Monthly Archives: September 2017

 

Could Micro Housing alleviate the housing crisis or is it a passing fad?

 

Urbanissta’s Legal Beagle – Farhana Hussain, examines the topic of micro housing in the UK.

  • What are micro homes?
  • Who would be the target audience?
  • Has the need for larger homes become less of a priority?
  • House costs and affordability

Farhana’s findings…

I recently submitted my dissertation and it was centred upon whether micro housing could solve the housing crisis. I’ve observed a number of micro housing schemes popping up across London, so, I thought, why not do a blog on my findings and address what’s been making the headlines. Is there room for micro homes in this current climate, how affordable are they and could they really alleviate the housing crisis?

Context

I find that there is a common perception that rising housing prices have forced developers to sacrifice space and quality by seeking higher density and higher revenue per sqf to offset rising land value and construction costs and so offer affordable housing. It is thus widely believed that the introduction of micro housing capitalises on this pattern. Apartments and houses that are small by traditional standards are currently being sold at 20 per cent below market rate in London, and are now being considered in urbanising locales, particularly high-density cities where affordability is stretched.

What are Micro Homes?

A working definition of micro housing is a unit of less than 500 sq.ft, with a fully functioning kitchen, bathroom and WC. A small room at 160 sq.ft with a communal kitchen, bathroom, etc., is not to be considered a micro home as it does not fall under this definition. It is difficult to pinpoint the ideal unit size. Furthermore, for micro homes to gain popularity on a meaningful scale, and so potentially alleviate the housing crisis, it is important to understand that these homes need to be targeted at a specific audience and serve a specific purpose, particularly if they fall below minimum space standards.

Who would be the target audience?

London has a target to deliver a minimum of 55,000 homes per annum for the next decade. As in the image below, the biggest age group in Inner London is 25 to 29 olds and in Outer London it is 30 to 34. The Households and Household Composition in England and Wales report for 2001-2011 showed an increase of 564 single-person households, the highest proportion of which was in London (35%). With the highest population in London being below the age of 30, it is evident that not enough is being done to house this audience. This is reinforced by the 37% over the ten-year period in the number of 20 to 34-olds living with parents.
Has the need for larger homes become less of a priority?

Yes and no.

The needs of society are not the same as they were at the time of two World Wars. The economic status of the country, digitisation, lifestyle changes and under-occupancy may all have contributed to the reduction in minimum standards, while the increase in one-bedroom households is more likely due to cost limitations rather than personal preference. Nevertheless, the evident demand for one-bedroom homes in London, where the largest age demographic is between 25 and 29, indicates that there may be a market for micro home. Micro housing appeals mainly to younger audiences for whom location, economics and privacy are important, or to older generations looking to downsize.

House costs and affordability

Due to the housing crisis, housing costs of all types and tenures are rapidly increasing across the UK, particularly in London and the South East. Affordability, however, is not just confined to private ownership: tenures of all types are now disproportionate compared to average income, with almost three million households in the UK now spending more than a third of their income on housing. Thus, it is widely agreed that the supply of affordable housing is at an historic low and requires urgent policy intervention. In order to improve affordability, it is estimated that 300,000 new homes are needed in England every year, more than double the current rate of building.

London has seen a slight increase in affordable housing, with many local authorities making the provision of affordable housing a prerequisite in securing planning permission. There has been a rise in shared ownership and sub-market rented homes, yet questions remain over just how affordable they really are, and to whom. Some of these ‘affordable’ homes require the occupiers to be on incomes over £60,000, double the average London household income. Clarity over what is meant by affordable housing is therefore paramount, and to whom we are relativising the housing cost. With middle-income households demanding homes at 60-80% of market prices, this by no means infers a reduction in the need for social rent for low-income households.

Within the overarching definition, the London Plan’s supporting texts set out criteria to assess affordability based on different schemes:

Affordable housing includes social rented, affordable rented and intermediate housing… and should: (a) meet the needs of eligible households including availability at a cost low enough for them to afford, determined with regard to local incomes and local house prices; (b) include provisions for the home to remain at an affordable price for future eligible households; or (c) if these restrictions are lifted, for the subsidy to be recycled for alternatively (London Plan, 2016).

 

Further details for each scheme stipulated by the policy are listed in the table below

 

Type of housing Criteria
Social rented housing Guideline target rents are determined through the national rent regime or provided by other bodies under equivalent rental arrangements to the above, agreed with the local authority or with the Homes and Communities Agency.
Affordable rented housing Affordable rent is subject to rent controls that require a rent of no more than 80% of the local market rent.
Intermediate housing Affordable to households whose annual income is in the range £18,100-£64,000. Two bedrooms, suitable for families; the upper end of this range will be extended to £74,000.
London living rent Yet to be rolled out by the government.

 

 

Despite the government’s efforts and the 56%  increase in residential consents, closer analysis indicates that there has not been any increase in the areas where affordability is most stretched ( see image below. Source: Savills, 2017).

Figure 14. Affordability in England
Source: Savills, 2017

It is, therefore necessary for developers to take advantage of market demand in order to drive the success of their market-sale programmes and generate subsidy for affordable housing. Priorities need to be shifted from aimlessly building homes to homes being built where they are most needed. Ultimately, for micro homes to make a meaningful contribution to the housing market, they should be deployed in areas of stretched affordability, particularly in London and the South East.

Can Micro Housing alleviate the housing crisis?

The UK housing crisis is made up of a number of interconnected issues, including the lack of construction workers, reduced LPA powers, a lack of transparency, increased demand through deregulation, and lax policy-making. Some have argued that the housing reform to this point, if anything, has exacerbated the problem. This would suggest that the government need to look first at stabilising the market before the crisis can be solved in the long term before diving head first into eliminating the crisis.

As highlighted above, 25 to 29-olds are the largest age demographic in Inner London; in Outer London, it is 30-34 year olds. The Households and Household Composition in England and Wales reported an increase of 564,000 single-person households between 2001 and 2011, the highest proportion of which is in London holding (35%). Taking both the above indicators together, it is clear that not enough is being done to house the under-thirty market in London.  Come micro housing developers are marketing micro homes as a potential solution for Inner Londoners, a one-bed micro home is currently being marketed at over £200,000 (after 20% discount): this would require an average annual income of at least £40-50,000. I n reality, the average for those aged between 25 and 29 is £28,000. This would suggest, therefore, that the micro housing schemes currently being implemented in London are not serving their original purpose. Moreover, it is understood that the Mayor of London has already invested millions of pounds into the development of micro homes, without any clearly-advertised criteria against which these schemes will be assessed. Given that such schemes are in their relative infancy, it would appear that LPAs are taking the initiative without empirical supporting evidence.

Conclusion

It appears, in practice, that current micro housing developments are solely targeting those on the higher end of this scale, effectively ignoring the majority of those who fall within it. As such, a new definition will need to be considered. Affordability must take into account expenditure, commuting costs, dependents, and a number of other socio-cultural determinants. Given that salaries and house prices differ from borough to borough, there is an argument for local authorities to be given greater powers to assess what is genuinely affordable in their areas, rather than being held to a standardised yet ultimately ambiguous definition. Furthermore, given how space standards have decreased over time, and will most likely continue to do so, the definition of micro housing may need to shift with the times as well: unless micro units are launched as a separate entity or affordable housing scheme, they may no longer by necessary as small one-bedroom properties become the norm.

Don’t miss out on Farhana’s case law reviews. Tracking planning decisions and proposed developments. Read more about Urbanissta’s Legal Beagle. 

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Britain’s housing crisis – what’s the latest?

 

Theresa May could face a Conservative backlash over the housing crisis if she doesn’t listen to the backbench Conservatives.

The Prime Minister has been advised to force councils to build more homes in an attempt to tackle the housing crisis and prompt a building boom.

Proposals have been put in place but nothing will be published until the end of the month according to The Department for Communities and Local Government.

The Communities Secretary, Sajid Javid, would like to see housebuilding boosted significantly.

In the housing white paper ‘Fixing Our Broken Housing Market’ published in February 2017, the Government said: “Some local authorities can duck potentially difficult decisions, because they are free to come up with their own methodology for calculating ‘objectively assessed need’. So, we are going to consult on a new standard methodology for calculating ‘objectively assessed need’, and encourage councils to plan on this basis.”

Sajid Javid hopes by adopting an expansive approach, which includes data about the local housing market, he can boost redevelopment in areas where prices are rising quickly. However, Javid and his allies are likely to find themselves up against Tory MPs and councillors that are wary of a planning blight. Andrew Mitchell, the former Development Secretary, publicly conflicted with Javid over plans for a housing development in his Sutton Coldfield constituency.

Housing campaigners urged the Prime Minister to be bold-faced. Gill Payne, the executive director of public impact at the National Housing Federation, said: “Getting this right will be a show of the strength of Government’s commitment to building the homes the nation needs. Getting a consistent and accurate picture of housing need is really important – it cements into the local plan the number of homes that need to be delivered.”

Ms Payne added: “Robust methodology will give a consistent and undisputable approach across the country.”

Polly Neate, the chief executive of Shelter, said: “We hope these changes will help to simplify and join up the way councils across the country assess housing need in their areas, and it’s vital that the new proposals work to deliver as many affordable homes as possible.”

She added that Javid should tighten up the planning regime, to allow local authorities to exert more control over what can be built, where, rather than relying on the market to deliver.

“It’s important to remember that developers can still often build whatever they like, regardless of whether it meets what the council says is needed or not. The Government must now take action to change this, by giving councils more power to get housing built that will meet the needs of their community.”

Previous Governments have sought to make property ownership more affordable. Ambitious building targets have rarely been met, and George Osborne’s focus on subsidising mortgages through the help-to-buy scheme was disparaged for fuelling the boom.

Moving forwards…

Theresa May really does need more young voters

The Prime Minister’s efforts to tackle the problem may have been strengthened by the Conservative’s poor showing among the younger generation at the general election in June. A recent YouGov poll suggested that just 4% of 18-24-year-olds trust the Conservatives to deal with the issue of housing – against 44% for Labour. If Theresa May takes the appropriate steps, she could gain more support from young people.

Official figures

Homeowners could expect to pay about 7.6 times their annual earnings to buy a house in England and Wales in 2016, up from 3.6 times earnings in 1997.

The Housing need test

The housing need test is one of a package of measures radical Conservatives believe will be necessary to tackle the challenge.

Whilst in Scotland…

The Scottish Conservative leader, Ruth Davidson, in a speech focusing on housing policy in Scotland, said on Friday: “It is a bedrock of Conservative belief that we should encourage a property-owning democracy. Yet increasingly, we now have something more akin to a property-owning oligarchy. Made up of lucky, mainly older, people who – by dint of having scaled the housing ladder – are now the ones who now control the country’s economic purse strings. “

George Freeman, chair of the Conservative policy forum, has also warned that young people risk rejecting capitalism if they have no chance of owning a home.

May signalled on her trip to Japan that she wants to press ahead with domestic reform, as well as complete the Brexit negotiations.

She pointed to her Downing Street speech last year, in which she pledged to right, “burning injustices”, including the fact that “if you’re young, you’ll find it harder than ever before to own your own home”.

But diluted corporate governance reforms published last week raised questions about whether May’s minority Government will be willing to take on vested interests.

Housebuilding slumped after the financial crash from more than 215,000 homes a year in 2007-8 to 133,000 in 2012-13. It has since recovered, but has not regained its pre-crisis level.

We will keep you informed about future developments.

Read our article on the Housing white paper 2017 here. 

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What’s on in London?

 

Urbanissta’s ‘Girl on the tube’ Kathryn Waldron, has been catching up with what’s on in London. The London landscape is forever changing – new plans, new infrastructure and more air pollution.

With a draft of the new London Plan expected in the autumn, we thought now was a good opportunity to look back at what’s been going on in London over the past couple of months.

  • Silvertown Tunnel
  • Supplementary Planning Guidance
  • Opportunity areas
  • Air pollution
  • Planning applications

1 . Infrastructure – Silvertown Tunnel

With the decision made on the preferred option for the Thames Crossing through Thurrock and Gravesend, further west into the city, the planning inspectorate has recommended the nationally significant Silvertown tunnel project to the Secretary of State. The application was submitted in April 2016 and been the subject of six month of public examination.

The Secretary of State now has until October 2017 to decide whether or not to grant the application. Should the application be successful, TFL anticipate that Silvertown Tunnel construction would begin in 2018.

The earliest the Silvertown Tunnel could become operational is 2022/23.

The new tunnel would:

  • Reduce the impact of unplanned incidents at the Blackwall Tunnel by providing a nearby alternative route
  • Cut down on queuing at the Blackwall Tunnel and approach roads
  • Include user charging at the Blackwall and Silvertown Tunnels to manage demand and provide a source of revenue to help build and maintain the new tunnel
  • Provide an opportunity to create new cross-river bus links in east London
  • Improve road connections to and from Docklands and east London from South London
  • Improve journey times and make travel, deliveries and servicing more reliable

The tunnel will also create opportunities for new jobs in the local area, help local employers to access new markets and reduce the environmental impact of traffic congestion.

An extensive range of detailed information about the Silvertown Tunnel scheme is in the application documents. Find out more here.

 2 . Supplementary Planning Guidance- Affordable Homes and Night Time Economy

Information about Affordable Housing and Viability Supplementary Planning Guidance.

The Mayor’s long-term aim is for half of all new homes to be affordable.

Consultation on an ‘Affordable Homes SPG’ ran from 29th November 2016 to 28th February 2017. Last week, the Mayor published the new SPG Affordable Housing and Viability Supplementary Planning Guidance. 

This SPG supersedes section 3.3 (Build to Rent) and Part 4 (Affordable Housing – Viability Appraisals) of the March 2016 Housing SPG. The rest of that SPG remains current.

The SPG sets out the Mayor’s preferred approach to implementing London Plan Policies 3.11 (Affordable housing targets), 3.12 (Negotiating affordable housing on individual private residential and mixed use schemes), and 3.13 (Affordable housing thresholds).

The SPG’s main aim is to increase the number of affordable homes delivered through the planning system. Importantly, it will help embed the requirement for affordable housing into land values and make the viability process more consistent and transparent. It will help ensure that where development appraisals take place, they are robustly and consistently scrutinised, whilst its innovative approach will also reduce the risk and increase the speed of the planning process for those schemes which deliver more affordable homes.

The threshold approach

Two approaches to affordable housing viability are being proposed depending on the amount of affordable housing being provided.

Over 35% provision

Applications that meet or exceed 35 per cent of affordable housing provision without public subsidy, provide affordable housing on-site, meet the specified tenure mix, and meet other planning requirements and obligations to the satisfaction of the LPA and the Mayor where relevant – are not required to submit viability information. Such schemes will be subject to an early viability review, but this is only triggered if an agreed level of progress is not made within two years of planning permission being granted (or a timeframe agreed by the LPA and set out within the S106 agreement).

Less than 35%

Schemes which do not meet the 35 per cent affordable housing threshold, or require public subsidy to do so, will be required to submit detailed viability information. Where an LPA or the Mayor determines that a greater level of affordable housing could viably be supported, a higher level of affordable housing will be required which may exceed the 35 per cent threshold. In addition, early and late viability reviews will be applied to all schemes that do not meet the threshold in order to ensure that affordable housing contributions are increased if viability improves over time.

Where an LPA currently adopts an evidenced approach which will deliver a higher average percentage of affordable housing (without public subsidy) the local approach can continue to apply.

On the matter of vacant building credit the Mayor’s view is that in most circumstances in London it will not be appropriate to apply the Vacant Building Credit.

Viability appraisal approach

The Mayor’s preference is for using Existing Use Value Plus as the comparable Benchmark Land Value when assessing the viability of a proposal. The premium above Existing Use Value will be based on site specific justification reflecting the circumstances that apply.

Build to rent

Build to rent is a distinct form of affordable housing being promoted by the Mayor with Discount Market rent as the affordable housing offer with homes let at London Living Rent. Any on-site affordable housing must include provisions to remain at an affordable price in perpetuity or that the subsidy (this includes the Section 106 ‘subsidy’) must be recycled for alternative affordable provision. Guidance is also provided on how Build to Rent viability assessments differ from traditional appraisals.

Culture and the Night Time Economy Supplementary Planning Guidance

A draft Supplementary Planning Guidance on Culture and Night time economy was the subject of consultation between April and May 2017. Perhaps following a number of high profile events including the closure of the famous night club Fabric and the closure of pubs in favour of residential conversion.

The SPG cites that London has 103 fewer nightclubs and live music venues than it did in 2007 and 35% of its grassroots music venues have been lost. 140 pubs are also lost each year.

This work ties in with the work of The London Assembly Economy Committee which is investigating London’s night time economy and working towards a 24-hour city.

The investigation will look at what a diverse NTE could look like, how it might be sustained and its likely impact on those who will work in it.

This supplementary planning guidance (SPG) provides guidance on implementing London Plan policies that have a bearing on London’s culture and the night time economy including:

  • Protecting pubs
  • Sustaining existing venues
  • Providing new facilities
  • Creating a more diverse and inclusive night time
  • Culture and economy
  • Agents of change
  • Places

We can expect the new London Plan to have a stronger more defined stance on London’s evening economy.

3. Opportunity Areas – Old Park and Park Royal and Isle of Dogs and South Poplar

Old Park and Park Royal

Old Park and Park Royal were identified as an Opportunity Area within the London Plan.

The Old Park and Park Royal Development Corporation (ODPC)was created in April 2015. The Development Corporation is responsible for the regeneration of the 650 hectare site where Crossrail and HS2 will meet in the north west of London. It includes areas of Brent, Ealing and Hammersmith and Fulham.

The ODPC is essentially the local planning authority, and are responsible for preparing and maintaining a Local Plan or Development Plan.

OPDC carried out the first consultation on the draft Local Plan and its supporting evidence base documents between 4th February and 31st March 2016. The public consultation on the revised draft Local Plan and associated documents runs from 29th June until midnight and on 11th September 2017.

The spatial strategy for Old Park and Park Royal is the creation of one main town centre stretching from Willesden Junction to North Acton, and three Neighbourhood Town Centres. The commercial centre is to be located around Old Oak with Wormwood Scrubs to be retained as open space.

The anticipated adoption of the ODPC Local Plan is spring 2018.

Isle of Dogs and South Poplar Opportunity Area

The GLA are working with Tower Hamlets to create an opportunity area at the Isle of Dogs and South Poplar. This additional opportunity area would add to the 44 other Opportunity Areas adopted or in progress within London.

An Opportunity Area Planning Framework is being prepared with a target of 30,000 new dwellings and 110000 new jobs, 9% of the total minimum housing requirement identified for the Opportunity Areas.

A Draft Opportunity Area Planning Framework is anticipated at any time now.

4. Air pollution

The GLA are preparing detailed guidance on air quality. Four stages of consultation are programmed of which three have already been undertaken.

16,000 Londoners commented on stage one and over 15000 on stage two. Stage 3a closed in June and responses are to be published in the autumn.

The most recent consultation considered the public’s views on proposals to:

  • Introduce the ULEZ in central London on 8th April 2019, to reduce overall exposure to air pollution and bring forward the health benefits to Londoners. This is around 17 months earlier than the currently approved date of 7th September 2020. Additionally, ULEZ resident’s vehicles that are not compliant with ULEZ emission standards will benefit from a three-year “sunset period” or “grace period” from the start of the ULEZ
  • A change to the required ULEZ emission standard for diesel vehicles to include Particulate Matter (PM) to ensure alignment with the national standards set as part of the government’s National Air Quality Plan

Whilst consultation on the London Air quality plan is on-going, the GLA has set out that the Mayor will be launching a £10 toxicity ‘T-Charge’ aimed at the oldest, most polluting vehicles on London roads from 23rd October 2017, and introducing a requirement for all newly licensed taxis to be zero emission capable from 1st January 2018.

5. Planning Applications- referrals and directions to refuse

Application referrals

For the week commencing 21st August 2017, 4 applications were referred to the GLA, including a minor material amendment for a mixed use development in Bishopsgate, redevelopment of a fitness club in Fulham and a Waste Transfer Station in Havering. .

Directions to refuse

On July 17th 2017, the Mayor directed Bexley and Barnet to refuse applications in their boroughs.

Bexley were directed to refuse redevelopment of the Howbury Park to provide a strategic rail freight interchange. The scheme is considered inappropriate development in the Green Belt.

Barnet were directed to refuse an application at Hasmonean High School for redevelopment of the school to create a combined Boys and Girls school. The scheme was considered inappropriate development in the Green Belt and it was considered that there was a lack of sustainable transport measures.

Do you need more information about planning applications? Find out more here.

Follow our series of ‘Girl on the tube’ and see what London really looks like to a Planner.

“I’m the girl on the Tube, no stranger to the fast-paced life of London and I take the underground every day to and from work.

I rise up from the tunnels of bustling business people and enthusiastic tourists and step out into the streets of London. Sensibly putting comfort and practically before fashion, wearing my well-worn trainers instead of 6-inch stilettos.”

Girl on the tube Part One

Girl on the tube Part Two

Girl on the tube Part Three

Girl on the tube Part Four

Girl on the tube Part Five

 

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