Elder Stubbs and Existing Use Value

“Elder Stubbs” is an allotment site in East Oxford owned by a charity rather than the local authority.  Something of its history can be found on its website here, but this skips the period in the 1990s when the charity found itself at loggerheads with Oxford City Council.  For this I am grateful for the privately printed notes on the history of Elder Stubbs, written by John Purves, formerly Chair of the Elder Stubbs Trustees.

Progress on the Oxford Field was far more frustrating. Despite our obtaining a new Governing Deed, drawing up plans for the Cricket Road frontage and receiving planning consent for social housing, a series of alterations of policy and funding by Central Government and finally a decision by the City Council to direct all social housing monies to the Greater Leys development prevented us from making the rapid progress we had envisaged. In addition the City Council had granted itself planning permission to build an Afro-Caribbean Centre on two and a half acres of our Cowley Road frontage for which they offered the Trustees £50,000. As the likely value of this area with planning permission was somewhat over £2,000,000 the Trustees rejected the offer as inadequate. The response from the planning department was that it was a fair offer as planning permission would not be granted for any other development. This indeed proved to be so when subsequent applications for housing, retail and leisure were all turned down. In 1994 two professional advisors were appointed on a “no sale – no fee basis” to help the Trustees out of this impasse. An “option” was granted to Messrs. Wimpey to find an acceptable use for the Cowley Road frontage which would provide the Trustees with a minimum sum of £1,200,000. For this option Wimpey paid a nonreturnable deposit of £16,000. This enabled the Trust to repay all debts, except the one to the City Council, cultivate the remaining derelict land on the Cowley Field, compensate the 30 plus allottees who were to lose their plots and re-locate them thus bringing the Cowley Field into full cultivation. Much needed new machinery was purchased and a start made on clearing the Oxford Field and bringing it into productive use. To this end an acre was cleared and planted up with a standard orchard of some 40 varieties of English apples, and a woodland of 600 indigenous hardwood trees was planted, screening off noise and pollution from the Cowley Road frontage and from the adjoining car repair works Thus a breathing space was secured which enabled the Trust to begin its work of reclamation and restoration. After some delay the Wimpey option failed but the City Council agreed to convert the Cricket Road social permission to open permission on payment of 30% of the sale price (some £360,051) to the City Council as “planning gain.” Whilst resenting this imposition the Trustees, after taking legal advice, agreed on the condition that the money be spent on social housing in the parishes of Cowley within five years. The Cricket Road frontage was subsequently sold to Bewley Homes for £1,235,000. After paying “planning gain” and all other outstanding debts a stockbroker was appointed to invest the remaining £766,000 in accordance with Charity Law. Plans were then drawn up to complete the backlog of maintenance and improvement work on site, to decide on future policy as to the distribution of charitable money and to make the Clerk’s position salaried.

At a time when all three major political parties are toying with the idea of using the power of government to acquire land for development at existing use value:

Labour is considering forcing landowners to give up sites for a fraction of their current price in an effort to slash the cost of council house building.

The proposal has been drawn up by John Healey, the shadow housing secretary, and would see a Jeremy Corbyn-led government change the law so landowners would have to sell sites to the state at knockdown prices.

Landowners currently sell at a price that factors in the dramatic increase in value when planning consent is granted. It means a hectare of agricultural land worth around £20,000 can sell for closer to £2m if it is zoned for housing.

Labour believes this is slowing down housebuilding by dramatically increasing costs. It is planning a new English Sovereign Land Trust with powers to buy sites at closer to the lower price.

This would be enabled by a change in the 1961 Land Compensation Act so the state could compulsorily purchase land at a price that excluded the potential for future planning consent.

Labour plans to make landowners sell to state for fraction of value

The most eye-catching element of Cable’s speech, among sections released in advance to the Guardian, is a so-called British Housing Company, an arm’s length government agency assigned to acquiring land at low cost.

Using compulsory acquisition powers given by law, the organisation would aim to save money by purchasing land at a price that would not include a hike in value factored in to include possible planning permission.

Lib Dems propose land-buying agency to boost house building

and even Conservatives:

2. We fail to capture the benefits for the community…

At the root of Britain’s broken development model is our failure to capture the gains from development for the community. At the stroke of a planner’s pen on a successful planning application, agricultural land in England typically becomes 100 times more valuable – with even bigger gains in areas near cities and in the South East. In the South
East, gaining permission for housing on just one hectare of land (roughly the size of a rugby pitch) generates an average £3.6 million in profit. No wonder a whole industry has been built around trying to privately capture this gain.

How much of this gain are we capturing for the community and how? Analysis by the Centre for Progressive Capitalism suggests that the total uplift in land values caused by the grant of planning permission for residential development alone was over £12 billion in 2015. However, the same analysis found that over £9 billion, or 75% of this gain, was not captured by the community but accrued to landowners and developers.

It is unlikely that any tax could ever capture every last penny of this planning-created gain. Indeed it might be sensible to leave incentive for landowners to bring land forward. Chris Philp MP has previously suggested aiming to capture around half of the uplift. It is clear that more of this gain could be captured than at present.

Neil O’Brien, MP

Onward, “Green, Pleasant and Affordable”

This experience of Elder Stubbs, whose Trustees will have seen themselves as on the Left, but who nonetheless ran up against a local government machine – Labour led, should be a warning against thinking buying out landowners at existing use value is the way to get more land for housing.  The eventual outcome, in which the charity kept 70% of the land value gain, suggests a more likely general solution, in which land value gain is shared, but the process by which is was reached was costly, not only financially, and in the time spent reaching it, but also in leaving a legacy of resentment.

The way to getting more housing for development should start with building trust all round, and working out more general ways in which the benefits of development can be shared.

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