Over the past year, the real estate sector has gone through several important changes. Wouter Neven is a lawyer at the law firm Lydian and lecturer in our Master Class in Real Estate Law. On a regular basis, he writes about important changes in the real estate sector. This time the proclaimed construction freeze.
An important step towards the Policy Plan Spatial Planning Flanders, which will replace the current Spatial Structure Policy Flanders, was the approval of the White Paper Policy Plan Spatial Planning Flanders by the Flemish Government on November 30, 2016.
The Policy Plan Spatial Planning Flanders will contain the strategy for spatial development in Flanders for the coming decades.
"The Flemish Government wants to reduce the pressure on open space by intensifying the current space use."
A widely discussed rule in the White Paper Policy Plan Spatial Planning Flanders, is the so-called “construction freeze”. The Flemish Government wants to reduce the pressure on open space by intensifying the current space use and do more with the already claimed space. At the moment, one third of the space in Flanders has been built on.
Today, 6 hectares of open space is given up for construction. From 2025 onwards, only 3 hectares should be taken per day. From 2040 onwards, no new open space will be taken. Still, the amount of families will increase by 19% by 2060.
"Today, 6 hectares of open space is given up for construction. From 2040 onwards, no new open space will be taken. Still, the amount of families will increase by 19% by 2060."
The Flemish Government also proclaimed that they will improve the current use of space by only expanding the use of space on well-situated locations. The residential density should increase around big traffic junctions.
The redevelopment of industrial parks, ports, and residential areas that have become obsolete, but are well-situated, will be important because of this switch from expansion to transformation. The White Paper Policy Plan Spatial Planning Flanders shows that at least 10% of the space in Flanders qualifies for redevelopment. This means that existing buildings will be restored or replaced.
"The White Paper Policy Plan Spatial Planning Flanders shows that at least 10% of the space in Flanders qualifies for redevelopment."
The latter means that existing buildings will be split up in smaller units and levels will be added, so future buildings will be higher.
The fate of the landowners affected by the construction freeze
Increase planning damage?
To increase support for the construction freeze, the Minister of Environment, Nature, and Agriculture, Schauvliege, announced that the planning compensation would be increased. Planning compensation is given for the depreciation of land that landowners suffer when the zoning of their piece of land is changed.
"Planning compensation currently amounts to 80% of the depreciation of the ground. Minister Schauvliege suggests increasing the compensation to 100% of the true value of the land."
Planning compensation currently amounts to 80% of the depreciation of the ground when its zoning changes. The depreciation is the difference between the indexed original purchase price and the value at the moment the planning compensation sees the light.
Minister Schauvliege suggests increasing the compensation to 100% of the true value of the land.
Increasing plan benefits?
To be able to pay the increased planning compensation, Minister Schauvliege proposes to increase the plan benefits. This is a tax for the increased value a plot gets by a change in zoning. The maximum tax would be increased from 30% to 50%.
Right now, the plan benefit tax lies between 1 and 30% of the estimated value increase of the plot. That value increase is progressively taxed: a value increase between 0 and 12,500€ is taxed at 1%; between 50,000 and 100,000€ at 5%; above 500,000€ at 30%.
Trade in development rights?
As said, the Flemish Government wants to simplify multiple land use. They want to combine this goal with the compensation of affected landowners and the right to build. A landowner affected by the construction freeze will be granted building rights which he can sell to a person in an area where space usage is increased. The latter can develop additional building layers with the purchased building rights.
"A landowner affected by the construction freeze will be granted building rights which he can sell to a person in an area where space usage is increased."
A planning switch – plots that cannot be built on are switched with plots on which owners can still build – is another possibility.
Disappearing building sites
In the Flemish regional plans, 28,250 hectares of ground were intended as residential extension area forty years ago. 13,000 hectares of that area isn’t built on yet.
"75 percent of the available land becomes obsolete"
A survey of cities and municipalities shows that they are willing to erase 30 percent of this building reserve and indicate it as open space. Developing this land would be too expensive. In addition, three million people could be accommodated on the basis of a further vertical urbanization of the currently built-up plots, which implies that 75 percent of the available land becomes obsolete.
Based on this information, the Flemish Government will draft a list of residential extension areas which will no longer be eligible for development.
Construction freeze in 2017
Currently, we are waiting for the draft of the Policy Plan Spatial Planning. Nevertheless, Schauvliege aims to start protecting the open spaces immediately. The circular of July 7 gives guidance to local governments on "a differentiated spatial transformation policy in built-up and undeveloped areas". The circular makes a distinction between built-up and undeveloped areas. This first category includes urban areas, selected cores, residential concentrations and industrial sites. All other areas are qualified as undeveloped.
"Only if no development, restructuring or transformation process is possible within the built-up areas, development can be considered outside existing built-up areas."
In order for an urban development license to be granted for an undeveloped area, it is required that the applicant demonstrates, on the basis of a need and facility study, that there is a need for building in the undeveloped area and that it cannot be realized in an already built-up area. Only if no development, restructuring or transformation process is possible within the built-up areas, development can be considered outside existing built-up areas.
With this circular – in line with the announced construction freeze – Minister Schauvliege wants built-up areas to be able to use their growth potential by making use of sustainable spatial planning. That way the open space can already be partially protected. We will closely follow these developments and keep you informed.