18. Adding value through design?

A recent cartoon by Rob Cowan in Planning magazine had a local authority planner explaining:  ‘People ask why we don’t have policies on urban design and affordability.  In fact … we have both.  Our policy not to demand high design standards … leads to lower property values. … Result: affordability.  Neat!’

The cartoon put me in mind off an e-mail exchange I had with the leader of a large urban design team in a provincial English local authority.  The authority had decided to sell off some of its surplus school land for a development including over 500 residential units.  The urban design section of the authority wished to produce a design code as part of the tender pack for prospective developers in order to help guarantee a higher level of control over the design quality of the future scheme.  They argued that in this way the council would be seen as setting a good example, and that the better designs that resulted would increase the value of the site, and deliver the necessary planning permissions more quickly, thus expediting delivery of the receipts.

To his frustration, the Head of Schools and Leisure at the same authority (effectively the client for the project) was reluctant to enter the market with anything that might have a negative impact on land value.  In this he included any requirements for good design as encapsulated in a design code.  His view was based on professional valuation advice which had espoused the view that to maximise receipts, the council should enter the market as unencumbered as possible.  A coda was added that disposing of the land in this way did not imply that any particular scheme was being approved, and therefore design quality would still need to be assessed as part of the normal planning process.

As, in many locations, easily the largest supplier of land for development, the case reflects a huge and ongoing dilemma for the public sector up and down the county.  Namely, to what extent does a desire to improve development quality conflict with a desire to maximise returns on public sector sites; resources that once received can be re-invested in the public interest (in this case, back into the School).

If one wants definitive answers to this difficult question backed with hard evidence (as my correspondent did), then they will not be forthcoming; at least not yet.  Nevertheless, the balance of evidence increasing backs an opposing view to that offered by the professional advisers in this story, namely that better design does add value.  For example, in research UCL undertook for the Government evaluating the use and impact of design codes, we found that across the 19 case studies conducted, developers reported more or less consistently better returns than expected, and in excess of what they would normally expect on similar, non-coded, schemes.

This, of course was not down to the design codes alone, but equates more to a premium that good design delivers, whatever the process.  In the case of the design codes, however, the codes were particularly effective at delivering more coordinated design quality across large development sites, helping to guarantee better economic returns in the process.

Their production also sent a clear message from the start that the aspiration was to build a premium quality development, in turn raising expectations about value.  Design codes, like other forms of detailed design guidance, offer the potential to guarantee much greater certainty about the final product and – importantly – what will or will not get planning permission.  Developers consistently report that they value this increased certainty, and it is something they are willing to pay for.

But, design codes, like the notion that better design adds value, are still new (to most) and debatable, and few professional property advisors will break with the old received wisdom that a free market will always (unaided) maximise returns.  Most developers are also risk averse, and may be reluctant to take these lessons on board until more solid quantitative evidence is available to make the case.

But, government guidance is clear.  PPS 1 says that ‘Planning authorities should plan positively for the achievement of high quality and inclusive design for all development’; in other words, good design is expected everywhere, and this should be established up front in the development process.  For the local authority in my story, and many others with a similar dilemma, that would equate to the following advice.  Don’t try and con developers into a false sense that anything goes when selling land, only to impose design requirements later as proposals come forward for planning permission.  Such an approach will only perpetuate adversarial development and planning processes and achieve neither best quality design nor best value for the site.  Instead, clearly set out your aspirations from the start, and have the courage of your convictions.  The overwhelming evidence suggests that better design will deliver dividends – economic, as well as social and environmental.

There is always the possibility to give developers two options on which to tender: bids on the basis of a design code, with a guaranteed planning permission and streamlined process for applications that comply; against bids for an ‘unencumbered’ site, but with a completely open planning process.  I am confident the former will come out on top, in every respect, and even (counter-intuitively) on the other dimension of Rob Cowan’s cartoon – affordability.  This is because better value will mean more potential for investment in the other ‘public goods’ that as planners we seek to deliver, one of which will undoubtedly be affordable housing.

The cartoon should now read:  ‘People ask do we have policies on urban design and affordability.  In fact … we have both.  Our policy to demand high design standards … leads to higher land values. … Result: more resources to invest in affordability.  Neat!’

Matthew Carmona

Professor of Planning & Urban Design

The Bartlett School of Planning, UCL


January 2008