Rebuilding momentum - Graham Parker

The recent downturn has all but brought regeneration activity to a halt in the UK. The collapse in residential property values and in retailers’ demand for new stores has undermined the twin pillars of most regeneration schemes, which tend to be dominated by residential and retail uses. Work on a number of projects ground to a halt mid-way through construction and others that had not yet started on site have been postponed indefinitely. However some, such as Trinity Walk in Wakefield, West Yorkshire have been restarted.

Mark Wesley, lead partner in Ernst & Young’s real-estate advisory practice, puts it in context: “As recently as four or  five years ago, there was a big push by local authorities to drive regeneration in cities across the UK. Schemes tended to combine commercial uses with a big residential element, and it was the residential that made it work. Any scheme that hasn’t started now needs reappraising. If the residential isn’t viable then the whole scheme no longer stacks up.” Other financial factors are also combining to prevent regeneration projects resuming, according to Wesley. Banks have changed their lending terms with much more stringent loanto- value ratios. At the same time, they are demanding a much higher level of pre-letting on the commercial elements before they will advance development funding. “For developers, it’s a perfect storm,” Wesley says.

To add to the uncertainly, just as the UK began to move out of recession in mid-2010, the country’s long-standing Labour government was replaced by a Conservative/Liberal coalition. The incoming administration promised a radical shake-up of the planning system to devolve decision-making power to local communities. And it moved almost immediately to abolish the regional development agencies that had previously played a key role in promoting regeneration in some of the UK’s more deprived areas. The doubt surrounding the new government’s intentions for urban regeneration only served as another brake on activity. Now, however, the situation is becoming clearer with the publication of the Localism Bill. Introducing the bill, Eric Pickles, secretary of state for communities and local government, said: “For far too long, local people have had too little say over a planning system that has imposed bureaucratic decisions by distant officials in Whitehall and the town hall. We need to change things so there is more people-planning and less politician-planning; so there is more direct democracy and less bureaucracy in the system.” But what will this mean in practice? Although it is presented as a move to promote development, will the Localism Bill actually provide new ammunition to those who want to prevent it?

Independent planning consultancy DPP fears that this will be the case and warns that the Bill is likely to present big challenges for developers, retailers and local authorities, while failing to deliver the expectations of local communities. DPP partner Bob Robinson says: “There is a danger that those more articulate and better educated interests within communities — for example, incomers to rural communities who perhaps want the village to stay the same as it is — will carry more weight in planning decisions. The losers are likely to be those less well-educated and less articulate communities that currently struggle to have their voice heard. There is a danger that the Localism Bill’s ‘Big Society’ agenda will continue to favour those with a big voice.”

The government puts a different spin on matters, however, pointing out that developers will be given the green light to build “whatever, wherever and whenever” they want if communities fail to put growth at the centre of their local plans.

MP for Henley John Howell, says councils that failed to plan for new development would be assumed to have a completely permissive planning system. “I think that is an extremely good incentive for councils,” he adds. “When we have got waiting lists for housing and a community that doesn’t want to build anything — that does not meet the sustainability test.” Liz Peace, chief executive of the developers’ lobby group the British Property Federation (BPF), welcomes the clarification. “The property industry’s greatest fear was that the localism agenda would lead to greater ‘nimbyism’,” she points out.

And Jim Fennell, managing director of planning consultancy Nathaniel Lichfield and Partners, urges developers to embrace the new process. “This move from big government to big society should begin with lifting the burden from developers and empowering communities to do things their way,” he says. He also suggests that developers should look “for councils and neighbourhoods that are open for business”.

Equally, the British Council of Shopping Centres (BCSC) has welcomed the new approach, which it hopes will help facilitate retail-led development and increase the engagement of business leaders in local decision-making processes. But the BCSC raises concerns about the ability of council planning and regeneration departments to cope with the pace of change brought about by these new powers. It points out that publicspending cuts could result in fewer planning officers, causing delays to planning applications and thereby stifling the industry’s ability to provide privatesector growth across the country.

BCSC executive director, Edward Cooke, says: “The focus on neighbourhood plans and local decision-making should in principle encourage communities to attract investment and development that is fit for purpose. However, we must acknowledge that it could also facilitate an increase in opposition to new development. Devolving greater powers to local authorities may also result in different rules and procedures around the country, creating inconsistency for the development process.”

And Cooke points out that fiscal measures could have a large role to play in promoting regeneration by allowing local councils to discount property taxes.

The BCSC has also been a long-term proponent of a system called Tax Increment Financing (TIF), which it believes could kick-start a number of stalled retail-led development schemes. TIF allows local authorities to borrow against the future tax revenues that would be derived from new developments, in order to invest in the infrastructure necessary for the development to take place. The model has already been embraced by the devolved Scottish government, which is using it to enable schemes in Edinburgh and Glasgow to go ahead.

Top image credit : Photobank gallery

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