Incentive Through Threat
Speculative powers for the enforcement of public control over the fate and value of vacant sites.
LiveSpace+ Development Model
The intention of LiveSpace+ builds upon the concept of ‘meanwhile spaces’ that through creative enterprise have sought to repurpose neglected sites in the pursuit of place-making and cohesion as remedy to urban decline. Despite having found a number of successful applications for community-led initiatives, the meanwhile space has often served to perpetuate the interests of the landowner to the possible long-term detriment of real public betterment. In recent years urban-dwellers have become well accustomed to the gentrifying typologies of the Meanwhile space. Whether it be the pop-up shop, the repurposed shipping container or the street-food market, in truth many temporary urban projects represent the public-friendly interfaces of much wider systems of private-capital. The meanwhile concept thus falls victim to neo-liberal logics of profit driven urbanism for those seeking the early activation of a site both as a means to maximise returns and to conveniently enable the social change necessary for a neighbourhood’s redevelopment.
An emblematic case study of such associations, the recent landmark project of POP-Brixton in London reveals a common theme played out through the meanwhile format. As originally set forth in the Lambeth Council’s plan for the underused site, the land was to be temporarily activated with community gardens and local businesses representative of Brixton’s heritage. In its current form however, the project iterates none of these desires and comes as the product of the council handing over the site rent-free to the Collective, a global developer with a combined property portfolio of £2.7 billion. As a totem for demographic change and corporate interests profiting from the use of public land, Pop-Brixton speaks to the doubtful public value of the meanwhile project and their susceptibility to capitalisation through the uneven power dynamics of the built environment.
With these contentions laid bare, LiveSpace+ pursues a model of redistribution to better capture the value uplifts produced by the temporary activation of sites, seeking the retainment of windfalls within the public domain. By iterating new legal frameworks for the obligations of landowners, value within the city may be re-conceptualised alongside greater incentive for the activation of vacant sites driven by public as opposed to private interests. The speculative tools set forth within the following discussions iterate how legislative reform of existing mechanisms of value capture paired with the extension of powers to bring land into public ownership could work alongside the LiveSpace+ digital platform to address the urgent questions of urban vacancy. In an era whereby our cities have come to be dominated by the speculative narratives of profit-driven development, the opportunities that exist to subvert urban power structures ultimately lie within the realm of legislation. The development of a radical apparatus of planning obligations could act as the beginning of new relationships between landowners, local authorities and the communities they seek to represent.
The temporary activation of vacant urban spaces raises a series of questions relating to value and ownership. Crucially who possesses the rights to land uplifts — or the increases in land-value that emerge as a result of a short-term occupation and what rights do communities and occupiers have to influence the long-term fate of a site? An extension of statutory powers to confront the issues surrounding vacant space stands as a necessary amelioration to be made to current systems of landowner obligations to support the LiveSpace+ model.
Windfall Capture: Section 106 & CIL
The requirement of the landowner to fulfil certain specified commitments represents a fundamental principle of ensuring public control over the built environment. Despite the mechanisms in place, the balance of power within land development skews firmly to the hand of the landowner with democratically-elected bodies and communities holding little influence over the interests of wealthy and often bullish property speculators. Consequently the majority of windfall gains made as a direct result of public policy decisions such as the granting of planning permission ultimately end up in private hands, ensuring a property market that is driven by profit as opposed to societal gain. The primary apparatus for recovering uplift for the public sector is the enforcement of developer contributions comprised of the Community Infrastructure Levy (CIL) and Planning Obligations contained within Section 106 of the Town and Country Planning Act 1990 (S106). These mechanisms are crucial to ensure the return of funds to local authorities for the provision of services and infrastructure relating to developments. Despite this, the majority of uplift still passes to landowners and as recent trends have displayed, obligations are susceptible to manipulation, avoidance and exemption. As figure_3 shows, developer contributions for the year 2016–17 amounted to over £5bn secured for public finances; despite the considerable value attained, in the same year a further £10.7bn was produced in profit for the landowner from public policy uplifts.
‘Gaming’ the System
Section 106 agreements are made between developers and a Local Planning Authority (LPA) to ensure that the infrastructure or affordable housing provisions made necessary by a proposed development are met. In many ways, due to their negotiable status, S106 clauses have become synonymous with the imbalance of power between LPAs looking to enforce local policy and developers on occasion seeking to ‘game’ the system. In the past decade, it has been commonplace for 106 agreements to be renegotiated typically at the behest of developers seeking to drive down their contributions.
As a 2018 Housing, Communities and Local Government Committee discussed on the effectiveness of current land value capture methods, the frequency of S106 non-compliance is high. Government statics iterate that over 65% of all local authorities had renegotiated planning agreements in the year of 2016/17 while just 40% of housing schemes in 2013 met local targets for the provision of affordable homes. A common route for re-negotiation by developers is the argument of viability which may be real or exaggerated to achieve desired reductions. As revealed in conversation with a senior planning manager of a large London house-builder, a minimum profit margin of 20% is desired for all major developments. If this becomes compromised in any manner this may result in a push for renegotiations of obligations or in extreme circumstances the withholding of progression on a site in the hope of gaining more favourable conditions in the future. Lacking the mechanisms to robustly enforce contributions gives LPAs a weak stance for these kinds of negotiations. By consequence, largely under-resourced LPAs find themselves competing with experienced and well-funded developers and their extensive legal expertise in navigating the system’s loopholes.
This issue of competence, is the same reason why many local authorities have ceased attempting to enforce CIL charges to landowners. CIL, differing from Section 106 was conceived as a means to raise revenues to address the combined infrastructure impacts of development in an area as opposed to the effects of a specific proposal. Being non-negotiable, its intention was to provide a universal, fixed rate charge to developers at locally agreed rates. Crucially, a portion of funds secured by CIL (typically 15%) are passed directly to the parishes and town halls of local communities to be spent however best they might see appropriate to respond to the changes associated to a development. The levy’s failings have emerged from its complexity in enforcement that has led to over a third of LPAs across the UK to abandon its implementation, believing it to be not worth the trouble of carrying out its charge. Resulting gaps left in public finances from the unclaimed uplift may lead to insufficiencies for the provision of services associated to a development by whilst failing to deliver maximum value to communities. The issues known to the implementation of developer contributions emerge as a direct consequence of policy decisions taken in central government that have increasingly worked to strip local voices of power. The environment created leads to high-gain land speculation for developers and ever reducing agency for local voices.
By inherence, profit is prioritised over place.
Common Value; Meanwhile Uplift
Despite increasing attempts to reform planning contributions, legislation continues to favour landowners. A radical rethinking of obligations stands as a major opportunity to require that land and landowners meet additional criteria to fulfil greater transferral of value to society. In the context of activating vacant spaces in the city, the value produced through meanwhile use must be seen as a form urban commons that by the rights to the city may belong in public hands. In the current built environment system, land value correlates heavily to what a plot’s legal use class denotes. The temporary occupation of urban spaces therefore represents an act of both social and economic value creation often bringing about change of use-classes that may herald long term legacies. As acknowledged in the Centre for London’s report into meanwhile use in the capital, quantifying this form of uplift is challenging as the externalities produced by a temporary occupation may be ‘neither immediately apparent or fiscally expressed’. Nonetheless the placemaking abilities of meanwhile sites are acknowledged by both landowners and communities alike. In particular with regard to the activation of spaces for SMEs, freelancers and creatives, for which the provision of open workspace has been found to generate £1.7 billion for London’s economy. Local communities thus stand to gain from forming robust policy to incentivise this form of occupation paired with greater mechanisms of value retainment.
Compulsory Purchase Reform; ‘hope vs. market value’
Expanding Compulsory Purchase Order (CPO) powers represents a potentially highly effective mechanism to combat landowners escaping their duties of commitment to planning obligations. As the most common form of non-compliance by developers, the use of viability assessments to argue the case for exemptions could be halted by local authorities holding greater power to enforce improved CIL and Section 106 requirements. In cases of developers failing to fulfil the expectations of local policy, sites could be taken away from landowners in return for compensation. However for this to function, reform would first have to be made to the current outdated legalisation stemming from the Land Compensation Act of 1961 that necessitates the payment of ‘hope value’ for any land compulsorily purchased. This ‘hope value’ is an estimation of what the land would be worth if it were to someday receive planning permission. As a result it is often inflated at the whim of speculative development and is a key driver to distorted land valuations. Therefore an essential tool of reform lies within the ability of local authorities to compulsorily purchase land at market use rates as a means to credibly enact CPO enforcement. With the mere existence of a real possibility of land being re-appropriated by state, a potential transformation could occur within the market working to end the practice of land banking whilst yielding greater assurances that developments and the uplifts produced meet the needs of local communities.
Incentive Through Threat; Introducing a Vacancy Register
When combined with greater requisites to confront vacancy, the threat posed by CPOs could incentivise an increased uptake in the meanwhile use of empty sites as iterated through the LiveSpace+ model. Local Planning Authorities could stipulate that land under control of developers must meet additional criteria, namely with regard to sites that are left vacant for extended periods of time or face their removal and purchase. As an extension of planning obligations, LPAs would thus have the power to issue a CPO onto any empty site as a mechanism to take control of their detrimental impacts onto a local community. Temporary meanwhile activation could be iterated as being a preferential usage for neglected space in the city that would absolve a site from the risk of compulsory purchase. For this to function correctly, legislation would have to be formed obligating local authorities to compile a vacant site register that would document all currently underused spaces within their jurisdiction that have not been put forward for development. Any sites appearing on this register for a designated period of time could have CPOs enacted upon to incentivise their use. The data produced through this documentation could then serve the dual role of contributing to open source platform suggested by LiveSpace+ use model.
Political Barriers
CPO as a concept is not a new idea, however its application is one that divides opinions along political lines. As a response to the recommendation of expanding CPO powers in 2018, the Conservative Minister of State for Housing raised objections that carry the anxieties of the landowning class apprehensive about a perceived overstep of the state:
“As a Conservative politician, I am naturally nervous about the spot nationalisation of land. The ability of the Government to confiscate assets is a problem in a capitalist society”
— Kit Malthouse MP, Minister Of State For Housing, 2018
This focus placed on the principle of rights of private property overlooks the fact that CPO powers seek to enforce policy through threat, and in reality would have to be used rarely. Even so, it must accepted that compulsory purchase can be a challenging process fraught with lengthy appeals and difficulty finding new buyers. Hence the granting of additional CPO powers to local bodies would necessitate the cross-party support of members of central government and a willingness to radically confront the status quo. As the failure to implement this kind of reform iterates, achieving this within today’s political environment in the UK might face considerably barriers. Recent attempts in Scotland to introduce Compulsory Sales Orders (CSO) rights to local authorities have faced similar democratic hurdles. The CSO, differing from a CPO takes control of a site without needing local authorities to acquire its true ownership but rather oversee its sale by auction to the highest bidder. The primary benefit of this mechanism is that local authorities need not raise the capital to purchase a site whilst simultaneously the land may be first offered to local groups for purchase to encourage community reclamation and ownership. As a radical measure to confront long-term dereliction in urban and rural contexts, the CSO was pledged within the 2018 SNP election-winning manifesto. Since then however, the proposed legislation has been retracted due to difficulties securing its compliance with the European Conventions on Human Rights as a result of concerns regarding individual property rights.
Forming a Meanwhile Tariff
Nonetheless, given the correct support, additional purchasing powers could underpin a more meaningful extension of value capture for local communities. With regard to the uplifts in land value formed through meanwhile occupation and its associated place making, the question remains of how best to transfer value to longterm local needs and avoid the total extraction of profit by commercial interests. Through its inherent importance in preparing an area for development, temporary activation merits to gain from the profits made by a subsequent development upon its site. Recognition of the range of value produced by any meanwhile usage could feasibly be inhered into Section 106 obligations that could call for a tariff onto rents passed to the landowner through its temporary activation. This ‘meanwhile levy’ would serve the role of iterating a quantitive value as recognition for the potential social, environmental and economic benefits brought to a neighbourhood through its bottom up intervention. Naturally a reform of this nature would face considerable opposition by landowners but the argument to be made would be that even a tariffed site in meanwhile use would still generate greater revenue than a long term vacant site. Paired with tougher powers to discourage vacancy, the adoption of meanwhile usage would be identified as the preferential outcome to lead landowners to a path of greater local obligation.
The confrontation of vacancy is inherent to the re-thinking of space in urban areas necessary for the achievement of a net0 future. As an issue faced by urban areas around the globe, vacancy produces highly specific manifestations and barriers unique to the political and cultural climates present in the UK. Mechanisms of state land purchase are commonplace in many European countries, particularly Germany and the Netherlands where the acquisition of land at market value faces less barriers due to the strong residential renting markets and alternative notions of ownership. Resistance from both politicians and landowners stand as major challenges to reform the UK land market that situates itself within the centuries old cultural fetishisation of private property rights. Overcoming these barriers stands to produce a more balanced built environment with local democratic groups and communities empowered to enact swifter and more effectual control over developments. With greater legislative tools, achieving bottom up change enacts a step towards addressing society’s most urgent questions relating to the social, economic and ecological fabrics of our cities.
Bibliography
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