It’s time for a social contract for garden cities

Garden cities are making for a fascinating debate. The country needs more homes and there is a good cross-party consensus on the need to build garden cities. There also seems to be growing sense of consensus that they should be locally led or community based. This weekend Nick Clegg told the BBC’s Countryfile that the government could buy homes blighted by developments or offer owners council tax cuts while building takes place and this sounds like a sensible approach as existing communities quite rightly need to be reassured. Part of the problem is that much of the debate has been on the number of houses that need building. They are anxious about developers pilling in to develop new houses.

The public recognises that developers are focused on how many houses they can build. Our starting point must be how we build communities, and more importantly how can we make them socially, economically and environmentally sustainable. What we do not want is 200,000 Brezhnev homes to be thrown up all over the country every year for the next ten years without a thought and just a focus on numbers. I am the former mayor of Letchworth Garden City. I would say we do want more Letchworths, more Welwyns and more Milton Keyneses. We want cities and towns that work and that create a sense of community. We are not proposing carbon copies of these towns but to build upon their success which is as much about their invisible architecture – the social building blocks not just on bricks and mortar.

The driving force behind the founder of the garden city movement, Ebenezer Howard, was not a desire to build new homes out of charity and paternalism for grateful subjects. The developers did that in the 1960s when they levelled communities and gave them in exchange tower blocks and Formica kitchens and expected them to be grateful. Garden cities are about participation, empowerment and citizenship. They are about creating a harmonious community at ease with itself and with the happiness of the people that live there at its core. Howard believed that to achieve this there needs to be a focus on the invisible architecture as much as it does on the physical. A key part of this is land value capture, such that rising land values can be captured for the people who live in the settlement, whether tenants or owners. As infrastructure is built into any community land values rise but the usual winners are the often absent landlords.

Consider the extension to the Jubilee line in the 1990s. The taxpayer invested £3.5bn, but following its completion property values within 1,000 yards of each of the eleven new stations jumped in value 3.7 times to £13bn. Who benefited from this windfall? Not the tenants in Southwark for sure, the rise in land values and following spikes in rents went to the landlords – most of them absentee corporate owners. This wealth was sucked out of the community right into the pockets of the wealthiest. The proposition for a garden city is instead to capture that wealth for the good of the people who live there.

As such in Letchworth a trust owns much of the commercial, industrial and agricultural land to the value of £127m which generates an annual revenue of £7.5m a year which it spends in the town. Not bad for a population of 35,000. Milton Keynes has a similar model which it uses to finance the running of its parks and open spaces. In the USA the community land trust movement is delivering similar benefits in places such as Burlington. This is not a utopian or outdated model from a previous century but one that works here and now and is delivering success.

Garden cities are about creating a sense of place, purpose and belonging for people and giving them a stake in their community. The Town and Country Planning Association have defined seven garden city principles. We have written a book – ‘21st Century Garden Cities of Tomorrow’ – which details 12 social principles upon which to build a socially, ecologically and economically sustainable city. We believe that this social contract is the most important part as it can act as charter or manifesto for a new settlement and be the guarantor underwriting the value and belief in the place. In the United Kingdom there is still the belief in some quarters that a garden city must be an ‘idealised’ place and is based on an old idea. We believe that the values and particularly the underlining social principles of a garden city that are about sharing, enjoyment and prosperity are not old, but are fresh, alive and well and need to lead any future debate.

What the public need is not just a compensation assurance but also a social contract that builds the trust for what a garden city is. Today’s agenda with new garden cities offer us a chance to get it right afresh. It means getting the trinity of planning, architecture and social values to work together. In doing so community-led garden cities can have a community-led definition that can inspire planners, architects and be the contract and covenant between them, the community surrounding new settlements and for future citizens.

We believe that at the heart of this will be the principles for land value capture for the community and commitments to be socially, economically and ecologically sustainable. The fair trade town’s assurance model is a good one to follow. People should be able to trust in the definition of a garden city and know that only a city that keeps it promises and follows the principles can be deserving of the garden city suffix.

A formal definition of a garden city is for communities and social groups rather than just developers or Whitehall to formulate and that is what we must do. It needs to occur with cross-party support the momentum to do this has begun already.

Garden cities are famous throughout the world as a ‘utopian ideal’ that worked. I embrace it, as I believe that it is the British skill in turning such hopes and dreams into reality that made this country great and we should not shy away from it now.

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Philip Ross is a former mayor of Letchworth Garden City and is the founder of the New Garden City Movement. He is co-author of ‘21st Century Garden Cities of Tomorrow. A manifesto’.

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Photo: Steve Cadman

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Comments: 7...

  1. On August 4, 2014 at 6:59 pm The Orbital Garden responded with... #

    The land value increase should definitely be used by a Garden city to fund the community.

    However a Garden city will need to fund the required infrastructure; Generating enough money to fund a rapidly expanding garden cities to have any impact on the housing shortage will most likely have to sell off the assets; This will make it difficult to maintain significant land bank,to generate future on-going income.

    The housing numbers need to prioritised over social experiments and utopian vision. Maybe we should used another name to Garden cities to make it clear that the priority to build enough homes to resolve the housing crisis,improve quality of towns and reduce the cost of living for all.

    • On August 5, 2014 at 6:46 am C. S. Shann Turnbull responded with... #

      The need to sell of parts of new Garden Cities as suggested by “the
      Orbital Garden” can be avoided by establishing a Cooperative Land Bank
      (CLBs). Unlike Community Land Trusts (CLTs), CLBs can issues various types of securities to assembly a land bank to host new “Locally-led Garden Cities” without the need for any cash except for piloting the project.

      Additional securities can then be issued to fund infrastructure that
      creates virtuous self-reinforcing increases in land values to provide
      additional security to fund the formation of a new Garden City. In this way
      CLBs become self-financing to eliminate the cost of land for pioneer
      homebuyers. As the cost of land is typically half the cost of a house, CLBs
      create half cost housing!

      The cost of land is also eliminated for investors in rental properties, office blocks and supermarkets etc. This in turn creates many self-reinforcing sources of added value and cash-flows to cross subsidize affordable housing on a sustainable basis.

      Further details are set out in ‘Cooperative Land
      Banks: A solution in search for a home’ posted at http://communityrenewal.ca/co-op-landbanks.

      Further details are in my academic paper: ‘Self-financing
      Urban Development’ posted at: http://ssrn.com/abstract=1113603.

      • On August 6, 2014 at 7:34 am The Orbital Garden responded with... #

        I find it difficult to understand what my rights as a tennant would be therefore I would be less likely to buy in.

        Shared ownership does provide some interesting options but it always end up with the problem of paying a second mortgage to a landlord (or trust) who could simply up their rent. As tenant does not provide the security I would want from home ownership, it more like a long term lease with some form of rent control.

        It relays on the the CLB being well run and making good spending descisions, so that I am not going to have to bail out CLB, either compulsarlly via ground rent increases or under threat and of losing my home (or the ground which it sits on).

        When buying a home, as tennant or landlord, you need some certainty about my expenses; this includes all possible ground rents and taxes. So that I am able to borrow money with confidence. Otherwise I will need to assume the worst in the amount I borrow. This will reduce demand and lower the value of the properties; giving you less to spend on infrastructure.

        It also mentioned an initial bond (or seed money), this would not be very different to if the home owners gift the share from the existing property but shows that there is little benefit as the property still has to be fully paid for.

        • On August 6, 2014 at 9:41 am C. S. Shann Turnbull responded with... #

          Thank you for your response.

          However, I do not understand your postings. Your language in the second posting is ambiguous when you refer to tenants being “less likely to buy in”.

          In any event tenants in a CLB do not need to “buy in” because they obtain co-ownership rights without any extra payments as the investor transfers co-ownership rights to their tenant at the rate they write off their property for tax purposes.

          You then then refer to “shared ownership” and a “second mortgage” that would not be relevant to a tennant who would obtain exclusive occupancy. The need for CLB home buyers to have a second mortgage is not likely as they obtain half cost housing because they do not have to buy the land. Please read the two articles I cited to clear up your misunderstandings on how a CLB operates.You may be confusing the concept with a Community Land Trust?

          • On August 6, 2014 at 10:24 am The Orbital Garden responded with... #

            I am confused, even after reading the articles.

            The home owner will pay for the building as normal. (1st mortgage – building)
            They however will not own the ground but will not pay ground rent? (2nd mortgagerent – site?)

            Why would the site owner (CLB) not charge the ground rent? If so, how would you get enough people to invest, you probably would get some people who are motivated by other reason. I however doubt the donations will be suffient investiment unless there is a return inline with the normal market rate, which would be more than the tax right off.

      • On August 6, 2014 at 7:46 am The Orbital Garden responded with... #

        The document also makes a comparison to land value taxes which I can see the advantage of as it attempts to raise taxes as values increase the problem is that it creates uncertainty about the cost of home ownership. The cost and tax applied to homes needs to done in a way that is seems fair and increases need to be slowly applied.

        I do however believe that too much tax is collected centrally instead of being locally sourced. This can be done using council tax in a transparent way.

  2. On August 5, 2014 at 5:42 pm StevenBoxall responded with... #

    A good article by Philip Ross, mainly because of the stress he puts on making places which work for people. Everything else flows from that.

    I disagree with The Orbital Gardener about prioritising housing numbers – Yes, we need a lot more homes built, but it must not be a numbers game without wider considerations. Building lots of homes in the wrong locations, or the wrong sort of homes, will lead us to repeat some of the mistakes of the past. However The Gardener may have a point about the name – using the title of Garden Cities seems to mean in the minds of some people a straight copy of previous Garden Cities. Perhaps we ought to revert to the title of ‘Sustainable Communities’ as used by the previous Labour Government?

    C. S. Shann Turnbull addresses the issue of funding but I think we need to do the simple thing. The cash-flow funding, to pay for the required up-front infrastructure, ought to come via the Government. This may be via a bond issue backed by the Government rather than secured by charges on the land, but I think we really need to get away from this obsession of financial engineering because we are frightened of public expenditure. I am not saying that his suggestions are at the extream of financial engineering (I will have to read his papers) – I suspect they are far from it – but let us keep things simple.

    I have never understood how excluding the cost of land reduces the price of a home. It is the market which decides the price not cost to build plus x%. However, having the community owning the undeveloped land does mean that it can use the uplift in land values, and future rents, to pay towards infrastructure, community facilities and running costs. But even then does this get the Government totally off the hook – is there enough money in the land to pay for everything or will/should central Government still be expected to pay for some infrastructure and running costs?

    Now off to read C.S. Shann Turnbull’s papers.

    Steven Boxall
    Regeneration X

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