Putting Crossrail 2 on the map: Land value capture must work for all
While there are some downsides to living within walking distance of Arsenal, the flipside is being able to walk into work on a nice day in about 20 mins. Avoiding the daily anger of rush hour Tube-ing is well worth putting up with the nightly blue light serenade that comes with living centrally or the terrible, terrible service I currently suffer renting via PG Estates, an estate agency.
Having seen areas like Finsbury Park and Blackhorse Road, both in north east London, emerge in recent years as Angel, Islington did 20 years ago, opens up a world of possibility for Crossrail 2. Regeneration occurred here largely because they are cheaper than plush Highbury and boast super-quick connections via the Victoria Line. Development around the former Arsenal stadium – not without controversy – also helped shovel in a few more pennies.
A recent seminar, hosted by Fieldfisher, a law firm, eloquently set the stage for London’s next great infrastructure project (assuming that the Third Runway will still be in legals in 2030). Even thinking about how to build a ￡30bn twin-tunnel bored through sticky London clay between Wimbledon and Tottenham Hale makes my brain hurt.
What’s worrying though, is that just as much energy and expense will go into a lot of needless legal and planning faff as the more virtuous task of avoiding the wealth of structures – and other tunnels – massed across the capital’s increasingly congested underbelly.
While respecting the limits placed on her by purdah, Michele Dix, chief executive of Crossrail 2, laid out the enormity of the task at hand. The cost of the scheme is now estimated at ￡30bn – up 10 percent from when it was originally announced, although the final cost could well be more.
Dissecting London diagonally from northeast to southwest will connect Surrey and Hertfordshire to the capital. But crucially, it will connect affluent areas such as Hertford and Wimbledon with less salubrious new stops such as Lea Valley which has swathes of undeveloped land sitting not 20 minutes outside the capital’s core.
Areas like Lea Valley which sit in the hinterland between the Victoria Line and TfL Line that conects Essex to the City could prove popular with developers as the land is cheap and well connected. A model for this could be Legal & General’s build to rent scheme on Ferry LFne, near Walthamstow down the road, designed by Assael Architecture.
L&G’s Pete Gladwell, presenting, outlined the vastness of the insurer’s appetite for housing. Its foray into residential investment follows Essential Living’s deal with TFL on the redeveloped Archway Tower which is now a RIBA-award winning building – the first purpose built rental block since Dolphine Square. The Tube owner gets a share of the rent as it has retained the headlease to the former brutalist office block.
The rail link would enable 270,000 more people to get into London each day. It would be built by the early 2030s. Ms. Dix promised that, as part of this, Crossrail 2 would also unlock many new areas for development and could pioneer land value capture in order to fund it.
Fairly capturing the masses of profits made around such schemes has been a longstanding challenge. For landowners lucky (or, in some cases, smart) enough to have owner or acquired sites around projects, the boon of infrastructure has been monumental. But the distant unfairness of private speculators gaining solely as a result of public investment pains many citizens. This matters because it contributes to many of the reputational hurdles developers face via the planning system: the prevailing feeling that the public does not benefit from development.
It’s important to address this, not simply for PR value but because without it, new railways won’t get built.
L&G’s Gladwell talked briefly around the potential for patient capital – such as insuers or pension funds – to invest more in infrastructure the way his company is now looking at long-term rented housing. Whether through equity investment or long-term debt finance, unwrapping more of the pension fund pounds currently tied up in stocks or bonds could put it to much better use in Britain. It’s fascinating to try and chart the bredth of L&G’s own activity – which stretches from funding East Anglia trains right through to clean energy.
With Brexit on the horizon, the need for Britain to be more self-sufficient and for its economy to be more balanced is obvious. As I mentioned in this Sky News interview (below) last week, it’s worrying that Crossrail 2 seems to be missing from the Conservative manifesto (where it was present in the previous two). It has to go ahead and while we’re cracking on, we need to ensure that land value capture is done right – and fairly. What that looks like precisely will have to wait until another day.