Reports that HBOS is in talks to hand over its land holdings to a group of leading housebuilders sound like just another piece of fall-out from the housing market crash - until you ask yourself who really owns that land.
The holdings are the legacy of the bank’s disastrous strategy of making direct investments in a clutch of leading property developers and housebuilders as well as lending money to them. The strategy contributed to the multi-million losses that led to HBOS having to be bailed out first by Lloyds and then by the taxpayer.
Before the shit hit the fan, HBOS had built up stakes of up to 50% in four of the top 20 housebuilders (Miller, Crest Nicholson, Countryside, Cala) plus other companies including Tulloch and Kenmore.
On the latest figures I can find, between them they own land with planning permission for more than 40,000 homes and their total land holdings are enough up to 150,000 homes. That’s not in the league of the Barratts and Taylor Wimpeys but it’s still a significant proportion of the housing land held by private builders and is the equivalent of a year’s production at pre-crash levels or two years at current levels.
Details about the proposed deal are sketchy but the idea seems to be that HBOS would hand over the land to companies like Barratt, Persimmon and Bellway and homes would be built in a series of profit-sharing joint ventures.
That seems to work for Lloyds in terms of repairing its balance sheet and it works for the housebuilders too because a sell-off could trigger a further fall in land values.
But does it work for the majority owner of Lloyds? Perhaps, if it leads to the government and taxpayer recouping the cash. But how far is a deal that further concentrates the ownership of housebuilding land really in the public interest? Why not deal instead with the new developers that are already expressing an interest in the Homes and Communities Agency’s public land initiative? Why not make the HBOS land part of that initiative?
It could be that a deal with the big companies still makes the most financial sense but not without at least considering the alternatives first.
Have your say
You must sign in to make a comment