House building is more complicated than “Use it or Lose it”

Ed Miliband’s Party Conference key note speech, in which he challenged developers to ‘use or lose’ their land holdings, only serves to demonstrate that the complexities of house building continue to be misunderstood.

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There are two types of site; those with planning permission, and those without.  In respect of the latter, if a site doesn’t have planning permission it is plainly misleading to regard it as forming part of a ‘land bank’.  Sites without planning permission can take years to promote, at considerable cost, and always against an uncertain backdrop that planning and politics can seemingly scupper it at any moment.  If a site does have planning permission, it will invariably be developed – provided it is financially viable.  That places a duty on the planning system not to tie sites up in knots of planning conditions and legal agreements, and a responsibility on developers to purchase sites at a realistic price.  However, and as an example, the ‘best value’ approach to the sale of public owned land places an unhealthy bias on securing the highest price above other objectives, such as developing a greater level of affordable housing.  Equally, some of the most puzzling land acquisitions leading up to the economic downturn were undertaken by quangos acting in the public interest.  Most developers are canny enough to know what the correct price point is, and don’t pay above it.  They then seek to secure a return on their investment as soon as possible – which means getting on with building sites that have planning permission.  Is it really credible to believe that the public sector can do a better job, when cashed-strapped local authorities have been cut to the bone, and already rely on external consultants for more specialist services?

The development industry probably poked a collective finger at the TV screen when Ed Miliband was in full flow, but it remains the case that the industry has got to get better at explaining the complexities of its business so that off-key political pledges have less chance to manifest.  Its misleading to the public, and ultimately detrimental to addressing the housing crisis.

Fight to Save England’s Beauty?

It is ironic that The Sunday Times chose to print and report a letter of endorsement of the CPRE’s ‘charter to save our countryside’ from a collection of the Country’s literati in the same week that it also highlighted the MoD’s intent to sell the Household Cavalry Barracks in Hyde Park. The publication of both serves as a magnifying glass on the difficulties facing planners and developers in meeting our national housing requirements.

The basic premise of the CPRE’s argument is not new.  The Government is giving preferential treatment to ‘virgin’ (it’s always evocative) greenfield sites over brownfield options (factually not correct); there are numerous empty homes up and down the country waiting to be put to use (ditto), and; planners and developers have no imagination (quite a generalisation).  The typical claim is that much better use should be made of ‘derelict urban sites crying out for investment’, and that we should be building affordable homes in the right places, rather than executive homes.

Which brings me nicely to the Cavalry Barracks.  The Sunday Times speculate that the six acre site will probably have a market value of circa £500M, which (as ridiculous as it is to say) doesn’t seem unlikely based on comparable land values in prime Central London.  Taking a rudimentary rule of thumb, the Barracks might deliver in the order of 800 homes.  That equates to a pro rata land value of £625,000 per unit – and that’s before a single unit has been designed or built.  It’s also before a single penny has been contributed to the Mayor or Westminster City Council through financial contributions (obligatory).  So even if an altruistic developer were to purchase the site and to provide them all as ‘affordable’ dwellings, there wouldn’t be a single unit available for less than seven figures.  A much more likely scenario is that any development will look to outdo the performance of One Hyde Park, which has seen price per sq. ft. levels exceeding £7,000.  So a 700,000sq.ft. two-bedroom flat could cost about £5 million. And that’s before anyone questions the social cost of one of the Capital’s favourite landmarks being permanently lost to redevelopment.

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I have never disputed the strength of the CPRE’s conviction, and I continue to maintain that they are the best organised, and most effective property pressure group bar none.  But the picture depicted in the Sunday Times article is just plain lazy.  For example, we are told that the Country is about to embark on an unprecedented, and excessive, construction programme.  Firstly, it is not unprecedented.  We managed it after the Second World War when the Country had come through a much greater crisis, and the housing stock delivered during the 1950’s continues to be recycled to provide much needed accommodation for hard working families up and down the country.  Secondly, it is not excessive: the homes we need to build are the homes we need.  What a luxury for some of our fabled writers and artists to complain about their changing landscape when at least three generations (the last, the current and the next) cannot get on the housing ladder.  How many of the signatories to the CPRE’s campaign cannot afford to buy their own home?

The likes of the Cavalry Barracks are clearly exceptional instances, but I have yet to see a brownfield site deliver a combination of more family units, more affordable accommodation, provide more investment in infrastructure, including health and education, than a greenfield alternative.  They are very rarely executive enclaves, whereas many brownfield sites becomes just that; that is often the price of regeneration.  The country urgently needs the property industry to put forward as powerful a case for development as the CPRE makes for preservation.