Planning matters

A unique aspect of estate regeneration projects is the potential requirement for a residents’ ballot to demonstrate support for the proposals being put forward on an estate. This requirement places residents at the heart of any project, giving them the opportunity to fundamentally support or object to regeneration proposals, in a clear yes/no vote. For good reason, the Mayor of London is keen for residents to have a clear say in what happens on the estates where they live to ensure they are an integral part of the process. In reality, the Mayor has limited planning powers to enforce best practice on estate regeneration projects. Controlling access to GLA funding is one of the only ways he can exert power. It is now over four years since the requirement for a residents’ ballot became mandatory for any development in London involving the demolition of social housing and construction of more than 150 homes (of any tenure) which is subject to GLA capital funding. To date, the requirement for a residents’ ballot has applied to a relatively small number of the estates currently coming forward for redevelopment.  As of November 2022 (the latest data available from the GLA), 21 estates regeneration projects which were subject to GLA funding, had registered a successful positive ballot outcome and 51 projects had sought an exemption. The latter figure reflects the long-term nature of these types of projects with planning permission often granted prior to the ballot requirement being in place. We are aware of numerous other schemes, which were not subject to funding restrictions, but where landlords have elected to undertake a residents’ ballot without being required, although there is no centralised record of these balloted schemes. We believe that voluntary ballots are becoming more commonplace as Registered Providers, Councils and development partners are recognising their prospective value. The ballot requirement is likely to apply to other emerging projects in receipt of the Affordable Homes Programme funding. Many of the new homes covered by this funding are likely to be provided on housing estates, which, as identified in our Great Estates Insight, offer an unparalleled opportunity to help tackle the capital’s acute housing crisis, whilst delivering better homes, enhancing neighbourhoods and improving lives. Despite recent changes to the grant funding regime to exclude funding for the reprovision of existing homes (trigging a recent flurry of activity to implement permissions by April 2023) and growing viability challenges, this sector still represents a significant opportunity to deliver the homes needed in London. The residents’ ballot has in the past been an area of disagreement between the Mayor and Government. At one point the Government openly criticised the ‘onerous conditions’ imposed by the Mayor on estate regeneration, particularly the need to run a residents’ ballot, and suggested that these requirements will jeopardise housing delivery. Others have criticised the extensive design work and engagement to be undertaken prior to the ballot process, often at risk before there is certainty on the level of support for the changes. This work can be time consuming and requires significant investment to ensure success.  Most recently, Siân Berry, Green Party Member of the London Assembly, called for reform of the process, suggesting there is failure to ensure residents are having a say in a fair and democratic way. Notwithstanding this, the underlying purpose of the residents’ ballot is to foster positive and inclusive engagement on developments which perhaps have the greatest direct effect on people’s lives. Many Councils and RPs are committed to running ballots on regeneration schemes, almost all ballots to-date have been overwhelmingly positive and the frequency and scale of estate renewal projects in London continues to grow. Lichfields’ view is that the Mayor’s approach to estate regeneration and the ballot process provide clarity and support for well-conceived development at London’s estates. This has certainly been our experience at Barnsbury where an overwhelmingly positive ballot outcome of 73% voting in favour of regeneration was achieved in August 2021. The ballot underpinned a constructive process of engagement with Islington and the GLA and ongoing resident consultation, prior to securing planning permission in early 2023. The emphasis on collaboration and inclusion, and the introduction of the ballot provides a mandate for regeneration and the Mayor’s approach allows these often sensitive and charged developments to be progressed in a manner that is acceptable both politically and to communities. For a ballot to be successful, it must be integrated as part of an open and inclusive engagement strategy, in which residents are consulted multiple times throughout the project. This background work is necessary to ensure that by the time the ballot is approached there is a groundswell of support for the proposals. Lichfields’ research found that a successful ballot outcome carries significant weight throughout a project, illustrating transparency in the engagement process and providing clear and unambiguous evidence to Planning Officers and Councillors of residents’ support for estate regeneration. In this context, we outline below a few of the key principles to consider when preparing for a residents’ ballot.   Residents ballot - key principles Eligible Residents: Any resident over 16 living on the estate for over a year is eligible to vote.  Defining the ‘Estate’: The ballot should be estate-wide, not limited to the immediate area of development or the homes being demolished. There can however be challenges applying this principle to very large estates where only a small amount of development is taking place. The GLA has in our experience taken a pragmatic view in agreeing a suitable area to be balloted. However, it can be an area of contention and further guidance has been published, advising on how an estate boundary can be defined. This guidance makes it clear that where there is uncertainty as to what constitutes the estate boundary it is incumbent upon the Investment Partners (RP/Council/JV partner etc.) to propose a boundary with a clear rationale and a number of pertinent considerations are listed - such as residents’ conceptions of what constitutes their estate, the typology and /or age of buildings and geographical boundaries such as road or train lines etc.  Landlord’s offer: This is the proposition residents vote on in the ballot. It must include at least a minimal level of information (objectives; design principles; approx. quantum of new homes and tenure mix; decant and phasing strategy; and commitments to ongoing consultation). In our experience though, more information and effective communication maximises the prospect of a positive outcome.  Timing: There is no procedural link between the timing of the ballot and the planning process, but there are clear reciprocal benefits in aligning the two. In Lichfields’ view, the ballot should be run when pre-application discussions are at a sufficiently advanced stage, the scheme is being crystallised and in-principle support has been secured from Officers. An earlier ballot has less chance of success or might result in abortive work if a development is amended later (and the GLA can reclaim funding if a planning permission materially deviates from the Landlord’s Offer).  Majority required: the ballot must offer a ‘yes/no’ vote on the Landlord’s Offer and a simple majority is required to pass the vote, though a large majority demonstrates unambiguous support and clearly carries more weight with planning officers and decision takers. There is no minimum threshold for turnout.  Repetition: There is no limit on the number of ballots that can be held and a revised Landlord Offer can be put to residents in the event of a ‘no’ vote or if revisions are required. This gives some comfort and flexibility, but the aim should clearly be to secure a ‘yes’ vote first time around. Further guidance on the residents’ ballot and other themes associated with estate regeneration can be found in Lichfields’ Great Estates Insight.   Image credit: Edmond Dantès via Pexels 

It’s been a whole year since Natural England sent shockwaves through the housebuilding industry across England, including those 12 local authorities within the catchment of the River Tees, by increasing the number of catchments and authorities that are subject to its advice in respect of nutrient neutrality. Over that period, nutrient neutrality has been a hot topic in the North East with the advice of Natural England being that planning permission, including for reserved matters and where conditions still need to be discharged, cannot be legally granted for residential developments unless they are able to demonstrate nitrate or phosphate neutrality. The Tees catchment is experiencing high housing pressure with more than 500 dwellings needed per annum. The HBF estimate that the delivery of 21,420 homes within the North East have been held up by the announcement last year. In the light of this level of need and the fact that the River Tees is only subject to Nitrogen problems (some other catchments have Phosphorous or both which require more land to mitigate), the catchment has been selected as the location to test the proposed credit system. Natural England is set to launch its nutrient credit bank later this month and this blog examines the proposed application process and allocation system and what this means for development proposals that are currently being held up by nutrient neutrality. How are credits established? There are requirements in the Levelling Up and Regeneration Bill (LURB) for all waste water treatment works that serve a population of more than 2,000 in the affected catchment areas to be upgraded to the highest technically achievable limits by 2030. In the meantime, Natural England has identified temporary mitigation measures to bridge the gap until the new requirements are in placebetween now and 2030 (and continue post 2030 given that Natural England and Northumbrian Water believe that upgrades to treatment works will only negate two thirds of the need). The topography and geography of the Tees catchment makes the reversion of arable land the most suitable temporary mitigation method and will generate the highest number of credits in the shortest time. This is followed by the creation of wetlands, although these can take three years to establish. So far, Natural England has been able to fallow enough agricultural land to generate 1,600 credits to be made available for mitigation within the Tees Valley catchment over the next 12 months. What is the current position on occupancy rates? The 12 local authorities that fall within the Tees catchment have commissioned an independent study into the occupancy rates that are to be used within the credit calculations. The report is expected to be published and made available before the end of March. Whilst Darlington Borough Council have confirmed they will be using a figure of 0.8 residents per household, it is still to be confirmed as to the other 11 local authorities as each are dependent on their own demographic data. Figures are based on a calculation of net additional increase in the local population as a result of new development, as well as the declining size in the average household, and so the average occupancy rate used for credit calculations differing from the figure of 2.4 residents per household that is applied by Natural England in its nutrient calculator currently. This figure is based on the national average household assumption that all residents would be new to the area, even though Natural England has accepted that some people would move locally and would therefore not result in any additional nutrient impact within the defined catchment. How will the credit bank system work? Applications for credits will be open once a Quarter, with the first batch released at 9am on 31 March 2023. Guidance on what to include in the application will be released on 27 March via the gov.uk website in order for applicants to prepare the necessary information and calculations. Initially, there will be 400 credits available in each batch with any that are not claimed rolling over to the next batch. Natural England is confident that more credits will be unlocked if the revenue is returned quickly to enable it to invest in more sites and make more credits available. The process of applying will be online via the gov.uk website. If an application is successful, a 10% deposit will be immediately payable. Natural England will then issue a certificate that can be submitted with a planning application. The certificate will have a 36-week expiration date from being issued; Natural England believe that this will stop credit banking. Should planning permission not be granted after 36 weeks then the credits will be returned to the ‘credit bank’. However, it is expected that there may be some flex in this should there be any undue delays that are out of the applicant’s control, such as a deferred planning committee. Should planning permission be granted, then the balance of the payment for the credits will be due within 12 weeks of determination. The full certificate will then be issued which can be used to discharge any pre-occupancy conditions relating to nutrient neutrality. It has been confirmed that the deposit will be refundable should the application get refused, however it is uncertain if this will happen if the certificate expires. The credits will be allocated on a first come, first served basis through the application process. Whilst this will inevitably lead to some inconsistency it was determined that it was crucial to keep the process simple and this was the best approach to balance with fairness. Applications will be divided into major (over 50 dwellings) and minor (fewer than 50 dwellings) applications (albeit the credits will be issued based on the size of the site rather than the applicant). In order to assist SME builders, the credits will be allocated over a 40:60 split, meaning there will be 160 credits available for major applications and 240 credits available for minor applications in the first batch. Any credits allocated for minor applications that are not allocated can be transferred for use by major applications. Natural England estimate that the first batch of credits for major applications will cover approximately 3 large developments (over 50 dwellings) across the Tees catchment. Subsequent batches will be released every three months as follows: Batch 2 – 30 June 2023 Batch 3 – 30 September 2023 Batch 4 – 8 January 2024 Natural England confirmed that the price per credit would be £1,825. Using the occupancy rate of 0.8 that is to be applied by Darlington Council it is estimated by Natural England that an average of 1.14 credits will be required for each dwelling. It therefore estimates that the cost per dwelling will be around £2,100 (1.27% of the average house price in Darlington). As it stands, the credit calculator does not anticipate the upgrading of water treatment works in 2030 as the LURB has not yet received royal assent. However, as soon as this takes place, the calculator will need to be updated to take this into consideration. What does this mean for current and future applications? Whilst this is a positive step towards achieving a solution for nutrient neutrality, it will create some uncertainty for developers as to the realistic timescales in which credits can be obtained via the nutrient credit bank. Applications are only open once a Quarter and the first come first served approach means that the majority of applications will miss out initially. Natural England has chosen not to prioritise applications that have already been submitted and are ready to be determined (following a resolution on nutrient credits). This may hold up housing that can come forward for delivery now. Instead, they have taken the approach they have in order to offer a ‘fair’ opportunity for all applications. There is also still uncertainty about applications that only need to mitigate for part of the site, where on-site mitigation can be provided for some of the site. For example, if a site of over 50 units applies for credits through Natural England it would be considered as a major application (where the demand for credits is greatest). However, on-site mitigation may negate the need for a portion of the site, leaving fewer than 50 units to be mitigated for through the credit bank. Although the application would only be requesting credits for less than 50 dwellings, the scale of the development would still be considered under a major application. Natural England suggest they would consider this on a case-by-case basis. Natural England is keen for this initiative to be successful and is encouraging a high uptake in using its credit bank in order to unlock more revenue to further increase the supply of credits (thus lowering the demand and competitiveness). In time and as more land is unlocked, this will create stability and Natural England claim that their £30m investment has the potential to generate £80m which will be used to improve the offering. However, until this stability is established, and the backlog of applications starts to clear, it is likely that there will be an extremely high demand for an inadequate supply of credits. Lichfields will be continuing to closely monitor the situation with nutrient neutrality and would be more than happy to assist with credit applications once the new credit bank has launched for the Tees catchment. Please get in touch if you have any queries or need any assistance with calculations or any advice on projects that may be caught up in this process.