1. Governance
July 20, 2015

If London's housing "opportunity areas" are to succeed, its planning system will need reform

By Faraz Baber

As every 25-year-old struggling to get onto the property ladder knows, the British capital has a real problem with building enough homes. And as London continues to thrive economically and attracts global talent, the population continues to rise by 100,000 people a year.

Clearly, something needs to be done. Chancellor George Osborne recently made clear that the government’s desire was to increase brownfield land development.

Yet, in London, swathes of brownfield land critical to creating hundreds of thousands of homes – and jobs – will struggle to become developed, unless action is urgently taken.

The city’s so-called Opportunity Areas are 38 such challenging places. The cost of site preparation – that is, assembling land under different ownership, or the need to clean up contaminated land – has made many of them commercially unviable. So has the lack of infrastructure or transport provision. Opportunity Area status is supposed to put in place a clear planning framework and activate London local government, the mayor and Transport for London (TfL) to overcome these issues.

So what are the main problems? Well, first, London boroughs often lack the experienced senior staff or specialist resources necessary to manage large and complex phased developments. There is also just too much complexity and cost involved in gaining planning permission.

We believe the Mayor should require boroughs to introduce simpler planning rules across all Opportunity Areas. These would include rules regarding when Community Infrastructure Levy, Section 106 planning obligations and affordable housing requirements can be removed or reduced in the early phases, so as to ensure development is commercially viable.

Second, there is a lack of information available to prospective developers and investors about the level of public support required in each Opportunity Area. This could be resolved by ensuring boroughs create a more detailed work plan, equivalent to a business plan to help provide greater certainty for investors and public bodies.

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And we think there’s a need to share a regularly updated set of “traffic lights” – such as in the diagram below – showing just how much public-sector support, such as in public transport, is still needed for the opportunity area to deliver on its objectives.

Third, it is unclear how the required transport infrastructure costs will be met and built on time in Opportunity Areas. At present, the Greater London Authority (including TfL) is heavily reliant on short-term agreements with the Treasury for its funding. This hamstrings City Hall’s ability to invest for the long term benefit of Londoners. Greater fiscal devolution could overcome this problem.

And, finally, old utility regulation means that there isn’t always timely forward provision of electricity and water infrastructure. We need to reform the regulation so that developers can get the utilities their developments need without delays generating unnecessary costs.

Fixing these problems together will help the Opportunity Areas create up to 303,000 new homes and 575,000 new jobs. It’s a prize worth fighting to – but London local government, the mayor and TfL need to take action, if they’re to incentivise the market to make it happen.

Faraz Baber is head of planning policy at London First.

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