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How have recent incentives impacted upon the redevelopment on Brownfield land, with particular reference to housing?
The purpose of this paper is to explore and examine how the recent government incentives to redevelop brownfield sites have impacted upon the industry and whether the incentives have gone far enough register a positive effect. With the Government focus on 60% of new housing being built on previously developed land there is a worry that overall construction will drop as a result of limited space and applicable brownfield sites.
In order to ascertain the current feeling amongst professionals and local authorities, a carefully devised self completion questionnaire has been sent to Developers, Estate Agents and Local Authorities. The results have shown a very divided set of answers when it came to asking about the impact of the focus of brownfield land, especially for housing. What was interesting was that both estate agents and developers agreed; but for different reasons, that the current impetus on brownfield construction cannot be sustained and changes are needed in order for further growth. This is problematic, as the current government cannot afford to be seen as backtracking on sustainable development.
The reuse of brownfield land is still high on the government's agenda. The reason for the continued focus on brownfield land is threefold: to prevent urban sprawl, increase environmentally friendly awareness such as greenbelt destruction, and finally to encourage urban regeneration.
However, partial reticence is still evident from private developers. To combat this, incentives such as the landfill tax legislation came into force “...it rewards those who make the effort to remove recyclables and biological activity prior to disposal.” Slater, B., Warhurst, M.(2009).
This dissertation will focus on the incentives for redevelopment and the level of impact they have had.
Landfill Tax was first introduced in 1996, and since that time, especially for brownfield sites, landfill had become the instrument of choice for developers who wanted the quickest and simplest solution for developments to get off the ground.
Currently the government is trying to deal with the legacy of industrialisation from early Britain. It contains densely populated and built-up areas, and is faced with both historical and recent soil contamination where some of the historical contamination dates back to the accelerated industrial development of the 19th century(Vanheusden, 2003. Citied in Thornton et al, 2007).
Moreover, brownfield, particularly in old industrial areas, are more often than not economically marginally viable(B sites) or even non-viable sites(C sites)(Ferber, 1997. citied in Thornton et al, 2007) as they tend not to be competitive when compared with greenfield sites especially without public aid. However, it is possible for the Government and local councils to bring about an increased competitive position for brownfield sites by introducing a barrage of incentives. These incentives are often required as developers are reluctant to redevelop brownfield sites due to the associated uncertainty with the risks they pose such as:
- wrong location;
- legacy of redundant infrastructure;
- decontamination costs;
- high rehabilitation costs;
- reduced real estate value;
The regeneration of such sites and the surrounding area can present an insurmountable challenge.
Incentives, known as indirection regulation, instead of command and control are relatively new.
According to Turner(2000) “until recently, environmental policy in most countries was dominated by direct regulatory measures, that is, legal instruments by which governing institutions, at all levels of government, impose obligations or constraints on the actions and behaviour of private firms and consumers, in order to protect the environment”
However, this has arguably changed during the last two decades: the scope of forms and regulations has become more far reaching(Thornton et al, 2007)(cf. Mayntz, 1997).
This is especially true for brownfield redevelopment. This has included non-fiscal instruments such as:
- information disclosure schemes,
- planning policies,
Environmental Impact Assessment requirements,
Furthermore, public funding is made available for brownfield regeneration as arguably it delays the consumption of greenfield sites and thus worthy of funding.
Aims and Objectives
The focus of this paper is two-fold:
Firstly, to determine whether the Government's insistence on the focus for brownfield land including an ambitious target of 60% for new housing has had any negative impact upon construction overall.
Secondly, to determine the impact incentives, with emphasis on the land fill tax, has had upon the redevelopment of brownfield sites across the UK. And whether these incentives go far enough to meet their remit.
This section describes the research method used to collect the data needed and the analytical approach that has been adopted to form conclusions.
The research conducted for this dissertation included the use of both primary and secondary sources of information, comprising of both qualitative and quantitative data.
Firstly, the primary method consisting of secondary sources involved a desk based literature review, collected from a wide-ranging pool of academic/professional journals, professional body reports and government documents.
This study will analyse the extent of the existing research or lack thereof, the Government response to recommendations on overcoming barriers and future incentives, and the developer's response to brownfield redevelopment.
The research focused on the barriers, incentives and developers regarding the reuse of brownfield land.
The literature search and subsequent review has allowed me to broaden my knowledge of the topic being investigated and has been instrumental in forming the opinions in this paper.
Information has been sourced from; online portals such Science direct, Elsevier and the University of the West of England's(UWE) Journal database from which a number of journals have been sourced. Further sources such as the RICS, English Partnership National Regeneration Agency, the Building Research Establishment(BRE) and Government documents such as the Communities and local Government Paper ‘Securing the Future of Brownfield Land' have also been used.
Secondly, primary evidence shall be collated using a self-completion questionnaire which has been devised following the literature review to answer questions I felt were not found by reading over the related articles/documents.
This quantitative approach has been used as it can collect information from a large number of sources from small yet concise set of questions, enabling ease of comparisons and formulation of statistical data. Bell(1992)
The questionnaire was handed out to professionals in the construction/ estate industries and Local authorities to determine their response to the current incentives.
The self-completion questionnaire has been chosen over the alternative survey options due to the following advantages:
- It can be a relatively quick means of contacting a wide range of organisations;
- Respondents are more likely to answer honestly as they can respond anonymously if they so wish;
- It is a relatively inexpensive form of primary research;
- Respondents can take their time to fully consider the questions posed to them, hopefully providing a more detailed and informative response;
- It is not limited geographically so a full range of responses from differing areas can be achieved giving the results a varied and diverse response.
The disadvantages of this form of survey are considered to be as follows:
- Answers given are final with no or little chance or probing;
- Frequently a low response rate is achieved
- Reaching the right people can be difficult and time consuming.
To mitigate this, the questions posed to them were sensitive, and concise to provide a maximum reply level. The overall length of the questionnaire I felt should not be more than two sides of A4 and quick to complete if so wished.
To gain a maximum response it has also been decided to keep the questionnaire anonymous as some questions could possibly be of a sensitive nature to some organisations.
To aid analysis multiple choice questions were used, this is in line with best practice for surveys(Fink, 2003) However a comment box has been included, if a respondent wishes to expand upon an answer given. This has been deemed necessary as a structured questionnaire can impose too much of the researchers views on the topic, and the researcher should not be the only one to decide on the relevance or importance of the questions asked. Veal(1992).
This was important to gain the views of persons working on real projects within the industry hopefully providing a firm foundation for the analytical review.
Other options for this research strategy were considered such as; face to face interviews or focus groups, both these alternatives were subsequently dismissed as being to time costly for the individuals concerned, Denscombe(1998, p137). And due to some sensitive questions the anonymous approach offered by the questionnaire would illicit the maximum responses. It is also possible that persons being interviewed could have particularly radical views and by using the questionnaire approach a wider audience could be reached avoiding this problem.
By using a mixture of both qualitative and quantitative research methods it is hoped that a broad foundation of research has been achieved, covering many aspects, this has provided the dissertation with weight for its conclusions, comparisons or arguments drawn.
“I am convinced that each research method is suited to answering certain types of questions but not appropriate to answering other types. Furthermore, the best answer frequently results from using a combination of qualitative and quantitative methods.” Thomas(2003, p.7)
The questionnaire(Appendix A) was sent by post together with a stamped self addressed envelope and covering letter informing the respondent concerning the details of the survey and reassure of the anonymity of it.(See Appendix B)
A total of 150 questionnaires were sent, covering Local Authorities, Estate Agents and Developers(Appendix C) of the 150 sent a reply level of 38% were received back, this would seem about right with the average response rate of 40%(May, 2001).
Defining Brownfield Land:
Brownfield land, sometimes referred to as Previously-developed land has been defined in Planning policy statement 3(PPS3) Annex B(November 2006) as ‘Previously-developed land is that which is or was occupied by a permanent structure, including the cartilage of the developed land and any associated fixed surface infrastructure.‘
This definition is the result and review of the Planning Policy Guidance 3(PPG3) definition which has some minor changes and caused much comment upon.
The main comment being that Airfields, which were exempt from the brownfield definition in PPG3, were not included or mentioned in PPS3.
This was clarified by a letter from Yvette Cooper(Labour MP and Secretary of state for the Department of Works and Pensions) who explained what the Government did. It informed the concerned that PPS3 did not change the status of airfields compared to PPG3.
PPG3 stated that where the proportion of open land on previously developed sites was large, then it would not normally be appropriate to develop them to the boundary. PPS3 continued this approach further adding that local authorities must decide upon this in a case by case basis which depends on the particular circumstances of the site.
The definition includes defence buildings but also excludes;
- Land that has been previously developed but so long ago that the fixed structure has blended into the natural surroundings;
- Land in built-up areas such as parks etc which, although may have fixed structures on is still not considered developed upon;
- Agricultural or forestry buildings;
- And any land that has been used for mineral extraction or landfill purposes where provision for restoration has been made.
As one of the earliest countries to industrialise in the world, the United Kingdom has a large number of contaminated sites which can pose a serious risk to human and environmental health. This is one of the main concerns for developers when working with brownfield sites as the cost of remediation can affect the actual profitability of a potential site.
Contaminated land is defined in Section 78a(2) of Part IIA of the Environmental Protection Act 1990:
‘Any area which appears to the local authority' to be in such a condition, by reason of substances in, on or under the land that:
- Significant harm is being caused, or there is a significant possibility of such harm being caused, or
- Significant pollution of controlled waters is being, or is likely to be, caused.
The importance of Redeveloping Brownfield land:
Urban regeneration was a major focus for the Conservative government during the mid 1990's; and from the 1980's the growing influence of sustainability caused a shift in political thinking towards the environment due to the 1992 Rio Summit, which forced policy changes across a broad spectrum.(CPRE, 2009, pg13)
The original brownfield housing target was first introduced by the last Conservative Secretary of State for the Environment, John Gummer, who stated in the 1995 Green Paper that the Government wished to see 50% of all new homes built on brownfield land.(Department of the Environment, Our Future Homes, 1995).
When the new Labour government was elected in 1997, they placed heavy emphasis on brownfield regeneration as the main way of urban regeneration.
This recognised the vital role of brownfield regeneration in combating rural development pressures and improving urban environments.
In 1998 the Labour government announced a more ambitious target then previously stated by John Gummer and his 50% target;
Housing was to be developed on brownfield land and through conversion of existing buildings at a rate of 60% by 2008.(Dixon, Pocock, Waters, 2005).
In 2001 this target was supposedly met and was portrayed as a success by the Government. However, there has been some concern about the validity of this statement as according to the CPRE(2009, Pg 13) who through a close inspection of the Land Use Change Statistics(LUCS) data which related to other statistics published by the same Government department found that the problem arose;
“from the policy focus on the relative proportion of brownfield redevelopment, which created the paradoxical possibility that ministers could claim success, even if that absolute amount of recycled land fell as a result of overall reduced house building rates.”
This can be seen as 82,899 was the absolute number of houses built on brownfield land in England 2001 which was similar to that of 1993 in which 82,788 were built.(Source: the DCLG land use change for 2007 and the Housebuilding statistics Live table 217, 2009.)
In fact improvements only really came about from 2002 onwards; this was due to 2 main causes:
Cause 1 was the introduction of the Sustainable Communities Plan and the core role for English Partnerships, who were tasked with developing a comprehensive national strategy.
To achieve the goals set they were awarded £500 million over 3 years to find housing sites(not strictly brownfield), they were given further power in the form of compulsory purchase orders for sites which had remained derelict or vacant since 1993. This was targeted at the data provided by the National Land Use database(NLUD) and its assessment of 17,000 hectares of brownfield land.
The success of this was evident as in 2005 123,000 dwellings were completed on brownfield sites that year alone.
According to the National Statistics(2008) 77% was reached for development of houses on brownfield land in 2008.
Cause 2: This dramatic increase was caused by a rising housing market which made brownfield developments increasingly lucrative for developer's specialising in urban centres and brownfield regeneration.
These specialist developers were in the minority and the majority of main house building firms remained sceptics and were reluctant to take on the risks associated with brownfield sites(Payne, 2009).
The main increase however came from the small to middle sized firms who were getting increasingly squeezed out of the market for greenfield sites due to planning restrictions and policy changes which made brownfields commercially more viable by limiting the supply of greenfield land elsewhere.
This policy change came about due to two documents the Urban Task Force Document(Towards and Urban Renaissance, 1999) which stated that brownfield regeneration was being hampered by ease of access to greenfield land, and the Sustainable Communities Plan(Building for the Future, 2003) which stated that they have reduced greenfield urban fringe land and increased targets for re-use of brownfield land.
By restricting the supply of greenfield land, the positives were recognised by Kate Barker(Review of Housing supply-Securing our future needs, 2003) which stated that by limiting access to greenfield land it has increased supply of brownfield land due to the fact of an increased brownfield land value.
However a note of caution was advocated by John Calcutt(2007)(Citied in CPRE, 2009):
“A prudent local planning authority will want to make as much use as possible of brownfield in planning its five-year supply of housing land, as required by PPS3: ideally, meeting or exceeding the Governments 60% Target. However, sites identified for the five year supply must be financially viable. There is a risk that any downturn in the market will make less viable sites altogether unviable, thus increasing the pressure on greenfield land”.
The use of economic instruments in construction is not a new concept; but with the rise in environmental issues and sustainable development, the carrot and stick approach through the medium of finance has become a potent tool. In 2007 the Government published its waste strategy for England; making clear that the construction industry is in its sights and will be made to improve. This is arguably, an understandable stance since the construction, demolition and excavation sectors generate more hazardous waste in England than any other industry,(Watson 2007).
Environmental issues have become increasingly important for all those working in the real estate industry. This extends to tax, which is being used as a means of influencing behaviour so as to persuade people to act in a less harmful way towards the environment. ‘Tax may be used as an incentive to behave in an environmentally acceptable way or as a means to punish transgressors'(Chapper, 2008). Landfill Tax was introduced in 1996 by the then Conservative government and has been at the forefront of measures to lower the use of environmentally harmful practices.
Landfill Tax acts as an incentive to the company that disposes of the waste to wean them off of their reliance upon landfill and seek alternatives such as recycling.(Myers, 2006) stated that “in a typical year as much as 70 million tonnes of construction and demolition waste ends up as landfill waste-of which 13 million tonnes(nearly 20%) comprises of new unused materials”.
The operator of a landfill site pays the tax to HM Revenue and Customs, the cost being passed on to the party that disposes the waste. The rate varies depending upon whether the waste is active, inactive or inert. A higher rate of £40 per tonne applies to active waste, with inactive or inert waste being charged at £2.50 per tonne.
In principle the Landfill Tax is there not to make it more expensive to remove waste but to make it more environmentally friendly. However, whilst originally the tax imposed on the party removing the waste was in the range of £32 per tonne, since April 2009 that was increased to £40 per tonne; making it a less viable option for many small to medium companies(SMEs). These rates send a clear signal about the need to reduce the external costs associated with the large volume of waste sent to landfill, and help to provide an economic incentive to develop alternative forms of waste disposal.(Myers, 2007).
Early findings are promising. By ensuring that waste producers incorporate the full cost of waste disposal into business decisions, landfill tax encourages the development of sustainable waste management options, including recycling and anaerobic digestion. Since 1997, the tax has contributed to a 32% reduction in the proportion of waste sent to landfill and a similar increase in recycling. The tax already saves 0.7 million tonnes of carbon dioxide equivalent emissions a year.(HM Treasury 2009)
However, these findings do not take into account many factors. Such as the unknown quantity of illegal fly-tipping, which has been reported to increase in countries with similar forms of landfill tax(see the Danish Waste Tax of 1987). Gary Bishop, managing director of Bromley Demolition, thinks the further upcoming tax rise will again “put all the prices up and that's bound to have an effect, it will definitely mean that fly-tipping will increase”. Moreover, it is hard to ascertain to what extent the decreasing tendency in waste supply is due to the waste tax and not from other factors, such as the increase in user charges, regulations on waste removal and processing, and autonomous economic and technical developments.
What further compounds the situation is that many disposers of waste are not even aware of what constitutes taxable waste and what is exempt. There has been a history of litigation about what constitutes a taxable disposal of waste at landfill sites, based on differing interpretations of the legislation. Most recently, in 2008, the Court of Appeal in Commissioners for HMRC v Waste Recycling Group LTD(2008), ruled to the effect that material received on a landfill site which is put to a use on the site is not taxable.(HM Treasury 2009).
Following the Waste Recycling Group case, it has become apparent to HMRC, that across the UK, a significant amount of waste is outside the scope of landfill tax. Simultaneously, the Government has believed that the policy raison d'être underlying the tax, points to an urgent need to tax much of this waste. Legislation(2009) has therefore been brought back into the remit of the tax.
Due to the above changes that have been mentioned, the Government is seeking to modernise the following two key aspects of landfill tax:
- The definition of a taxable disposal of waste at a landfill site
- The definition of wastes that should qualify for the lower rate of tax.
These aspects are central to the tax. However, for the reasons explained above, they are based on environmental regulations and waste industry practice which, over more than a decade of the tax, have changed considerably.(HM Treasury 2009).
Landfill Tax Exemption
With the Landfill Tax, one potential problem was that as a direct result of taxation for companies using landfill, brownfield sites were becoming less viable. To counter this, the then government brought in the Landfill Tax Exemption scheme. This permitted developers to transport contaminated waste such as soils to landfill without being charged the Landfill Tax. This was a relatively straightforward process, with the developer via their environmental consultant applying to HM Revenue with evidence as to the degree of contaminated soils on any given site, the amount of which had been estimated and agreed upon between the Environment Agency and the contractor/ developer as part of the remediation strategy for the site. If this amount were to exceed the agreed total, it would be possible to re-negotiate and obtain an extension to the amount of contaminated waste/ soils that had been removed.
The system, in effect, kept a record of how much, and what types of contaminated waste were being removed from one location and carried to another; it did little however, to incentivise to actually clean the soils. The only real incentive to keep the soil's removal under this system to a minimum was to enforce a competitive tendering system upon the contractors/ developers removing the waste; in effect making the process self regulatory; so that the contractors/ developers themselves would endeavour to minimise the volume of waste removed to maximise profit. This commercial imperative for developer and contractor is not aligned however, with the ‘remediation' of brownfield sites and could lead to less environmentally friendly practices to maximise profits.(Webb, Marshall, Czarnomski, Tilley, 2006)
Land Remediation Tax Relief
The two main incentives for developers regarding contaminated land consisted of the Land Remediation Tax(LRTR) and the Landfill Tax Exemption.
The Landfill Tax Exemption was removed in 2008, this was advocated in a Environmental Science and Policy journal in 2007(Thornton et al, 2007), who stated ‘the UK Government should phase out the Landfill Tax Exemption scheme for contaminated soils and should, in parallel, increase the Corporation Tax relief through the Finance Act 2000 to compensate those funding voluntary remediation'. However, all applications received before the cut off date(insert date) have until 2012 to complete the work of removal. This led to a large increase of applications and the result of this is yet to be seen, however the likely hood of a substantial increase in brownfield development and in subsequent landfill is expected.
This leaves the main incentive for development on brownfield land being the LRTR introduced in May 2001, this would only cover businesses who are subject to corporation tax i.e. no individuals or partnerships can claim relief from said tax for land remediation. The rate of relief is 150% of the qualifying clean-up cost. So if a developer was to spend £10, 000 on remediation of the site, for tax purposes it would appear as though they spent £15, 000 on remediation, thus reducing the amount of Tax payable.
Clean-up expenditure qualifies if all of the following are true:
- The land is in the UK and was acquired by the business to carry out its trade or letting business
- The land was already derelict or contaminated at the time it was acquired
- The dereliction or contamination was not caused by action or inaction of the business or a person connected to the business(Source: Environmental Tax Obligations and Breaks, 2008)
Relief extends to buildings on the land. Land is contaminated if contamination is present that is causing or has the real potential to cause significant harm. The cost of dealing with natural contaminants(other than Japanese Knotweed, arsenic or radon) does not qualify for relief.
If sites are being brought in an un-remediated condition, the impact of the remediation costs on the final sale price of contaminated land is always considered important by developers in their financial appraisals. Under such a situation, developers can consequently take advantage from the tax benefit offered by LRTR involving themselves undertaking the remediation work needed. At the point of sale of the land, the remediation cost can only be an estimate; so therefore, whilst the land owner may try for the best possible price the uncertainty of remediation costs gives the developer a stronger bargaining position to achieve a lower land price.
It can be argued that the current pressure for development on previously developed land has resulted in the overall number of dwellings being constructed to drastically fall and subsequently impact upon the provision for affordable housing.
Furthermore, even though statistics may show that the Government is achieving its target of delivering 60% of housing on previously developed sites(LUCS), according to the Department for Local Communities and Government(DCLG), by 2001, the total number of new houses completed in England fell to a post-war low of 129,500, compared against 164,000 in 1990.(DCLG, Housing Green Paper, 2006a).
In support of this a spokesperson for the Home Builders Federation blames the shortfall in housing on the Government's policy approach, claiming that “plummeting Greenfield construction was the only reason the government had met its target of 60% of development to take place on brownfield land” Macdonald(2003, p.15)
Within the target of 60% for redevelopment on brownfield sites, a large proportion of available land came from Windfall sites. The potential importance of windfall sites can be seen in the South West and West Midlands. In the South West in 2007 to 2008 55% of new housing developments took place on windfall sites-a proportion which in the case of Dorset rose to almost 85%(South West Regional Planning Assembly, Annual Monitoring Report, 2008). During the same period in the West Midlands completions on windfall sites amounted to 75% of all completions(West Midlands Regional Assembly Examination in Public Statement, paragraph 17, Matter 4A ‘Land for Housing', ref 4.A/WMRA/R400, May 2009).Source CPRE(2009)
However, Windfall Sites can be defined as ‘a site which unexpectedly comes forward during the plan period' Windfall Sites(2006).
It is important to include an assumption on what level of windfall will come forward for housing. Consultation with the development industry through the 2004 UCS suggest small windfall sites are less likely to come forward than allocations because of the viability of such sites. It was assumed that the high rates of brownfield windfall completions would decline given the supply of such sites are finite. Which ponders the thought, how will government legislation continue to be realised if a key resource will run out at any time during the next decade? Furthermore, as Windfall sites cannot be reliably quantified, and as the Government's agenda for brownfield redevelopment is so strong, it seems a high risk strategy to place so much emphasis on brownfield redevelopment and target setting when so much is reliant upon an unquantifiable component that can fluctuate, forcing Councils to seek alternative ways of gaining appropriate sites for redevelopment.
It can be argued that the increased governmental objectives for development on brownfield land has actually reduced the total number of dwellings being produced. Pryce(2003, p.564). Earlier research by Pryce(1999) regarding the receptiveness of the construction industry to the supply of brownfield land, found that “the effect of brownfield development is to reduce new construction overall”.
From Pryce's study it has been possible to estimate the effect the forced reliance on brownfield housing development has on the overall total of housing developments; “for every 1 per cent increase in the proportion of development on recycled land, new construction overall is found to fall by 0.3 per cent during boom periods and by 0.9 per cent during a slump, equivalent to a decline in construction or around 0.6 per cent across both periods.” Pryce(2003, p.565)
The implications of these results has been that by constraining and prioritising new developments to brownfield sites, the impact is that the actual amount of houses being built will likely fall.
Pryce(2003, p.565) goes on to conclude that;
“If this proves to be the outcome of such policy measures over the next 10 years, when the demand for housing is anticipated to rise significantly, then there could be a substantial shortfall of supply and increased house prices and homelessness as a result”.
This study clearly shows that increasing development on previously developed land, be it through a conscious policy initiative such as that in PPS3, or through other mechanisms, shrinks the total number of dwellings being constructed; thus resulting in a lower number of market dwellings completed, along with less affordable housing provision through the planning system as a direct result.
However, having mentioned this, the statistics should be viewed with a degree of prudence. The research was undertaken during the years 1988 to 1992 and consequently is noticeably out of date. One argument to assuage this fear may be that developers nowadays are now more geared up and experienced to deliver housing on previously developed land and that through that experience they are better equipped and skilled to overcome the constraints associated with development on such sites.
A more up to date comparison(2006) has been achieved with thanks to the CPRE(2009) who have complied results from the DCLG land use change for 2007, Housebuilding statistics Live table 217, 2009 and National Statistics(2008)
From these results it is clear to see that brownfield development for housing has been fairly consistent. But the overall construction of new houses has been erratic, during the years 1994-2006; there has been an overall decrease, if not a consistent one.
In order for there to be significantly increased output from the house building industry, developers would require the Government to not merely relax its regulatory framework but take a more direct action to increase supply. This insight has initially been highlighted in the Sustainable Communities Plan of 2003, which promised an additional 200,000 new homes on top of those previously planned in four areas in the South East of England, costing over £22 billion. Running adjacent with this, action was taken to tackle low demand and desertion affecting over a million homes in the Midlands and the northern regions, by setting up nine housing market renewal pathfinders(CPRE, 2009).
Moreover, by 2007 the Government pressed forward with the proposal for another 150,000 to 200,000 homes to be built in the newest Regional Spatial Strategies(RSSs) this was in addition to the already proposed(RSSs) 1.6 million homes.(DCLG, Housing Green Paper, 2007a).
One issue explored within this research then is to discover whether and how greenfield land release affects the viability of brownfield sites at a local level.
To do this, a more incorporated approach to housing land policy is needed, rather than an assumption that the brownfield target can be met, irrespective of the overall balance in land supply between greenfield/brownfield.
Planning Policy Statement 3(PPS3), published in 2006, still retained the national brownfield target of 60% and further required it to be translated to the local/regional levels. One critical revision was that it required local authorities to put into place a more active strategy, i.e. the release of more public sector land. This was done to help achieve the national target of 60% at a more local level. So far it still remains unclear as to the extent of participation by local authorities and even if it is sustainable during this recession as public funding is squeezed.
Therefore, 2010 will prove a vital year for brownfield policy as public expenditure is tightened thus less money is spent on regeneration of brownfield land, and furthermore, during this recession private sector initiatives will be greatly reduced.
‘Developers may become less able to fund remediation costs from development gain, as accelerated land release leads to an increase in housing delivery, which may cause house prices to fall and lead to lower development gain' DCLG, Planning for Housing: Market Signals, 4,(2007c) citied in CPRE(2009)
This came about due to the continued focus of government policies on brownfield housing and the relative proportions of new housing on brownfield land.
By focusing on this, it subsequently drew attention away from the steady decline in house building leading up to 2001, this consequently impacted on the recent market problems.
So if the ambitious targets set by Government are to be met it will require a renewed initiative and greater intervention by Government then has been in evidence so far. Subsequently, if this is not realised, the pursuit of affordable housing on brownfield land by including current market information into planning decisions will likely lead to housing production being the priority, negating urban regeneration, this will cause a negative impact on brownfield targets.
The questionnaire which was carried out has been devised using the literary review from section 4.0. A broad spectrum from the development sector received a self completion questionnaire; Local Authority, Developers and Estate Agents all received the same questions, which required a yes/no answer, plus a box for addition comment. Inevitably though, some questions would be more relevant for one sector then the others.
The following section will provide commentary on the findings from the survey and provide summaries for each of the questions.
The statistics which have informed the figures contained in this Chapter and a compilation of the comment responses from the questionnaire are contained in Annexes Four and Five respectively.
The response rate for the questionnaire was 38%, this is in line with the quoted average to be expected from self completion questionnaires of 40%(May, 2001). Furthermore, some respondents have provided comments and/or explanations for their answers, some in greater depth than others.
After compiling the results, a very interesting split of responses was found. Developers were divided over their response to brownfield development; a slight majority viewing it in a positive light citing the financial incentives as an aid to increased profit margins. Whilst other companies offered a much more pessimistic outlook and narrower profit margin predictions. Estate Agents were unified in their response; believing that the stigma attached to brownfield development would keep profit margins low and hinder the sale of properties. However, the prime brownfield locations would offer sizeable returns, but these for highly sought after and a finite resource. Local Authorities were very much of the opinion that brownfield development is a positive step forward and that new Government legislation is a strong step in tackling sustainable development.
As mentioned above in the findings, at first glance, the responses received highlight a strikingly different response between Estate Agents and Local Authorities, with Developers seemingly to straddle the two. This would appear to support the findings in the literature review. Overall though, the feedback can be put in a positive light towards this question; some of the negativity from developers could be attributed to the availability of brownfield and the small amount of windfall sites coming through in their respective areas. Whilst there was negativity from Estate Agents, some did mention that this was due to the unavailability in their area for larger, more ‘community' based developments to take place where stigma became negligible, and if this was different then they would also view brownfield in a more positive light.
As expected this question's relevance seemed to hinge upon the developer's responses. Estate Agents cited the reliance upon the developer's initial costs impacting on cost/benefit ratios, whilst LA's mentioned that where there was no viable alternative to landfill then consequently a negative impact would be inevitable upon abilities to tender, although these costs could be passed on to the landowner. There was no real split in responses between the different sectors.
All parties responded that increased landfill tax would affect ability to tender. However with new technologies coming forward all the time and the cost of onsite remediation coming down, over time the impact of increased landfill tax should lessen.
All responses were unified for this question; in so much as the short term needs for brownfield development. Those that also added an explanation though offered different forecasts for medium to long term development needs. Developers and Estate Agents agree that as far as long term supply is concerned this policy is not sustainable, with the consumption of brownfield as it is, it will become increasingly difficult to purchase plots that are financially viable, and that Windfall sites are unknown and unquantifiable so cannot be relied upon.
However, the LA's have a different view. They point to the five year rolling supply of brownfield land that they are required to have and comment on their experience of constantly finding new sites and as a last resort the power to compulsory purchase land, as mentioned in the literary review.
It is unknown therefore, as to the exact situation brownfield development will be in the medium to long term. If the Developer's and Estate Agents are correct then there could be the need for a ‘watering down' of Government policy to accommodate limited greenfield use, possibly through the use of permits. Whilst, if LA's are correct then yes indeed, this current policy of brownfield development is sustainable and will serve to cater for this county's need for the foreseeable future, but even then the inevitable use of compulsory purchase orders will be needed in some cases, leading to the possibility that current legislation is too stringent and not enough leniency is included to allow development to take place whilst not upsetting or removing indigenous populations.
This question posed quite a significant difference in responses per sector, developers and estate agents were of the opinion that the emphasis on previously developed land has reduced overall construction this is I line with the research carried out in the literary review, contrastingly Local Authorities felt that this was not the case.
Local Authorities implied that they had evidence that house completions in their authority had actually risen in recent years with a dramatic increase in completions on brownfield land, however this could be due to windfall sites, or one off large developments.
A minority of Local Authorities stipulated that as they felt brownfield land was a finite resource, they expected completions to fall in coming years.
The majority of developers on the other hand, felt that as brownfield sites are in essence more time consuming/ complex/ expensive and the actual resources needed to complete are larger than greenfield developments, meaning that less quantities can be completed within a given time.
Furthermore, they had a general opinion that Local Authorities were less likely to grant planning position on greenfield land thus limiting the supply of future developments.
As can be seen from the above responses this question divided the views between Local Authorities and estate agents/ developers.
After the literature review and the comments made within it, this is hardly surprising.
Local authorities held the view that development rates had actually started to rise in recent years, however it would be interesting to discover their view if a reduced emphasis was placed on brownfield land then would the amount of overall development be even greater.
This view was contradicted by both developers and estate agents.
The majority of developers agreed with the statement, feeling that yes it has reduced overall construction and they would like a less restrictive policy towards development, giving them a preference to develop on sites of their choosing. This could possibly lead to an overall increase in development; however care would have to be taken to prevent a simple transference from brownfield sites to greenfield sites. This would seem to support the findings in the literature review, with the general comments being that brownfield sites are more complex, time consuming and expensive to redevelop. However some comments did remark on the fact the industry has started adapting to this change with new companies forming, specialising in contaminated/ brownfield land remediation.
A few developer respondents appeared to share the view of being forced unwillingly to change to brownfield sites due to the fact there were no greenfield sites left available.
Estate agents also held a similar view to that of developers, stating the decrease in available ‘new to the market properties'. Furthermore, finding suitable properties for their clients were becoming more and more difficult, this was especially true for commercial uses.
A high percentage of answers to this question only came from developers. Within this sector a majority of developers answered yes as the current recession was greatly affecting the viability of developments as reduced profit margins and the lack of a secure market made investment a risky venture, which many could not afford. Only a small minority commented that the recession had had no impact or minimal impact upon business. Estate Agents and LAs predominately answered ‘don't know' or left blank. This was to be expected.
In conclusion the recession has greatly and predictably impacted upon the development of brownfield sites. With the housing market especially in turmoil, many developers are reluctant or simply unable to invest in new projects. The couple of responses from Estate Agents and Las that offered a comment pointed towards the need during the recession to pull the purse strings and the need to divert or ear mark funding for different projects. This has, in some cases, resulted in projects half way through development being abandoned and the money either diverted to different projects or simply held on to gauge the short term situation.
The response here was split not only between the sectors but also within. Many developers referred to development of new technologies and the sudden influx of new companies specialising in remediation. However this was localised to urban companies where seemed to be an abundance of specialists. This is in stark contrast with rural developers who complained of the exact opposite in the availability of specialists.
Estate Agents didn't offer an answer to this question as they had no experience directly relating to this question. LA's on the other hand stated no problem in finding specialist agencies for remediation.
It can be found that dependant on where the different sectors are based, different answers are given. The main point of contention for rural sectors was the limited scope for competition between specialist companies, which resulted in higher charges and less profit for developers. No LAs though commented on this. This can only be accredited to the fact that as of yet they have had little cause for concern as developers are still getting specialists in, although this may change in the future if price rises are not slowed down.
A complete mixed bag of responses was found for this question. The majority developers expressed the opinion that the current incentives are of help but that much more could be done, for example to streamline the process for getting aid. On the flip side however, some developers stated that the current barrage of incentives were more than enough to entice companies onto brownfield.
Estate Agents mostly held the view that whilst there are incentives and that they are effective; more could and should be done to reduce the stigma attached.
Local Authorities feel that they have offered enough support in the past, but justify the current incentives as enough, as less aid is needed with the coming of new technologies and increased competition, helping to keep prices down.
In conclusion, both the developers and the LAs have valid arguments. It just seems to be dependent upon which side of the fence you stand. Compromises could be made, such as streamlining the availability of aid. This could be done without increasing amounts or variations of incentives. Thereby appeasing both sides. Even though Estate Agents seemed to be rather mute on this point, nonetheless they pose a valid point of the stigma of brownfield development, which could be addressed, possibly increasing the ability for some developers to successfully tender for plots.
Until recently, many brownfield development projects were stationary in the U.K due to the economic recession and that the remediation sector relied on the then, poorly performing property and construction sectors. In the start of 2010, the U.K has nursed its way out of recession and projects are starting to be brought forward or re-continued. However, remediation works will not start wholeheartedly until developers perceive the U.K to be fully out of recession. This cannot be claimed yet as it is still too early to tell if the country is not only out of it(the recession) but also not in jeopardy of a relapse. It is more likely that we will have to wait until 2011 at the earliest for a more comprehensive growth of the industry before developers will become confident enough to deal with complicated and risky ventures into brownfield redevelopment.
However, for some companies, exemption certificates have been obtained, allowing them to haul waste to landfills until the expiration date of December 2012. Therefore, as large amounts of money have been spent in gaining these certificates, it is very unlikely that these certificates will be wasted. Developers and land owners will utilise these certificates regardless of the current economic conditions until the end of 2012. So as a result, a dig and dump culture will likely ensue in the next couple of years as it is the most convenient and cost effective method. Furthermore there is no way of effectively policing against the possibility of illegal fly-tipping especially for small to medium sized firms who struggle to deal with remediation costs and are unaware or unsure of how to claim relief for redevelopment on brownfield land. A prime example of this occurrence could be seen in Denmark during the late 1980s(see: Danish Waste Tax 1987).
Moreover, it can be argued that the use of landfill taxation as a means to decrease the impact upon the environment has been of mixed success. Whilst there has been notable improvement in the levels of recycling and reduction in carbon dioxide, it is not completely certain whether this is purely the result of the tax, or a mixture of an increase in fly-tipping; or as seen in Denmark, the ingenious use of building waste being put to use in road making, noise abatement and the like.(OECD, 1994). Has there been a reduction of environmentally impact on waste or simply a redistribution of the waste, of which, cannot be accurately measured? The success of landfill tax can therefore be argued to demonstrate the effectiveness of the economic instruments. However, in line for continuous improvement, perhaps a further review in early 2011 of the arrangements would be appropriate.
A focus of this dissertation was to analyse the impact of brownfield regeneration on housing. Through the use of empirical evidence and supporting arguments from leading professionals, it can be argued that whilst the Government is indeed meeting their 60% target ratio of affordable housing on brownfield land, the overall construction of affordable housing has dwindled markedly. It can be seen that windfall sites have a large part to play in the Government's figures, but they are an unknown quantity and cannot be relied upon to continually support the Government's ambitious target setting. Being a finite resource the Government needs to re-evaluate the sustainability of brownfield sites with reference to affordable housing even though there is a five year rolling supply initiative in place.
Therefore, if the Government wishes to avoid a rise in house prices and potential increases in homelessness, an alternative needs to be found. One way to accomplish this could be to slightly relax the stringent rules that Local Councils and Planning Authorities have to go by. By repositioning the rules and guidelines, it may allow the flexibility they(Local Councils and Planning Authorities) need to stem the overall reduction in housing whilst meeting the quota for environmental targets set by the Government.
Overall, this dissertation has successfully answered the initial questions posed in the aims and objectives. The Government's emphasis on brownfield housing has indeed impacted upon overall development, with affordable housing dwindling. Whilst the financial incentives to stimulate brownfield regeneration have been successful, the Government's policies have been too restrictive for LCs and LAs to offer an alternative when these incentives fail, especially with differing regional demands and idiosyncrasies. The questionnaire's findings support this outcome and reiterate the need for more dialogue between the different sectors(Local Councils, Developers and Estate Agents) and the relevant Government policy makers and departments.
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