Supporting Older

People Conference

Sponsored by:

Df

B1: Ivory tower blocks – from research to delivery

Speakers: Kathleen Kelly

Programme Manager, Policy and Research, JRF

Professor Ken Gibb

Professor in Housing Economics University of Glasgow

Professor Christine Whitehead OBE Professor of Housing Economics London School of Economics

Chair: Rob Warm

Lead Manager, Yorkshire and Humberside National Housing Federation

The links between housing and poverty

@jrfKathleen

Kathleen Kelly,

Programme Manager, Joseph Rowntree Foundation

PO

VE

RT

Y Our aim:

To identify the

root causes of

poverty and

injustice

PL

AC

E

Our aim:

To support

resilient

communities

where people

thrive

AN

AG

EIN

G

SO

CIE

TY

Our aim:

To respond

positively to the

opportunities

and challenges

of an ageing

society

JRF and JRHT work themes

Housing and poverty programme

AIMS to

“set out realistic policy and practice approaches to delivering more effective housing responses to those living in poverty in the UK.”

RUNS from 2013 to 2017

Defining features of UK poverty

• 6.1 million people in poverty are in working households.

• the highest figure for underemployment in 20 years.

• Significant churn and a ‘low pay, no pay

cycle’ for many

Links between housing and poverty

Housing cost induced poverty has been growing for two decades

Over 3 million extra people in the UK are in poverty after their housing costs have been paid.

Rent matters most in terms of housing cost induced poverty

Efforts to reduce poverty =

limiting rent costs

maintaining good conditions

Programme design:

• Housing and poverty over the life course (2013)

• Housing and work incentives (2013)

• Trade-offs at the bottom of the market (2014)

• 2 potential further projects (2015)

Housing and poverty (research)

• Senior level practitioner group (2013 -2015)

• ‘Poverty’ review of business plans and strategies (2013)

• Planning obligations (2013)

• Building sustainable homes more cheaply (2013)

Affordable housing supply

(research into practice)

• Housing destitute asylum seekers (replication)

• International housing models

• Homelessness monitor (2013-2016)

Extreme exclusion

(replication)

Taking research into practice

Plugging strategic knowledge gaps

Affordable housing development and poverty: Reports 2014 and 2015

Replicating housing models that

tackle destitution

Finance Innovation and

Affordable Housing Supply: An International Evidence Review

Kenneth Gibb

March 2013

Introduction

• A Joseph Rowntree Foundation evidence review project with Duncan Maclennan and Mark Stephens

• The project combined desk-based review, the application of researcher specific knowledge of countries and systems, plus advice from consultants and in-country colleagues

• Semantics: - international & national – policy transfer - what does innovation mean? - what does affordable mean? - what about financing? - policies, models or projects

Project Overview

Findings from the Literature

• No simple market solutions that will close the gap between private

cost and return requirements, remaining affordable, without effective

subsidy of some kind.

• The national housing system and all of its institutional features and

path dependencies, is a critical frame within which approaches to

finance innovation take place.

• Many models and potential approaches exist or can be conceived

but they all have strengths and weaknesses when set against key

criteria:

- scalability;

- dependence on supporting, complementary institutions;

- value for money; and

- effective targeting

Ten Themes

1. Appetite for state-backed guarantees

2. Contestable supply & partnership

3. Devolved governance

4. Flexible, blended subsidy

5. Collaborative solidarity

6. Separable management role

7. Simplicity & design features

8. Affordable = shallow subsidy

9. Exploiting or ‘sweating’ existing assets (including revolving funds)

10.Regulatory stance

Conclusions:

Re-thinking Policy • The need for a wider long term policy framework

• An approach to affordable housing policy within a wider vision of place and a clearer recognition of market failures and the risks to the most needy

• National policies must be based on consistent local estimates of need to maximise the best use of scarce resources

• In the light of the AHP/S106 debacle, we would support ‘rule consistency’ in housing policy

• We must also test policy ideas against rigorous criteria

• We caution against the flavour in some quarters for fundamental radical overhaul

Finally….

• A number of recent developments:

1. Rents, grant and affordable rent

2. Help to buy underwriting

3. Grant rates in Scotland

4. Council borrowing?

5. Financial capacity cries wolf

• Reflections on these developments in the

context of an international evidence review

International Review of Land Supply and Planning

Systems

Sarah Monk, Christine Whitehead, Connie Tang

and Gemma Burgess

NHF Housing Development Conference July 4th

2013

Session B 1: from Research to Delivery

Introduction

• The JRF Housing Market Taskforce identified land supply

as a key issue contributing to housing market volatility and

housing affordability problems in England.

• It therefore commissioned research to establish whether

experiences in other countries could contribute to

understanding of the constraints on land supply in

England

• The research explored whether mechanisms that work in

other countries might be introduced to help unlock new

housing supply here

The research

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

population density, house prices, housing completions,

completions per 1,000 population compared

• Selected 11 countries for detailed analysis

• Literature and data search and review

• Advice and critiques from country experts

• Round table of stakeholders to test how far the findings could be

replicated in the English context

• Case study countries:

Why land supply is a vital issue

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

new homes did not increase significantly

• This contributed further to affordability problems

• Global financial crisis and resultant recession only

worsened the supply situation

• A review of planning systems and land supply is therefore

timely

Current policy and practice

The Coalition government has introduced policies to achieve

sustainable growth and address housing supply

• A strong presumption in favour of development

• New Homes Bonus

• Speedier planning system

• Fast tracking of major infrastructure projects

• Duty to co-operate

• Neighbourhood planning

• Land auctions and green belt swaps

How much land do we need?

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

area of England

• Urban land covers only around 10%

• Planning Minister recently stated that increasing this to

12% would meet all identified future requirements

• This could be done while preserving green belts

The problem: perceived constraints on supply

• Lack of incentives for local authorities to support new

development

• Nature of the housebuilding industry

• Disincentives to make land available in light of potential

future price increases

• Mechanisms for funding and providing infrastructure

• Availability and cost of finance for development

• Risks associated with re-use of urban land

• Market volatility and uncertainty

Figure 1 New housing completions, England

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1969

1972

1975

1978

1981

1984

1987

1990

1992

-93

1995

-96

1998

-99

2001

-02

2004

-05

2007

-08

2010

-11

Completions

Household numbers England 1951 – 2021 (projected)

Approaches to land supply

• Only England has purely planning permission background,

although South Korea is moving that way

• All the others used zoning with varying degrees of

discretion/flexibility

• Almost all countries face growth pressures in desirable areas

• Most have constraints to curb urban sprawl and protect

agricultural and other land

• But most did not see planning as a constraint

• Many have low responsiveness of supply to price increases

• OECD data show that GB (not England) is very similar to France

and Germany while higher than the Netherlands.

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

Denmark

Findings - governance

• Most countries have three layers of governance for planning –

national, regional and local

• England outside London is alone in having no regional strategic

layer

• The number of local authorities varies enormously – in France

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

• England has no regional layer and 336 local planning authorities

• Smaller local decision making areas are thought to help

community involvement

• Looking to particular instruments we identified five main themes

Findings – Growth management

• Growth management boundaries / urban growth limits are used

by most countries to prevent urban sprawl

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

regularly

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

the boundary

• There are some examples of successful urban containment and

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

recently

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

reactive, in monitoring and adjusting land supply

Findings – Land assembly

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

assembly, often using compulsory purchase powers

• Germany – address fragmented land ownership by

assembling the land so the increase in value following

development is shared proportionately among the original

owners after repaying the local authority for infrastructure

provision

• Netherlands – local authorities have traditionally purchased

land at existing use value, provided infrastructure and

services, and sold it to developers at a price that at least

recovered costs

Findings – Infrastructure provision

• Several countries have mechanisms to ensure infrastructure is

in place prior to planned development

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

hypothecated to transport infrastructure

• Netherlands – early provision through municipal land purchase

and sale

• Germany - land readjustment processes also provide for

infrastructure

Findings – Compensation and incentives

• Most compensation and incentive mechanisms involve

increased benefits to local authorities

• Switzerland – cantons retain the tax revenues that accrue to

new development – as this is their main source of revenue it

acts as an incentive for further development

• Tax Increment Financing – hypothecating future local tax

revenues has been used extensively in the USA to incentivise

inner city regeneration schemes

• Density bonuses are used in a number of countries to

compensate developers for potential loss of income from

providing affordable housing on site.

• In the Netherlands there is provision to compensate individuals,

but it is not widely used

Findings –Land value capture

• Underpinning many of these mechanisms are forms of land

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

• These include infrastructure charges, inclusionary zoning to

provide affordable housing, and land value taxation.

• Infrastructure and services, including affordable housing, can

often be funded from the increase in land values associated with

development

• But works best in periods of economic growth – becomes

difficult when land values are falling

Implications for England

• Most of the mechanisms identified have their equivalent in

England

• Could they be used more widely or brought together more

effectively and on a sufficient scale to ensure a larger and more

regular flow of land to meet current and future housing needs?

Three interlinked core issues:

• How to provide sufficient incentives to bring land forward

• How to enable growth without urban sprawl

• How to provide infrastructure to support new housing

development

Incentives to bring land forward

• Land assembly and land readjustment (including compulsory

purchase) are powerful tools to enable development – and help

stabilise expectations about future land prices

• Incentives to enable development work best where the local

authority retains local taxes which are spent on local services –

and possibly where the authority is small enough for the

community to appreciate the benefits of growth

• In England neighbourhood planning with community buy-in plus

the New Homes Bonus may help to incentivise development

• So may the strategic use of public land

Growth management

• The green belt has been successful in preventing urban sprawl

but at a price

• Evidence from other countries suggests it should be operated

more flexibly, with boundaries revisited regularly

• Planners should monitor land supply and respond to price

changes by adjusting potential supply

Infrastructure provision

• Provision in advance of, or alongside, development is essential

• Funding can come from land value uplift, taxation (including

additional tax revenues from new development) and debt

finance paid for from a growing tax base

• A rolling infrastructure fund has clear potential, provided an

initial source is available and the returns are recycled for further

infrastructure investment

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

go ahead during the downturn and be repaid in the upturn

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

elements together pro-actively

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

incentives can change

Conclusions

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

available – Cambridge; Milton Keynes

• Some government initiatives are in line with international

experience

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

growth agenda

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

assembly

Supporting Older

People Conference

Sponsored by:

Df

B1: Ivory tower blocks – from research to delivery

Speakers: Kathleen Kelly

Programme Manager, Policy and Research, JRF

Professor Ken Gibb

Professor in Housing Economics University of Glasgow

Professor Christine Whitehead OBE Professor of Housing Economics London School of Economics

Chair: Rob Warm

Lead Manager, Yorkshire and Humberside National Housing Federation