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Planning and Housing

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A presentation looking at the flaws in the viability system and how planning loopholes are being exploited by landlords claiming huge housing benefit payments

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Planning and Housing

  1. 1. OURCITY.LONDON Understanding planning and housing George Turner Investigative Journalist and Campaigner
  2. 2. OURCITY.LONDON PLANNING ● By law a local planning authority must grant an application for permission to develop land in line with the statutory development plan ● The development plan in London is: – The National Planning Policy Framework – The London Plan – The Boroughs’ Local Plans ● The goal of the development plan is to meet demonstrated local need
  3. 3. OURCITY.LONDON NEED VS DEMAND “Whichever level or type of development one is dealing with, a clear distinction is always drawn between public "need" (i.e. what is in the public planning interest), and private "demand" (i.e. what is in the developers interest by having this particular type of development). “The developers argued that proof of private "demand" for exclusive golf facilities equated to "need". This proposition is fallacious. …Pure private "demand" is antithetical to public "need", particularly very exclusive private demand... The more exclusive the development, the less public need is demonstrated. It is a zero sum game.” - Mr. Justice Haddon-Cave’s judgement in R (Cherkley Campaign) V Mole Valley District Council and Others [2013] EWHC 2582 (Admin)
  4. 4. OURCITY.LONDON PLANNING OBLIGATIONS Local plans contain a number of obligations – Affordable Housing – Provision of Open Space – The Protection of Historic Monuments – etc
  12. 12. OURCITY.LONDON GOVERNMENT POLICY ON PLANNING AND ECONOMIC VIABILITY To encourage growth, if planning obligations render a development to be so unprofitable that a developer cannot get finance for the scheme, or acquire the land, then the planning obligations must be removed
  13. 13. OURCITY.LONDON VIABILITY IN PLANNING Introduced by Ken Livingstone in London at the same time as introducing a 50% affordable housing target. Originally targeted at affordable housing obligations, and the goal of the policy was to increase affordable housing obligations. Coalition government increased the scope of the viability policy though the National Planning Policy Framework
  14. 14. OURCITY.LONDON HOW VIABILITY WORKS Revenues – cost = profit Profit must be sufficient to provide: – A reasonable return to the land owner – A reasonable return to the developer
  16. 16. OURCITY.LONDON REVENUES Extremely easy to manipulate – based on estimated of future sales values Surveyors will now produce two valuations for potential revenues from a new development
  17. 17. OURCITY.LONDON THE SHELL CENTER - REVENUES BNP Paribas confidential review of the submitted viability assessment – May 2013 “Through analysis of the available comparable evidence and their own judgment, Savills and KF have applied average values, on a pounds per square foot basis…. Across the entire Development the resultant average value is £1,275 per square foot.” Knight Frank and Savills confidential presentation to potential Shell Centre investors – February 2013 Average Price per square foot £1640
  18. 18. OURCITY.LONDON COSTS There are no benchmarks for maximum acceptable costs Almost any costs can be and will be added to a viability appraisal
  19. 19. OURCITY.LONDON PROFITS Profit benchmarks manipulated by setting an existing use value which is too high, or by creating unreasonable profit demands from the developer. Battersea Power Station, Earls Court and the Shell Centre all had a minimum profit requirement of 20% on an internal rate of return basis.
  20. 20. OURCITY.LONDON THE OUTCOMES ● London currently achieving 13% of new homes as affordable housing. ● Most boroughs have a target of between 40-50% ● London losing industrial land at 3* the planned rate causing real problems for workspace ● New buildings are deficient in terms of basic amenity, such as open space and daylight
  21. 21. OURCITY.LONDON THE SHELL CENTRE ● 8 towers packed together in a highly sensitive area ● Loss of office space ● 30%+ of building would have inadequate daylight, 40% + inadequate sunlight ● Apartments 8m away from each other ● Damage to heritage assets of global importance ● Loss of 4,500 sqm open space ● New public square – 99.3% overshadowed ● 10% onsite affordable housing concentrated at the back of the development (all with sub standard daylight)
  23. 23. OURCITY.LONDON SECRETARY OF STATE DECISION Inspector concluded that the Shell Centre redevelopment could cause no harm the setting of the WWHS because the development was not in it’s setting. Inspector also concluded that there was no harm to the setting of any historic assets as a result of development
  24. 24. OURCITY.LONDON HIGH COURT DECISION Inspector had “not expressed himself as well as he should have done” with regard to setting of the World Heritage Site, but had clearly considered the issue
  25. 25. OURCITY.LONDON CONDUCT OF THE PLANNING INSPECTOR “I have no doubt that the inspector’s conduct was such as to give rise to a real concern that he was unfair to the objectors. He seriously mismanaged his conduct of the inquiry. It may well be that the individual decisions he made were justifiable, but the way in which he made them was unacceptable. Observations which are against a party’s interests may be reasonable, but care has to be taken to ensure that they do not give the wrong impression. It is of course essential that parties to an inquiry feel that they have had a fair hearing and that their case has been properly taken into account. That did not happen in this inquiry so far as the claimant is concerned.”
  26. 26. OURCITY.LONDON CONCLUSIONS ON VIABILITY Planning policies are weakly drafted to allow them to be interpreted however the decision maker on the day pleases Culture, and good urban design are being traded off against the short term economic boost of development. This is (unstated) government policy The international market for investment property is causing particular pressure in central London The corruption of the economic viability policy is a key driver
  27. 27. OURCITY.LONDON THE HOUSING BENEFIT SCAM In 2010 government changed planning rules to allow conversions of single family dwelling into homes in multiple occupation Homes in multiple occupation are shared houses where residents are unrelated, rent rooms and share facilities like a kitchen Housing benefit rates for rooms in HMOs are less than half the rates for 1 bedroom flats
  28. 28. OURCITY.LONDON THE HOUSING BENEFIT SCAM 2 Landlords have been buying up 2-3 bedroom family homes, and converting them into 6 rooms and a kitchen, they claim they don’t need planning permission as they are HMOs. The landlords then let the rooms to the homeless and destitute. The landlords kindly help the tenants fill out their housing benefit claim form, and get them to claim the higher HB rate for a self contained flat. They also get the tenant to request that HB is paid directly to the landlord and not the tenant.
  32. 32. OURCITY.LONDON SCALE In London each HB claimant can claim approx. £1000 per month. Each home has six rooms generating 6k per month in rent 72k a year. London councils, looking at 6 boroughs, found 3000 properties operating this model
  33. 33. OURCITY.LONDON THANK YOU – QUESTIONS AND DISCUSSION www.ourcity.london george@ourcity.london Twitter - @georgenturner

A presentation looking at the flaws in the viability system and how planning loopholes are being exploited by landlords claiming huge housing benefit payments


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