Report calls for tax and planning reforms to support sustainable development
Patient community development schemes that focus on adding value over generations rather than chasing quick sales and returns, deliver greater rewards for investors, developers, and the local population alike, according to a new report out today from architect and masterplanner ADAM Architecture, and leading UK law firm Farrer & Co.
Authored and researched by Future Places Studio, ‘Placemaking Two – a stewardship approach to creating communities’, a follow up to ‘Placemaking: a patient approach to creating communities’ published in early 2020, the report draws on a number of other qualified and expert sources for input, and outlines what it terms the Patient Development Model as an important way forward for the provision of future housing.
The report examines the challenge of tackling Government targets for 300,000 new homes per annum but cautions against the creation of “sleepy mono-use commuter towns”. It also questions the prevailing system of the release of land to volume housebuilders seeking a quick return on investment in a single use product and instead (or in addition) advocates opportunities for smaller regional bespoke builders to play their part given the right economic and planning frameworks.
The report picks out innovative schemes that have the potential to be replicated more widely and identifies 8 factors common to successful approaches to sustainable development:
1. Taking a long-term view at the outset of a project
2. Accepting a deferred return on investment, which can lead to greater long-term revenues
3. Measuring the success through a social and environmental lens – not just in terms of a return on capital or profit
4. Prioritising the design and community building of a scheme through a long-term masterplan and design codes
5. Placing greater emphasis on community and local authority co-creation
6. Re-thinking the business-as-usual approach to social housing, streets, mixed-use, green spaces, and social infrastructure
7. Putting in place a stewardship model to maintain the ongoing quality of the place
8. Prioritising community health, well-being, and social cohesion through best practice design solutions
It contrasts modern volume housebuilding approaches with successful community developments and what can be learned from them, as well as gathering evidence from the re-set brought about by the Covid-19 outbreak in the way we live and work. The report espouses a different model to bring land and housing forward, proposes new incentives for landowners to release land for longer term development whilst retaining an interest in it, and delivery not just of homes but of new places where people want to live, work and to enjoy.
It recognises the shift towards more people wanting to live their lives locally, with sustainable, walkable neighbourhoods remaining a strong influence on placemaking strategy. It acknowledges also that this isn’t new per se as it revisits late 19th century town planning approaches and the birth of the ‘garden city’, characteristics that are being designed into community developments today for example at Poundbury, Nansledan, Stamford and Derwenthorpe.
Land stewardship is a vital component where the landowner retains an interest and offers up land for development for a share of the profit on the sales price, or through a licence model, landowners effectively becoming “custodians of place”. This approach requires landowners and developers to hold on to land and accept a far slower return on investment and, for it to succeed more widely, requires provision of incentives, finance and changes to both tax and planning regimes.
The report therefore outlines the call for a “level tax playing field” that would allow stewardship models to be at least tax neutral compared to the short-term land trading system prevalent today but with incentives introduced to include beneficial tax treatments, rollover of certain tax exemptions and reliefs for receipts under lease arrangements, and capital gains tax deferral to a point of future sale.
The availability of ‘patient capital’ would support the system, with affordable long-term funding from government to finance regenerative development. In addition, public land could be offered to developers through joint venture arrangements, and options to finance larger scale developments should be explored.
A more flexible planning approach for uncontentious sites would also be of benefit, allowing for development over longer time periods, the use of Local Development Orders, and a presumption in favour of future development.
Hugh Petter, Director, ADAM Architecture, says: “What we are doing is drawing from some of the best current examples, and those from the recent past that challenge the status quo. In the patient development model, quality of place and life are at the forefront, and the increased time-horizon allows the landowner to follow best practice and invest for the benefit of the wider community and the place as a whole. But this report also recognises that, to help encourage this more enlightened approach, we need changes in terms of tax and incentives, finance, and planning. Without these the current default system of up-front land sale to a developer will continue to be favoured where, regrettably, short term numbers are all important, and the quality of life; the quality of place, and the ability for residents to live a low carbon lifestyle are not even properly considered.”
Mark Gauguier, Head of Commercial Real Estate, Farrer & Co says: “The current planning application process for large development sites is complex, strenuous, and expensive. The system adds unnecessary risk and uncertainty, hindering patient development by many smaller players and landowners with stewardship ambitions. Despite this policy backdrop, our report has captured inspiring examples of local authorities, landowners, investors, and the local population coming together to re-imagine mixed-use places geared towards the evolving aspirations of specific communities. We need a more streamlined approach to planning and to level the tax playing field if we are to encourage more landowners to act as custodians of a place, more local authorities to co-invest in these projects and more local people to engage positively with the process. Patient capital investment has huge potential to help ease the pressure on housing stock and to ensure that more communities can enjoy desirable, sustainable, and people-oriented places for generations to come.”
The full report is available here Placemaking Two – a stewardship approach to creating communities