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Essay: Planning factors affecting small-site development in Marylebone

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  • Published: 2 October 2021*
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Introduction

The aim of this report is to point out the likely planning factors affecting a residential developer (Kydonia Holdings) when developing small sites (less than 0.4 hectares) with limited business and retail space in the Marylebone area, situated in the City of Westminster. This report will be focusing on the particular policies of concern, considerations, process of the planning applications and whether there may be any other non-planning factors, which may affect the achievement of any future development.

Area overview

Marylebone has the reputation of being one of the most desired areas in London to rent/buy property. Located in the heart of the City of Westminster, minutes away form Oxford Street; Marylebone is considered to be a surprisingly quite neighbourhood filled with stylish boutiques, restaurants and bars. Famous for its cornered streets with Georgian, Victoria and Edwardian period buildings, one gets a true sense of homeliness and “urban village feeling”. High-end Retail is concentrated on Marylebone High Street, however long-term residents have managed to still cling on to the old fashioned un-snobbish charm that makes this area so unique. Most Period buildings have been converted to flats, taking advantage from the abundance of mansion blocks, the most desirable ones being in close proximity to the garden squares, like Montagu Square. Family-size homes tend to be found in the Regents Park area, although there are an increasing amount of students finding their accommodation in that area as well. Transport-wise Marylebone is very well connected, with Baker Street, Marylebone, Bond Street, Regents Park and Oxford Circus Station in a roughly 10 minute radius.
The property price range is very broad, £200,000 compared to an immense sum of £17 million on the top end. The average price for a property located in Marylebone is £1,552,375 (“House Prices In Marylebone – Prices And Values”) Terraced properties had an average selling price of £4,714,529. Semi-detached properties sold for £6,070,000 on average. Detached properties fetched an average of £5,125,000
Overall, sold prices in Marylebone were 2.3% down on the previous year. (“Marylebone Sold Prices”)
In Marylebone, retail prices are at an average of £63.29 per sqf and the vacancy rate is a 1.8%, while the sale price is £1,855 per sqf. Renting office space comes at a very high price as well £62.65 per sqf with a vacancy rate of 20.6%, while the average sales price is at £1,401 per sqf (“Costar UK”).

Planning Factors

The London plan is an act that imposes a few key policies that are generally complied by all the boroughs in London, however due to the fact that London is such a diverse city there is a degree of flexibility for certain circumstances where the borough itself has to decide what is most beneficial for itself. To be able to obtain planning permission, an application must first go through the Local Planning Authority (LPA). The projected development is in Marylebone, which would fall under the authority of the Westminster City Council. In some rare cases the planning decision can be taken by the Mayor of London or Secretary of State. There have been several polices that have been implemented over the years in order to control how, where and when a planning permission can be obtained.
One example of these policies is the Westminster City Plan that was adopted in 2016 „which is the is the ‘spatial expression’ of our vision of the future. In this plan we will build on the things we value: we will improve our neighbourhoods; provide enhanced opportunities for our local communities; and deliver sustainable economic growth.“ (The Westminster City Plan). This report will only be mentioning a few the key polices underlying this “City Plan”. Section 1 (Mixed use for CAZ) dictates that within the CAZ (Central Activities Zone) different areas will be promoted for their distinct character, vitality and function. In the case of Marylebone, the chosen area for the District Shopping Centre and CAZ Frontage is Marylebone High Street. All of Marylebone is considered within the CAZ, however the Core CAZ takes up a small area in the south of the neighbourhood (this is where the commercial office development is concentrated). Section 1 dictates that due to the pressure between office development on residential development, any development in the Core CAZ, Opportunity areas and Named streets (new net additional B1 office floor space development included) will have to be backed up by delivering residential floor space as well. Section 8 of the focuses directly on Marylebone/Fitzrovia where it suggests that Named Streets would be a very suitable location for the proposed development as the policy encourages it to have residential and commercial use. Additionally, S14 focuses solely on housing delivery. Developments that propose a reduction in housing units will most likely be unacceptable and will be rejected by the LPA. It entirely depends on what Kydonia Holdings is trying to achieve (be more focused on residential or if retail/office will be a an important factor in his development) as picking the right area for the site will not only be very important for rental values but also for getting the planning permission.
The Westminster City plan encourages as much residential development as possible, hoping to deliver 1,068 homes every year translating to 21,360 homes until 2036/37. This is good news for residential developers, as they will have in a better position to realise their plans. The Strategic Housing Land Availability Assessment (SHLAA) has been implemented by the council to assess where there could be potential for additional residential development in Westminster, especially in Marylebone. The scheme works closely with Landowners to discuss potential developing sites (e.g. The Moxton Street car park which is to be a development site for flat units.)
It is also vital to provide a good mix of housing units to accommodate all the spectrum of the residential market. This point is highlighted in S15 (Meeting the housing needs) where they emphasise how important it is to provide a good assortment of different housing in terms of size, type etc. to encourage mixed communities (with special interest in providing family dwellings through a series of reconversions). This image to the left represents the amount of office to residential development there has been in Westminster from 2003- 2014.
There has been a drastic housing shortage in the City of Westminster. Due to the lack of supply the house prices have surged twenty fold, like in Harley street (Marylebone), where house prices have increased from and average of £150,000 two decades ago to £1.9m today (Patel). To deal with this issue, Section 16 of the City Plan centres its policy on affordable housing, a necessary focus point when one looks at the statistics of property prices in relation to household income, which in some cases has come to a 1/10 ratio. The Interim Note on affordable Housing 2015 acts as a guide between the UDP policy (H4) along side the S16. Section 16 sets strategic target of 30% of all new housing development to be affordable. To ensure this, the “City Plan” demands that any future housing development of 10 additional units or 1000 sq. m of added floor space will have to provide affordable housing to some extent. The housing will have to be provided on site, unless this is not practical or viable then in exceptional cases it could be provided off-site. This would mean that approximately 30% of the 4000 sq. m (1200 sqm) of the proposed development by Kydonia Holdings the will have to be affordable housing. This may be a risk as the rental value for affordable housing is at 80% of the market rental value. Resulting in a decrease in rental income for the landlord once the development is completed. However, supplying affordable hosing is vital in order to obtain the planning consent and mentioning it adequately in the planning application will give the LPA one less reason to decline it.
The Community infrastructure Levy (CIL) was introduced with the Planning & Compulsory Purchase Act which is a tax that the LPA sets on new development in order to fund new infrastructure projects in the area. This tax is worked out by size of the floor space. For the Kydonia Holdings, residential developers, they will have comply to all the obligations set out under a section 106 agreement set out by the local authority due to the effect that residential development has on the local social and economic area. For residential property the CIL is £400 per sqf as all of Marylebone is within the CAZ, as can be seen in Fig 4. For commercial uses the CIL is £150 per sqf for the CAZ and £200 per sqf in the Core CAZ(“Westminster City Council Community Infrastructure Levy Charging Schedule”). Due to the fact that in the brief it is not mentioned whether this development was going to be fully residential or mixed use one cannot make calculations on how high the definite cost of the CIL will be in the end.
The Development Plan is known to be the main influencing driver when planning applications are decided, however “Material Considerations” (section 70(2) of the Town and Country Planning Act 1990) can be very influential as well at the will of the Planning Authority. The NPPF stresses this issue “where the development plan is absent, silent or the relevant policies are out of date, paragraph 14 of the National Planning Policy Framework requires the application to be determined in accordance with the presumption in favour of sustainable development unless otherwise specified.”(“Planning Practice Guidance”). “In principle… any consideration which relates to the use and development of land is capable of being a planning consideration. Whether a particular consideration falling within that broad class is material in any given case will depend on the circumstances” (“Community Impact Evaluation”). Material considerations can be very substantial when it comes to the final decision, as they have to represent the interest of the community. Some of the material considerations include the following; the sustainably of the proposed land use, access to infrastructure, traffic generation & highway safety etc. The developer may be risking not getting the planning consent at the first go if these material considerations are not complied with.

Non-planning factors impacting development in the local area

There are many factors that are not planning related that may affect the deliverability of the development. This may include; the building costs (if demolition, construction costs, materials, fees etc. are too expensive, the viability of going forward this project may not be as beneficial for the developer as before). The rental market values have seen quite a cool down recently in central London postcodes, partly due to the uncertainty of the Brexit. This mean that profit margins for landlords have decreased substantially, which may be a reason of concern for a developer who is considering developing in an obdurate unreliable market. The viability of the development is also heavily affected by the political climate at the time, at the moment it is heavily dominated by conservative councillors. However, if labour starts gaining more seats they will have a more radical opinion on affordable housing, which may again reduce the rental income for the Landlord. The availability of financing with the adequate interest rate is also a pivotal issue that is very likely to decide whether a development proceeds further or not. The viability of the development is also heavily affected by the political climate at the time, at the moment the Westminster council is heavily dominated by conservative councillors (44/60). However, if labour starts gaining more seats they may have a more radical opinion on affordable housing, maybe even increasing it higher than the current 30% rate.

Getting Planning Consent

In order to apply for planning permission, one can assess the probability of obtaining it before actually buying the asset. To prevent your planning application from getting rejected the first time, it is always a good idea to meet with a planning officer to get advice (know what local requirements are and what the LPA is looking for in a development) before one presents the planning application (“Planning Portal”). You are obliged to notify the parties involved of your intentions, which includes the owner(s), any tenants with a lease that that still 7 years or longer until its termination and agricultural tenants (“Planning Portal”). This is of high importance as in London all land is already developed, so in any case the property will either have to be demolished or regenerated. Building regulations.
Submissions for building regulations approval are proposed to a building control body (BCB) and you can apply directly to your local authority for approval or to an approved inspector (“Planning Portal”). Planning applications should be submitted with the; necessary plans of the site, the adequate planning documentation, the completed form and the correct fee (“Planning Portal”). This application will be reviewed by the LPA (City of Westminster) sometimes taking 10 days. This application will be validated by the LPA (Case officer) on their key aims that they mentioned in their development plan. The LPA will publicise the planning proposal and over a period of time they will examine what effect it will have on the local community and whether it will be a viable development that they are satisfied with. The decision for approval or refusal will by decided by the planning committee.
It is very uncertain whether Kydonia Holdings will actually end up getting the planning permission. However, here are many things the developer can do to improve his chances. For example submitting the application online can result in in the process being cheaper and faster. It is absolutely essential that the adequate planning guidance is supplied, even in the pre-application process phase.

Conclusion

To sum up these were the main focus points of this report:

  • Housing is has been scarce in London, due to the increase in population in the area. Residential development is very much needed in order to hit the target set in the City Plan for 2036/37.
  • Existing residential unit numbers are be projected. New sustainable development including affordable housing is one of the key policies that the government is pursing. If a developer can guarantee that he will comply with all the policies that make London the successful city that its, then there isn’t going to be much resistance from the LPA.
  • The weight is on creating more housing units for all classes of the society (size, type etc.)
  • Mixed use development of residential and commercial property is endorsed
  • The planning application process must be perfectly organized in order to obtain planning permission

References

26.10.2016

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