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Delivering against the TCPA’s Garden City Principles, and the ability to capture and share land value uplift, requires consideration of a range of delivery issues including: ownership and control of land; planning powers and skills capacity; investment sources; infrastructure delivery; management of the delivery process; and promoting community development, integration and stewardship. There is no single approach to funding and delivering a new Garden City; local circumstances will determine the best way forward.
What should be the scale of new Garden Cities?
Whilst there is no definitive size threshold at which these principles can be applied, this guidance is most likely to be relevant for phased strategic sites over 1,500 homes as defined by the National Planning Policy Framework– those where there is significant potential to deliver a sustainable scale of growth that brings with it new facilities and amenities, including for existing residents. The case for public sector intervention to support such schemes is clear, as larger sites offer the scale to support a sustainable level of services and self-containment while meeting wider housing needs, in line with the Garden City principles. Schemes over 3,000 homes frequently encounter substantial challenges with land assembly, with infrastructure delivery and coordination spanning market cycles thereby requiring public grant or revolving loan funding. At a scale of 5,000 homes, schemes become comparatively rarer due to the significant complexities and challenges in planning over a 30 year delivery timescale. Meanwhile, schemes of 10,000 homes and above will have a wider regional and even significance – in its draft New Towns Programme government set out the justification for central government intervention on the basis that 10,000 homes is a scale ‘beyond what is currently able to be delivered by the market’ in England . The TCPA has long advocated that large scale growth enables higher sustainability standards, through economies of scale, and better use of infrastructure, and that Government should be considering new settlements of at least 35,000 homes alongside current delivery models.
There are, however, five assumptions which underpin any approach and these are woven through this Practical Guide:
1. The delivery of new Garden Cities will be local authority led.
Through the exercise of their statutory powers to allocate land for development, one or more local authorities will be promoting the project or they will be actively working with private land owners or developers to champion and deliver the scheme. Location/s will have been identified through a robust plan-led process, enabling suitable infrastructure and environmental planning to have taken place in an integrated way and considering the cumulative impacts of other development in the area. The introduction of spatial development strategies offers an opportunity for a more strategic and coordinated approach to locating new Garden Cities.
2. The majority of investment in a new Garden Cities will be from the private sector to generate returns from housebuilding, but a fair share of land value uplift must be reinvested for the public interest.
Private investors and developers – including a range of SMEs and community led housing models – will build and finance most of the homes. In order to achieve the high standard of social housing and genuinely affordable homes, there is an opportunity for additional social housing through Local Authority housing companies and/or Registered Social Landlords. Public funds will still be an important enabler to support the delivery of such schemes, including revenue funding to support project management, grant funding for affordable homes and infrastructure and loan funding to support early delivery. Up front infrastructure such as schools and community facilities could be financed by the private or public sectors, to be repaid based on a share of rising land values.
3. A dedicated governance structure for delivery – a Local Delivery Vehicle – is required to secure investment, manage delivery and commit to the Garden City principles.
The role, governance, and structure of the delivery vehicle will influence how land acquisition, infrastructure and community facilities are financed, and vice versa; delivery structure and funding are intertwined. “open book” accounting amongst the private and public sector partners in the scheme is encouraged. This does not mean, however, that detailed commercially sensitive information will always be available to the public. Changes to development corporation and compulsory purchase law have placed a renewed emphasis on this delivery model, but few have come forward in recent years and these would likely require government support to be established, even where local authority-led.
4. Unified land control offers significant opportunities and use of compulsory purchase powers may be required to secure this.
A unified land owner is one that either owns the unrestricted freehold on all the land or has implementable option agreements with all the freeholders. Unified control is desirable for good delivery, especially if it is aligned with the use of planning powers and investment funds. Securing agreements to deliver the necessary infrastructure across multiple landowner plots is inefficient, time consuming, and introduces risk, requiring complex land equalisation agreements which must be secured using the Section 106 process. The use of compulsory purchase powers may not be necessary but they must be held in reserve to ensure all the land necessary for a new Garden City is available and that landowners achieve fair (not excessive) payments for their land, taking into the account the necessary infrastructure and public facilities necessary to make the project sustainable and acceptable in principle.
5. With the right financial and stewardship models in place, new Garden Cities will be self-financing over time.
On the assumption that the land owner receives a “fair share” of the increase in land value, then the remainder of the increase in in land value (once financing costs have been paid) will be available to meet the borrowing costs of providing and maintaining infrastructure and community facilities. Often the biggest challenge for new towns and communities is cashflow. Funding and finance tools and delivery vehicles need to work in concert to reduce peak debt and smooth cashflow, taking into account factors such as taxation, risk and debt guarantees.
