The Garden Cities prospectus emphasises that the proposals need to attract private capital and make use of land value uplift to finance infrastructure. The project must also be locally-led, brought forward by Local Authorities with the support of the community.

This is a tall order. Given the complexity of a development project on this scale, we would advocate that the delivery process is facilitated by a larger-than-local body to bring all interested parties together. We anticipate that the land needed to accommodate 15,000 homes will come from a number of landowners and could stretch across Local Authority boundaries. Hence there will be considerations that would need to be addressed on a wider than local scale.

To achieve the scale necessary in locations where people want to live at a realistic cost to the landowner, developer and end user, requires a solid and accountable framework.

A New Town Development Corporation (NTDC) could be the vehicle that helps deliver a long-term vision and reduce risk to investors and developers. Ensuring that it is locally-based and controlled (it could be set up by Local Authorities, for example) would ensure transparency, accountability and help build support at grass roots.

NTDCs could create a planning framework, borrow money to fund infrastructure, share land value uplift with the private sector and instigate compulsory purchase where necessary to complete land assembly.

Planning numbers

As we discussed on ‘The case for Garden Cities’, many Local Authorities are failing to plan for housing need. Even if current planning targets are met, southern England faces a shortfall of 160,000 homes over the next five years.

One of the challenges with the locally-led approach is that new settlements are unlikely to be justified purely on local requirements. However, if the ultimate objective of creating a settlement is to increase build numbers drastically to cater for the wider national need, we believe locally set planning targets should add up to the latest estimates for housing requirements of 240,000 new homes a year.

Local authorities will then find ways of working together, perhaps through stronger city regions and/or Local Enterprise Partnerships (LEPs), to meet a fully assessed level of need in the south, with Garden Cities being part of the solution. Existing plans for urban extensions and the homes already allocated in Local Plans should continue to underpin delivery.

The delivery process also needs to recognise that the beneficiaries of new towns are by definition people who do not live there yet. Given the long-term nature of the concept, these future residents may not have been born or are likely to be too young to vote. The case for Garden Cities needs to be made on behalf of future generations. Designation process requires more than a local planning framework.

Land value uplift

The planning system is based on the premise that there should be competitive returns to landowners to encourage them to bring forward land. For owners of Greenfield land, this represents the ‘life changing sum’ that persuades them to give up long-term ownership of that land, typically in agricultural use, after paying taxes and costs of sale.

There are broad benchmarks that represent this ‘life changing sum’ for large scale urban extensions. We need to ask whether the benchmark land value for Garden Cities is any different on account of the scale of land take. The only way to discover this is to hold a national competition for sites to come forward, from private land owners and Local Authorities.

Assuming a number of proposals are put forward, the competitive element would test the potential for lower land prices so that gains from value uplift could be used to fund infrastructure. Bidders would have the option to compete on land value by proposing Joint Ventures or other delivery structures.

One, possibly complementary, route could be via a vehicle whereby existing landowners retain a minority share in the project value. This allows the landowner to benefit from rising land values but requires them to share some of the risks inherent in large-scale development.

On a note of caution, the assumption that all Garden City infrastructure can be funded from land value capture is heroic. Contributions from landowners and developers would supplement, rather than replace, central and local Government funding.

The process for setting the rates for Community Infrastructure Levy (CIL), recognises that the levy is only one source of infrastructure funding amongst many. Garden City infrastructure is no different. The merits of any proposed site will be underpinned by its location relative to existing and planned infrastructure, together with its capacity to contribute funding from land value towards new infrastructure.

Affordable housing

The Government has stated that it would “not impose a particular level of affordable housing for housing schemes” in Garden Cities. There is a realisation that prescriptive requirements on tenure mix can deter development.

Garden Cities offer the opportunity to provide for a range of need by delivering a variety of housing tenures – from social rent to market sale and rent, with various forms of subsidised housing in between.

This could come in the shape of shared equity, shared-ownership and homes at discounted and market rent as well innovative hybrids. Hence there are a number of trade-offs to be considered on a site by site basis. Generic requirements for Garden Cities should be avoided.

Taken from
Spotlight: Garden Cities - June 2014