Proposals to require resident ballots in estate regeneration

Referendums have had a mixed press recently – Clement Attlee's famous claim (repeated by Margaret Thatcher) that they were "a device of dictators and demagogues" has been much in vogue, and only last month a former minister described a recent referendum as "the most sordid political campaign I can remember".  Many politicians from all parties seem to have had enough of them.

The Mayor of London, however, seems to be a fan.  He has published "Better Homes for Local People" which sets out the best practice for estate regeneration in London.  Where demolition is proposed, the Mayor wants to see councils and housing associations providing an increase in affordable homes (or at least no loss of social housing); full rights to remain or return for existing tenants; and a fair deal for leaseholders and freeholders.

Most eye-catchingly, the guide promotes mandatory resident ballots in estate regeneration projects that involve the demolition of existing homes – a proposal that was only alluded to in the 2016 draft version of the guide.

Consultation

Whilst the guide is now in final form, the Mayor has launched a fresh consultation seeking views on requiring resident ballots as a condition of GLA funding for regeneration schemes.  The consultation runs until 3 April  and covers how the ballots will work in practice and what transitional arrangements should apply.

This sits alongside the draft London Plan, which contains policies requiring no net loss of affordable housing within estate regeneration schemes, and for an uplift in affordable housing where possible.  This is being consulted on separately.  For more details on the housing policies in the draft London Plan, see our London Plan briefing.

Proposals

The Mayor is proposing that the funding condition would be applied to any estate regeneration scheme for the construction of over 150 homes (of any tenure) which utilises GLA funding and which involves the demolition of homes owned by a social landlord.  Homes "owned by" a social landlord are defined as affordable or leasehold homes whose freehold that landlord owns, together with any freehold properties acquired under Right to Buy, Right to Acquire or Social HomeBuy.

The ballot would be a yes/no vote on a landlord's offer to residents, requiring a simple majority of respondents to vote in favour of the proposed development.  It would be open to all social tenants named on the tenancy agreements; resident leaseholders and freeholders who have been living at the property for at least a year and are named as the leaseholder or freeholder; and any resident who has been on the local authority's housing register for at least a year.

The ballot would take place following a period of "consultation, engagement and negotiation" between residents and the landlord, but "generally" prior to the procurement of a development partner or the precise specification of the works.

The consultation proposes that, as a minimum, the landlord's offer to residents should cover:

• the broad vision, priorities  and objectives for the estate regeneration (including the estimated overall number of new homes, scale of demolition, future tenure mix, green spaces and community facilities);
• details of the full right to return or remain for social tenants living in homes that are to be demolished;
• details of the offer for leaseholders and freeholders of homes that are to be demolished; and
• commitments relating to ongoing open and transparent consultation and engagement.

The consultation recognises that the design of schemes will evolve after the ballot, but the Mayor expects landlords to honour the outcomes of ballots - in other words, that landlords' offers to residents will be fulfilled. The Mayor proposes that the GLA will be able to claw back funding if it considers that a landlord's offer deviates materially from that agreed in a ballot.

Exemptions

The consultation suggests the following limited exemptions to the requirement for a ballot:

• where the proposed demolition is to facilitate a major infrastructure scheme, particularly a transport scheme;
• where the proposed demolition is in response to the safety of residents; or
• where the specialist or supported housing scheme is being decommissioned by the local authority.

Transitional arrangements

There will be transitional arrangements which would mean that the new funding condition would not apply where demolition already has full or outline planning permission.  However a ballot would be required if the existing planning permission is varied, amended or renewed to include further demolition that was not part of the existing permission, and the total number of new homes is 150 or more.

The new policy will not apply retrospectively.  So, if there is already a contract in place to fund a scheme then a ballot will not be required unless a significant change to the scope of the scheme is proposed.

Comment

It is an essential part of successful regeneration scheme that there is broad buy-in to the regeneration from the residents affected – they have the most to lose from an ill-conceived scheme, and the most to gain from a successful one.  It is also important that there is public trust that residents are being fairly treated – and for all that developers and authorities sincerely, and rightly, protest that they are already engaging with the local community, there is a widespread public perception that residents are being ignored.  This consultation gives a very welcome opportunity to address this negative perception. 

However concerns have been expressed as to how a yes/no vote can be best used in practice to shape a complex regeneration scheme – which will inevitably come with complicated trade-offs between different objectives.  There is a danger that honest conversations about the unavoidable compromises of regeneration will be drowned out by campaigners focussed on wider political agendas, rather than the specific details of the scheme proposed.  In the same week as the Mayor announced his consultation, Westminster City Council announced that it was scrapping its policy of balloting residents on regeneration schemes, precisely because of those concerns.

The debate over who should be balloted is equally difficult to resolve fairly.  The consultation's proposal to include social tenants but exclude non-resident private owners, private rental tenants, commercial occupiers and even owner-occupiers who have moved in recently, could potentially exclude a large number of stakeholders who will be significantly impacted by the regeneration.  Many estates have significant numbers of properties let out to private renters, and commercial units used predominantly by local small businesses; both of these interests will be unrepresented, raising the danger that they will be sidelined when schemes are drawn up.

Finally, the  timing of ballots is another problematic question.  It is understandable that the Mayor wants them to take place before plans are too far advanced, so that work is not wasted in going down blind alleys.  An estate regeneration project that is supported by the local population should help to attract an otherwise wary developer or investor.  But the proposal that ballots should take place before a developer has been procured raises challenges for social landlords: schemes are often both indicative and aspirational at this stage, with the intention that they will be optimised during the procurement and planning process.  How should landlords pitch their offers at this stage, given they will be publically committing themselves?  If they are too ambitious, they run the risk that no developer will bid; if they play it safe, they will lose all chance to use competitive tension between bidders to deliver the more aspirational elements of the landlord's wish list. 

And of course it is in the nature of regeneration schemes that they change, often substantially, between initial concept and final design – for example as a result of planning requirements, or adverse market conditions, as well as ideas simply evolving as more work is put into them.  It is not clear what the "tipping point" is where the changes to a scheme become excessive, or what happens when the tipping point is reached.  Is there a second ballot?  If so, and the ballot is lost, can the landowner simply keep asking the question with minor tweaks?  Developers will be very wary of signing up to schemes where there is not a clear, predictable process to deal with design changes.

In short, there are many difficult questions over who is balloted, when, and how.  But the debate is an important one, and arguably it is one that has been dodged for too long.  If the Mayor gets this right, this will be a valuable opportunity to rebuild public faith in the regeneration schemes that London so desperately needs.  We hope that authorities, housing providers and developers will take the opportunity to engage in the consultation so that these questions can be addressed.