the subject of planning gain negotiations cannot be met in full.

  5.2  In order to monitor the adequacy of existing supply an effective monitoring strategy needs to be implemented within regions. Clearly not every planning permission results in implementation. Therefore work needs to be carried out to check and co ordinate on completions, focussing purely on affordable housing with information detailing phasing, on site and off site provision, what happens to the affordable housing after delivery and the role of commuted sums specifically identified for affordable housing.

  5.3  It is encouraging to see in the Government's Regional Development Agency for the South East (SEEDA ) Regional Economic Strategy consultation document a recognition that it is "unrealistic to expect the planning process to deliver affordable housing on the scale needed", and that "only a major increase in allocation to the registered social landlords will seriously address this issue".


  6.1  Private sector property development must generate an adequate return on capital employed and reflects the level of assessed risk. Development activity is therefore inevitably concentrated in those areas where demand (preferably existing but also predicted) is either already robust or can be stimulated by the economic activity associated with regeneration. Certainty is a key factor influencing investment decisions.

  6.2  The Government's Planning Green Paper (Planning Obligations Consultation Paper) emphasises the desirability of funding affordable housing from planning obligations. Our experience in recent years is that this requirement as already applied to housing schemes has led to increasingly complex scheme and financial negotiations. In many parts of the country the consequential delays appear disproportionate to the benefits that can actually be secured and we have asked the government to look again at whether planning obligations are the best vehicle for funding affordable housing. Affordable Housing is an issue for society at large, not just for the development industry.

  6.3  Land Securities specifically made representations both to the London Mayor and the Secretary of State for Transport Local Government and the Regions on this issue. It is considered that requirements for funding from planning gain are wholly unrealistic. Concern has been voiced by the development industry on the proposed imposition of a 50 per cent target and for requiring commercial developments to make provision for affordable housing in London.

  6.4  The issue of contribution is recognised. However there is a concern that the imposition will not provide the flexibility to deal with all development circumstances. This is particularly relevant where there are abnormal development costs associated with the development; such as land reclamation. Equally there is a concern that the gain will be overly skewed to the provision of affordable housing when there may be other and, indeed in certain cases more important claims, on expenditure, such as schools and other local, physical or social infrastructure.

  6.5  Finally there needs to be careful consideration given to existing commercial locations. The provision of on-site affordable housing can be detrimental to the bringing forward of commercial development, particularly where this involves recycling a wholly commercial site such as a major office building.


  7.1  Clearly a balanced approach needs to be made which reflects the particular requirements in an area. Financial resources therefore ought to be focussed to match these requirements. Local authorities are obliged to compile housing needs assessments and it is from these surveys that an answer should be gained.

  7.2  The government's starter homes initiative, which aims to provide 10,000 affordable homes for key workers over a three year period is an example of an innovative and practical mechanism. However the scale must not be underestimated and we understand that demand for the initiative has far outstripped supply.

  7.3  It is important to have a range of tenures of affordable housing in addition to social rented housing. Otherwise those on lower incomes will not be able to progress to home ownership. Shared ownership and discounted market forms of affordable housing need to be available. The key issue to address is how to ensure that once built and made available, these homes remain part of the affordable housing stock and perform a long-term function in enabling home owners to staircase up to full ownership.


  8.1  We are familiar through our work in Kent Thameside with the Regional Planning Guidance for the South East (RPG9 March 2001). Policy H4 provides a very clear resume of the factors which planning authorities need to consider in their plan making (and site negotiations).

  8.2  Government has recently published a research report "Delivering Affordable Housing through Planning Policy" (DTLR March 2002) where amongst other things an approach to adopt thresholds and targets (based upon the recently published RPG9) is highlighted. The approach suggests that local authorities need to consider:

    —  the most up to date housing needs surveys and/or other evidence of housing need on which the authority can draw (eg the housing register, local house price trends and relationship to income);

    —  the authority's housing strategy;

    —  results of urban capacity studies (showing likely contribution to housing from sites of different sizes, from brownfield and greenfield sites and from allocated sites and the likely flow from windfalls);

    —  analysis of site development economics; and

    —  results from monitoring exercises which show the amounts and sources of affordable housing achieved in the recent past and the use made of commuted sums (and what these have funded).

  8.3  With our experience of dealing with brownfield sites the level of affordable housing that can be provided on any particular site will in the first instance depend on the development economics of that site.

  8.4  The short point is that affordable housing targets can be acceptable at regional level but in practice demands for affordable housing grow out of local disparities between rates of pay and income and house-prices. Regional targets are likely only to be of use if the principle of developers and local authorities delivering affordable housing "out of area" as well as off-site is embraced. Acceptance of this principle could easily achieve an early and rapid increase in numbers of affordable dwellings. For example commuted sums in lieu of affordable dwellings in some parts of Inner London could readily finance greater levels of affordable housing in outer London or the Thames Gateway Sub-Region than if employed in the Borough in which they are collected.


  9.1  The key to this is an effective working relationship between the stakeholders in the delivery process.

  9.2  Policy needs to be clearly defined and effective systems and processes in place including an assurance that members of local authorities have a clear, consistent and realistic understanding of the interface between affordable housing and development demands. The challenges to overcome are significantly greater (and different) in relation to mixed use, high density, inner urban projects than in relation to green field suburban settlements.


  10.1  Unfortunately, the equal failure of both planning and housing providers to adequately value the importance of "place making" in their activities has undermined the image of both in the public's eyes. The realisation of the importance of urban design is now fully reflected in government guidance and something that Land Securities fully subscribes to.

  10.2  PPG 3 specifically encourages (amongst other things) the creation of mixed communities, giving priority to reusing previously developed land and promotes good design by using land more effectively to create attractive high quality living environments at higher densities than have recently been built at.

  10.3  Our only concern with regard to the "densification" and the mixed use developments is the appropriateness for affordable housing within schemes where plot sizes, gardens, access and accommodation may not fit in traditional requirements.


  11.1  The planning system undoubtedly plays a critical role in influencing the location of new development. PPG3 has restrained development on many greenfield sites, but it is unclear whether it has been as effective as expected in promoting the release of previously used sites. What appears to have happened is a significant restriction on the release of greenfield sites while many brownfield sites fail to be released sufficiently quickly to replace them, leading to a reduction of land supply resulting in a supply/demand imbalance.

  11.2  At the moment there remains risk attached to investing in brownfield residential development particularly in areas such as Kent Thameside. The development potential of the area is dependent, to a significant extent, upon delivery of major infrastructure. The attitudes of some local authorities toward slavish adherence to inflexible local affordable housing protocols (manifestly unsuited to dense mixed use development on brownfield sites) significantly stifles the actual delivery of some afforable housing. We do not consider that increased allocation on greenfield sites will solve this issue.


  12.1  The time and resources spent negotiating Section 106 Agreements (the traditional planning mechanism for providing affordable housing) has been a major issue for Land Securities when securing planning permission. The complexity of negotiations is often the principal issue behind this delay, exacerbated by the fact there are little or no "ground rules" for conducting such negotiations [Land Securities has responded to the Government on the Planning Green Paper as mentioned earlier].

  12.2  Our concern is there is often a lack of appreciation by the local authorities of the extraordinary costs associated with delaying projects and the consequent impact this has on the delivery of identified affordable housing.

  12.3  On a more general basis the concern remains that government's laudable strategy to raise the profile of (and increase the numbers within) public sector services in health, education, transport, emergency services and even planning has also to tackle and resource the corresponding requirements for housing that is affordable to the workers in these key sectors.

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