How can we best regenerate the urban environment without driving communities away?

The Ministry of Housing, Communities and Local Government puts community at the heart of its agenda for change. But when it comes to urban regeneration, community concerns often co-exist uneasily with market processes.

In particular, urban renewal is associated with the shift of working-class neighbourhoods to middle class or commercial uses in the process of gentrification. This research collates views from nine leading industry experts on how the public sector, in partnership with private finance, can achieve its regeneration objectives without driving the community away.

Activation energy, propagation chain reactions

We define urban renewal as the upgrade and replacement of urban spaces and buildings over time and regeneration as the increase in desirability of a locality brought about the process of urban renewal. Public sector intervention is normally required to leverage flows of private capital into a geographical area against the viability gradient in sufficient quantities to turn around its fortunes.

The mechanism the public sector will typically be through provision of new public buildings, spaces and infrastructure with the aim of raising the viability potential of development in surrounding locations. “Activation energy” is a term we introduce to describe the inputs needed to reach a threshold to attract flows of private sector investment on any given site nearby.

For example, a new tram line might raise property values enough to make a nearby vacant site viable to develop. The cumulative effect of the tram line, some shiny new buildings in a block and the viability of an existing scheme induce further development, propagating flows of capital in a chain reaction until markets become saturated and the area reaches a new, more prosperous equilibrium. The effects are felt not just for the buildings and spaces that have been renewed, but on the whole area.

Protecting the community

A regenerated neighbourhood would normally include new and improved housing, better transport connections, improved visual amenity and public spaces and increased flows of commerce, job creation and sometimes tourism. New and vibrant occupiers arrive, which increase perceptions of value further. But in the other direction, existing communities are disbursed over time as renters and new generations become priced out. Home owners will benefit from rising values but those directly displaced by new schemes will not.

The planning process imposes affordability quotas on residential schemes to ensure that at least some new housing remains accessible to communities. But this is only weakly effective for various reasons. It only applies to schemes of over ten units for the first time they are sold. Most housing in an urban area will not be new-builds, and no such control rods exist for commercial property to protect business communities.

Our research participants offered three further initiatives that the public sector could consider in order to protect communities:

1. A radical approach to housing affordability would be to consider rental caps and house price ceilings; a policy used for some time in some German cities but not yet seen in the UK.
2. Where housing occupants are directly displaced by urban renewal, our research suggested that a “right to return” window might be explored through amended Housing Act legislation.
3. High rates of short term privately-rented accommodation is a barrier to long-term community formation and the new Labour government should consider placing restrictions on second homes, buy-to lets and Airbnb lets.

Ensuring development remains viable

Community-friendly development controls will generally serve to lower development returns and increase the activation energy for a development. The new government must find a way of balancing community needs with development viability, and we propose that this can be achieved through effective and well-targeted public funding to keep activation energy as low as possible.

The public sector has three main tools to achieve this: it can invest in an area to bring about the biggest impact but without an expectation of direct financial return; it controls planning; and it has powers of compulsory purchase to acquire land and assemble sites.

Our research participants suggested that public funds would be most effective when invested in the following ways:

1. Limited public funds are best invested in large schemes concentrated within a narrow geographical area. This increases perceptions of change and that is an important concept in value creation. Urban renewal concentrated within a block serves to lower the activation energy for private sector development nearby. Compulsory purchase powers are crucial to be able to assemble land for viable developments.
2. Infrastructure matters. Rydin considered that the facilitation of tram, bus, tube, train, road and public space improvements were fundamental to regeneration. Our research respondents agree, and talked of the importance of the Local Authority in providing an infrastructure map with a sequence strategy to improve the connectivity of an area to other parts of a city. They also said that phasing of works was important in reducing risk to developers, citing schemes ready to come onto the market with infrastructure incomplete.
3. Well-kept neighbourhoods increase visual amenity and property values. Respondents talked about poor lighting, rubbish and fly tipping as barriers to the propagation of urban renewal with one participant suggesting that people might pass up on a 15-minute walk to the station because they would rather not interact with a low quality streetscape.
4. Urban renewal is more likely to propagate in an environment of well-planned public projects. Respondents identified the ‘start-stop nature’ of funding programs, changes in personnel and the ‘short-termism’ of politically-motivated decisions providing a lack of certainty for developers to take financial risks.

The public sector plays a key role in the regeneration of deprived and run-down neighbourhoods in the UK as an initiator, a facilitator and regulator. In order to effectively leverage flows of private capital, our research indicates that public resources are best-concentrated within narrow geographical areas, in infrastructure, through cleaner and safer streets and alongside good planning.

But it must also consider how to balance its various aims while retaining existing communities of residents and local businesses, something which has often been difficult to achieve to date. This requires targeted intervention in planning and markets to protect the public good in the widest sense of the term.

This research project was undertaken by Eleanor Kinsella for her undergraduate dissertation, under the supervision of Chris Berry. The research panel comprised nine UK industry leading professionals from surveying, planning and architecture with an average of 22 years of industry experience.