12 Nov 2019
On the 26th October, the Ministry of Housing Communities and Local Government [MHCLG] launched a consultation on Development Corporation reform. It will seek to establish when it is appropriate for Development Corporations to be used and how legislative reforms might ensure that a fit-for-purpose model exists. The Government have simultaneously released guidance on a new ‘Development Corporation Competition’ that invites local authorities to apply for up to £10 million funding to ‘explore delivery models that have been less commonly used in a contemporary context, such as development corporations’. The MHCLG have set out that they are looking for up to 10 housing and economic growth opportunities with a regeneration focus.
The five established Development Corporations
Under current legislation, Development Corporations have the power to acquire (including compulsory purchase), develop, hold and dispose of land and property; as well as the ability to facilitate the provision of infrastructure, create businesses and subsidies, and offer financial assistance. The Localism Act (2011) allowed the Mayor of London to designate Mayoral Development Areas and establish Mayoral Development Corporations. Powers to establish Development Corporations were extended beyond London to England’s first Metro Mayors in 2017, and then again to locally-led new towns in 2018. The five active Development Corporations are set out below [Table 1].
Table 1: Established Development Corporations
Stockport Town Centre West
The ‘Stockport Town Centre West Mayoral Development Corporation (Establishment) Order 2019’ came into force on 2nd September 2019. The Stockport Mayoral Development Corporation [SMDC] is the first in the country to focus on town centre regeneration, with Stockport Council and the Greater Manchester Combined Authority proposing to deliver over 3,500 new homes in Stockport Town Centre West across a 52.6ha area.
Figure 1: Illustrative Vision for Stockport Town Centre West
Source: Stockport Council - Strategic Regeneration Framework
Challenges for Stockport Town Centre West
Delivering 3,500 new homes on predominantly brownfield land under the control of 500 landowners over the next 15-20 years is ambitious. The housing delivery achieved by Olympic Park Legacy Corporation [OPLC] and Old Oak and Park Royal Development Corporation [OOPRDC] in London [Table 2] does not provide means for encouragement, with neither delivering close to their adopted or emerging housing requirements. Outside of London, the only precedents are the South Tees Development Corporation [STDC] and Ebbsfleet Development Corporation [EDC], both of which serve very different purposes to the SMDC. The STDC is exclusively employment regeneration focussed and the EDC is a unique Development Corporation established with sole the purpose of delivering Ebbsfleet Garden City. Furthermore, by not assuming development management or plan making powers, there has been some doubt as to how SMDC can coordinate and deliver such an ambitious project.
Table 2: London Development Corporations Residential Delivery
Source: OPLC Housing Explanatory Note 2019 & OOPRDC Authority Monitoring Report 2018
Financing and Delivery
Most of the initial reservations over the Stockport Town Centre West project have been centred on how investment to deliver the vision set out in the Strategic Regeneration Framework [SRF], which includes a mix of market and affordable dwellings for families, young professionals and retirees across different density ‘neighbourhoods’, would be secured. However, on 1st October, an Investment Strategy Facility Report [ISFR] was approved at the meeting of Stockport Council’s Cabinet. The ISFR sets out the Council’s investment objectives and options, as well as the preferred operating and delivery model for SMDC. In order to deliver the volume and mix of housing outlined in the SRF, clear overarching financial coordination and management will be required. To achieve this the ISFR sets out that SMDC will adopt a range of roles including; promoter, facilitator, direct developer and JV partner with developers.
To achieve the ambitious vision for the project, SMDC will have to make full use of the development and acquisitional powers afforded to it, whilst simultaneously levering in public and private sector investment. The ISFR states that that SMDC will utilise a variety of investment techniques to target commercial and regeneration opportunities. This could include gap funding, land acquisition funding, remediation investment, patient capital, feasibility funding and direct investment. The ISFR also clarifies that the decision not to assume planning functions was taken to ensure that SMDC focuses on leading regeneration through acquisition and development powers.
The launch of the ‘Development Corporation Competition’ and the Government’s consultation on their reform indicates that there will be an increasing emphasis on utilising Development Corporations to deliver regeneration schemes. Ultimately however, eight years since the rebirth of Development Corporations in the Localism Act, there remains an absence of evidence to suggest that they are the most effective mechanism to deliver either major redevelopment schemes or smaller town centre regeneration projects. Nevertheless, if Stockport Town Centre West, or a similar project conceived through the ‘Development Corporation Competition’, is successful it could represent a renewed purpose for Development Corporations as a tool for town centre regeneration.
 MHCLG – Development Corporation Reform  MHCLG – New Development Corporation Competition  Stockport Council – Stockport Town Centre West Strategic Regeneration Framework  Stockport Council - Stockport Mayoral Development Corporation Facility Main Report
07 Nov 2019
The Scottish Government last week published its report Research into the impact of short-term lets on communities across Scotland. This paints a picture of the effects of home sharing/letting sites such as AirBnb on communities and economies in certain parts of Scotland. Focussing on Edinburgh, Glasgow for urban context and Skye and Fort William for rural, the report brings into sharp focus the economic benefits that are being experienced alongside disruptive impacts on communities and residential markets.
In Edinburgh, pressure for visitor accommodation during its summer and winter festivals leads to hotel occupancy rates in excess of 90%. Airbnb can offer an often cheaper and more flexible alternative which may take some pressure off hotel stock, but also open up our city to new visitors who may otherwise not have visited.
But these pressures are having a reported effect on the supply of housing and cost of rents. As at 25 September, there were 11,985 Airbnb listings in Edinburgh, 7,366 (65%) of which were entire properties. With around 30% occupancy it is evident that many of these cannot be permanent residences for Edinburgh’s population and must be full-time short-term lets. To put this into context, these figures represent 6% and 4% of the total no of privately owned dwellings in the city respectively.
In Skye the report highlights that 18% of all residential dwellings on the island are available for short term let. This has nearly obliterated the private rented sector market, posing problems for existing residents, incoming key workers as well as workers in construction and tourism, industries which are expanding in response to the short term lets that they are hindered by.
The findings of the consultation summarised in the report point toward consensus that regulation is required, but at this stage stops short of specific recommendations. It is interesting that planning controls are scarcely mentioned.
So what might planning do?
Earlier this summer, the Planning (Scotland) Act 2019 introduced the ability for planning authorities to designate all or part of its area as a short-term let control area (STLCA). Within these areas, use of a dwelling for a short term let will constitute a material change of use and require planning permission (unless it is already someone’s principal residence or subject to private residential tenancy). It’ll be ok to let out your spare room on rugby weekends, or even your whole house while you’re on holiday, but buy a flat solely for the purpose of short-term lets and you’ll need planning permission.
The change introduced by the Act does beg the question when is a change of use not a change of use? The answer will soon be, when it is outside a STLCA.
It initially feels as though introduction of regulation such as this would sit better within the General Permitted Development Order (GPDO). Introduction into the GDPO would however result in a blanket approach across Scotland, adding unwelcome regulation in areas where the adverse effects of short-term lets are less prevalent and do not outweigh the economic benefits of increased tourism.
This is a bit of a knotty problem. At present, if it is considered that the introduction of a short term let use represents a material change then it can already be deemed to require planning permission. What constitutes a material change is undefined but can include a number of factors such as frequency of arrivals/departures, number of nights let or impact upon residential amenity. Each individual case must be assessed by the relevant planning authority and there are a growing number of instances where enforcement action has been taken by planning authorities resulting in refusal of planning permission and, in some cases, dismissal of appeals. While these have yet to be tested in the courts, it is evident that the power already exists to deal with problem cases.
These case by case instances do not however address authority/city-wide issues of housing supply, or even community-wide impacts upon amenity and residential character arising as a result of multiple short term lets. This points toward a situation where STLCAs, if used across far reaching areas, such as a whole planning authorities, could in theory provide the control required.
But, this would of course place a significant burden on planning departments through enforcing these controls and considering applications. Where budgets and resources are already stressed it may result in a reluctance to use these powers.
It also raises questions as to what will happen in instances outwith STLCAs, where there has been or will be a material change. By making STLCAs optional and potentially over limited areas means that beyond them the default position will be as existing; demonstrating material change, but with the absence of a STLCA designation further blurring the lines.
I suspect the 2019 Act will not be a silver bullet and the discussion will rage on.
If you have a question about short term lets and Airbnb and the planning position please contact Gordon Thomson in our Edinburgh office.