Parking spaces serve the needs of a wide range of users, including residents, workers, shoppers, visitors, delivery drivers, taxis, and private hire passengers. However, they also reduce space for pavements, cycle lanes, and other social and environmental features such as benches or microparks. Car owners may pay for the privilege of parking – in the form of short-stay parking spaces and residential parking permits – but are they paying a fair price?
There are a number of ways that this question can be approached. Often-quoted international examples have focused on the costs of building and operating multi-storey parking structures, the added costs of providing parking in new buildings, and the potential reduction in available space for more affordable housing or other amenities. 21 Other investigations have focused on quantifying the environmental costs arising from increased parking provision. 22 However, there is little empirical evidence from London and the UK on the matter. To answer this question in a London context, this chapter considers a number of alternative approaches to pricing an on-street residential parking space.
Residents are underpaying for valuable public space
Using residential land values, property consultancy JLL estimates that the 3,200 hectares taken up by vehicles in London is worth £172 billion. 23 Using illustrative land values, Table 1 compares the capital value per parking space across selected London boroughs to what residents pay for a year’s parking. Treating the parking permit as an annual rental payment, the yield on the capital value is very low – less than one per cent in most cases. However, while this comparison is useful for car parks – which could potentially be converted into homes – few on-street parking spaces would be realistically developable.
A further approach is to compare resident permit costs with the market value of parking. The rise of peer-to-peer rental of parking spaces through online platforms like JustPark has allowed an accurate comparison between the price the market can support for a parking space and what local authorities are currently charging (see Table 2). The fact that prices across London for equivalent parking spaces rented through JustPark are at least 10 times higher than prices charged by local authorities suggests that residential parking permits are being priced a great deal lower than they would be on the open market.
Boroughs’ reported expenditure on parking does not cover costs
Another way of considering the pricing of residential parking permits is to ask whether they are sufficient to cover costs.
To obtain the relevant data to answer this question, we examined borough parking accounts, which report individual boroughs’ revenue from parking and associated expenditure (Figure 5). According to the Ministry of Housing, Communities and Local Government (MHCLG), London boroughs collectively made an average annual surplus of £376 million between 2014/15-2018/19. People often perceive this as “profit”, but the Traffic Management Act ringfences the use of parking surplus for transport services. In practice, boroughs use it to support road maintenance and provisions for disadvantaged groups, such as Freedom Passes for pensioners and specialist transport for disabled residents or children with special educational needs.
Furthermore, not all costs associated with parking provision are accounted for within the reported parking expenditure figures, which only include costs associated with enforcement. They do not include other costs involved in designating and operating Controlled Parking Zones (CPZs), such as road maintenance or back office staff. These are all recorded on different lines in revenue outturn accounts, and there is no dedicated proportion relating to parking.
According to MCHLG revenue expenditure data, these additional costs come to an extra £133 million per annum (averaged for the last five years) and, when taken into account, reduce the boroughs’ parking surplus to £243 million. If we replace each borough’s reported parking expenditure with our calculations, inclusive of additional parking-related costs (see Appendix 2 for the detailed borough breakdown) and compare them to parking revenues, we see that surplus diminishes significantly or becomes a loss for some boroughs (see Figure 5).
Borough parking space operation costs outstrip resident permit revenues
To answer the question of whether residents pay a fair price for parking provision, Table 3 below compares the average total operating costs per parking space for inner and outer London boroughs to the cost of annual resident permits. This shows that the costs of operating a parking space in both inner and outer London are not covered even by the most expensive permit costs when averaged and few residents will in fact be paying the highest levels.
It is important to clarify that these estimated costs per parking space are likely to be conservative, as the number of parking spaces may include free (e.g. disabled) bays and other kerbside uses.
Given that revenues from resident permits do not cover boroughs’ costs, the source of borough parking surpluses is largely short-stay parking and enforcement income. While the annual returns of borough accounts submitted to MHCLG do not provide a breakdown for the different components of parking revenue, some boroughs do publish these in their annual parking reports, and Table 4 gives the detailed breakdown for a number of boroughs that we have information for. Income from resident permits accounts for a small proportion of boroughs’ parking revenue, with the majority made up of short stay (pay and display) charges and enforcement charges.
This means that, in practice, charges to visitors and other non-resident drivers are cross subsidising the provision of resident parking as well as other transport services for residents. Given the value of kerbside space as a public good, resident parking provision should at least cover its own cost – and this would enable surplus income from short-stay parking and enforcement to be spent on modal shift and public realm improvements.