Garden communities - a brave new world

The government wants to deliver 300,000 new homes every year. To drive this forward, additional funding and greater powers and oversight to Homes England (previously the Homes and Community Agency) has been announced in the recent budget.

This will allow Homes England to catalyse the market and intervene to bring projects forward to support new delivery structures.

Building sustainable housing

A key ingredient to delivering new housing at scale is the creation of garden communities. These new settlements range from 1,500 to over 10,000 homes. They will be built in accordance with the 'garden city' design principles which underpinned the development of new homes and communities in Letchworth, Welwyn and Milton Keynes. The government is supporting the delivery of 24 new garden communities across England. There is also the potential for at least 220,000 new homes, with a further five garden communities in the pipeline.

From our experience large-scale and predominantly green field developments such as garden cities bring significant challenges including:

  • land assembly: cost-effectively assembling large areas of land for development across multiple land-owners providing confidence for potential development partners
  • infrastructure: key infrastructure such as transport, health, education and leisure facilities must be delivered at the right time to meet the demands of an expanding population
  • finance: the funding package must be able to support a programme which is likely to be front-loaded with significant land and infrastructure costs, and where a return on investment may not be realised for several years. This needs to be shaped in a manner which allows a commercial return to be taken which is attractive to existing and new investors
  • risk: the project must be able to deliver homes at pace over a phased programme of up to 50 years, but also be able to respond to the inevitable fluctuations in market demand.

Creating a framework to deliver housing

We believe that three key factors will be pivotal to translating the strategic vision for an area into on-site delivery:

  • leadership which engages with local stakeholders and the key brokers in government to develop a robust business case for investment
  • a clear governance structure which is 'fleet of foot', able to respond to the market and drive delivery whilst maintaining local accountability and local community confidence
  • a mechanism for 'land value capture' which ensures the benefits of new development are realised in the local community and local infrastructure keeps pace with development.

The government is developing the regulatory framework for a new breed of development corporations with compulsory purchase and planning powers. This structure is designed to combine local leadership and accountability with operational independence. The local authority will act as the 'oversight body', exercising powers previously retained by the Secretary of State in earlier development corporation models. They will appoint the development corporation’s board. However the board will be an independent entity designed to have operational control of delivery, with a majority of the board being independent members.

Increased infrastructure spending

There is an on-going debate on how best to structure land value capture. New developments will require significant levels of early infrastructure spending. However in time it will reap rewards at a local level through Community Infrastructure Levy (CIL), New Homes Bonus and increased council tax and business rates income. And at a national level from stamp duty taxes paid by new property owners. At the same time the increase in land value will be seen to meet a variety of interests including the original land owners, developers and funders, both public and private.

Taking all these factors into consideration and demonstrating that local interests are at the heart of any new development will be critical to ensuring success. There will need to be transparency at each stage of the decision making process and constructive engagement between the public and private sectors from the outset.

To find out more about garden cities, contact David Longbottom