Folkestone Harbour & Seafront Development: How did we get here.

The hoha around the seafront development continues. Regardless of where one stands on the issue of the Folkestone Harbour & Seafront being developed, one must look back in time to see how the polices of the National Planning Policy Framework (2012) allowed affordable housing, parking, design, density, open space and so on to be abandoned.

The Town & Country Planning Act 1947 purpose was to create legally binding local plans that would allocate land for its “best use” in the public interest.  It was not based on the best use of land from a profit or financial value point of  view. Indeed, the profitability of land and development was not a legitimate “planning reason” or “material consideration” for granting or refusing planning permission, or for formulating the pattern of preferred land uses in local plans. Town & Country planning was about society and the built environment , not personal or commercial gain.

This is broadly the way the system  worked until the financial crash (2008) and the election of the Conservatives and Lib Dems in 2010.

While the Tories were in opposition the property lobby brought pressure on them to introduce the concept of the viability assessment. The property lobby argued the rules should be changed so that irrespective  of what was said in approved local plans, planning obligations could be lowered if a developer could successfully demonstrate that planning obligations made the scheme unviable. This argument gained serious traction due to the financial crash and recession which followed it.

After the 2008 economic downturn, the government reacted to the property market slump with pro-growth planning reforms intended to encourage and not stall development. The coalition government was “convinced that the failure to build sufficient houses” was due to the problematic planning system that caused “delays”, and “reluctance by landowners, including those in the public sector, to bring land forward”. Under these circumstances the Treasury view was anything “holding back development” should be removed.

In 2012, the Tories & Liberal Democrats introduced the National Planning Policy Framework (NPPF), published on 27 March 2012. Inserted in this policy was the concept of viability assessments of planning decisions. It was set out in paragraph 173 (at that time) and it has caused untold damage to the integrity of the English planning system. Most critically, it has significantly reduced the amount of affordable housing delivered while, at the same time, bolstering housebuilder and landowner profits to record levels. The wording reveals the radicalism of this measure.

Ensuring viability and deliverability

173. Pursuing sustainable development requires careful attention to viability and costs in plan-making and decision-taking. Plans should be deliverable. Therefore, the sites and the scale of development identified in the plan should not be subject to such a scale of any obligations and policy burdens that their ability to be developed viably is threatened. To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable.

What the introduction of this paragraph has done is allow the reversal  of the purpose of town planning as initial set out in the 47 Act.

The “viability” of a planning scheme such as Folkestone Harbour & Seafront  was defined solely in financial terms. The social and environmental viability were allowed legitimately to be ignored. The viability test of the best use of land became financial – all other aspects of planning took second place. Finance trumped all other planning considerations.  The viability clause  equated “sustainable development” with the commercial viability of a development scheme. In effect, the financial viability of a scheme defined whether it was “sustainable development“. The third sentence in Paragraph 173 says bluntly that local authorities should not place “any obligations and policy burdens” on developers that might make a development scheme “unviable“. What this means is policies and planning standards  for example – affordable housing, parking, design, density, open space and so on, embedded in statutory local plans, which have been fully consulted on when they were drawn up, could be abandoned if the proposed Folkestone Harbour & Seafront development scheme was “unviable“.

However, if that wasn’t enough, it was up to the development industry to define what was financial viable. The measure of the viability was defined by the NPPF 2012 as “the competitive return” to the landowner and developer. To put that into plain English if developers claimed a 20% profit as the industry standard (RICS and development industry see this as normal level of developer profit), this amount of land value is automatically NOT available for affordable housing, schools funding, infrastructure spending or other planning obligations. Equally if a landowner demands a further 20 – 50% for his own profit , planning obligations are reduced even further. “Competitive returns” took precedence over policies in local plans.

The Folkestone Harbour & Seafront Viability Assessment  was submitted on the the 26 Sept 2012, six months after the introduction of Paragraph 173 into the NPPF 2012.

The viability assessment concludes as follows:

Taking into account the above, it is apparent that any higher level of affordable housing than that proposed would result in the scheme being commercially unviable and therefore undeliverable. This would be contrary to the current and emerging policies of Shepway District Council and national planning policy.

On Wednesday 31 July 2013, when outline planning permission was granted for Y12/0897/SH, Folkestone Harbour & Seafront, all the pieces of the jigsaw were in place to reduce affordable housing to 8% and abandon parking, design, density, open space as the Harbour & Seafront scheme was unviable. 

Developers imply that building affordable housing always entails a loss – but when affordable rents are capitalised at up to 80% of market rate, the reality is it just makes less of a profit. (Affordable housing also removes a chunk of the development risk, given it comes with guaranteed funding from a housing association.) Still, with an imperative to maximise shareholders’ returns, why would any commercial developer agree to anything that makes less profit than the maximum that can possibly be squeezed out?

According to housing viability expert Bob Colenutt: The amount of funding for affordable homes is guided by a project’s “residual valuation”, which is the difference between the gross development value (GDV) and its total costs (which includes the developer’s profit, usually at least 20%). In 2012, De Haan’s consultants estimated a GDV of up to £253m, and total costs of £194m, leaving a residual value of £59m – arguably more than enough to fund 30% affordable housing, even at that time.

Given all of the above and the fact affordable housing, parking, design, density, open space and so on, embedded in the then statutory local plan for the district, which was consulted on when it was drawn up, were abandoned as the proposed Folkestone Harbour & Seafront development scheme was “unviable” at that time.

This is why we are at the place we are and why there is little anyone can do. Yes one can Judicially Review the proposed design for “Flintstone Towers” even in its revised state, but somehow we suspect this won’t happen unless somebody starts a go fund me campaign to contest it, and even then the costs off losing a judicial review make it prohibitive.

But all of this is not a reason to give up. Yes it is Sir Roger’s land, but it is our community and we must try to make a difference, as Folkestone is our home, not just Sir Roger’s.

The Shepway Vox Team

Dissent is Not a Crime