First sites chosen for public land scheme
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The first sites have been identified for a scheme that will see public land handed over to developers to cut the cost of house building.
Three sites have been found for the first examples of the Public Land Initiative: Bentley, Doncaster; Kingsmead South, Milton Keynes; and East Bank, Ouseburn, Newcastle.
Under the scheme developers will be allowed to build on the land, but will not have to pay for it until the homes are sold. The work will be carried out by a panel of approved developers, reducing the costs of bidding and procurement.
In exchange for the reduced costs and risks of the developments, builders will be expected to take a profit margin of around 6/7 per cent, rather than the 15-20 per cent they would normally expect.
The three sites will deliver between 478 and 488 homes, 129 of which will be affordable. The initiative is expected to result in around 1,250 homes overall.
Two of the initial sites are owned by the Homes and Communities Agency, and the third is jointly owned by regional development agency One North East and Newcastle City Council.
Housing minister John Healey said: ‘This is a drive to make better use of government-owned land to build new homes. Where the HCA and Newcastle are leading I expect other public bodies to follow.
‘And I am now looking to new companies to bring a new competitive edge to the industry. We are looking to test this new business model on the first three sites I am announcing today, with the first builders on site over the coming months.’
Sir Bob Kerslake, chief executive of the Homes and Communities Agency, added: ‘The PLI is a significant new model for creating strong public-private partnerships that share the risks and rewards of delivering new homes.
‘These first three sites will be an important test bed for the initiative and its aim to spearhead the wide-scale delivery of homes that meet level four of the Code for Sustainable Homes.’
The first three Public Land Initiative sites
Bentley, Doncaster – 178 homes are planned for this site, of which 47 will be affordable. Subject to planning permission, work is expected to start this Summer.
Kingsmead South, Milton Keynes – this site will deliver 200 homes, of which 60 will be affordable. Work is expected to start this Autumn.
East Bank, Ouseburn, Newcastle – a joint venture between ONE North East, Newcastle City Council and 1NG, this will deliver between 90 and 100 town houses and larger apartments, 22 of which will be affordable. Work is due to begin in May.
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Readers' comments (4)
Tim Hamilton-Miller | 17/02/2010 3:02 pm
Working in Knight Frank's Development Department I am obviously delighted to see the delivery of new housing through this initiative and welcome an element of affordable homes. I am particularly interested to note that, on the basis of the figures reported, the affordable represents some 26% of the overall unit numbers and this is only supported on the basis of deferred land payment (assisting cashflow) and heavily reduced developer's margins (which would not be fundable in the real world). I very much hope that all local planning bodies take note of the reality of the economics of delivering schemes at the current time, and how much affordable housing can be achieved in this 'ideal' model. A proactive approach embracing flexibility is key to getting new schemes through planning, and built in these challenging times with all the associated housing, employment and regeneration benefits this brings.
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Harry Lime | 17/02/2010 3:36 pm
Indeed it is laudable Tim, but remember the market tends to be cyclical, so will there be quid pro quo from the developers when the market conditions pick up? I certainly doubt it. I deal with a number of developers who have had a damascus type conversion to the value of providing affordable housing, when it's the only game in town and it's kept money rolling in.
The cynic in me tells me we won't see them for dust once the market picks up and they'll complain about having to provide affordable units, whilst the open market price tags on the units will be going up by the month....
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Major Calloway | 17/02/2010 4:13 pm
Harry- its no great surprise that the majority of developers follow where the money is, indeed I'm confident you're not servicing your clients for the sheer joy of it. An additional thought to throw into the melting pot if I may- the current levels of affordable provision are only possible on the basis of current social housing grant allocations. I'm only expecting average grant to go in one direction, regardless of who is elected to run the country in May. This isn't going to help matters.
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John Newton | 17/02/2010 9:36 pm
Harry and Tim,
Rather than complicated ad hoc responses, a Housing Supply Partnership Planning (HSPP) model that mainstreamed the provision of affordable housing within private sector construction company business models is required.
Specifically, within the model, the town and country planning framework would require (certainly in areas of excess housing demand) at least 50 per cent of all dwellings provided in developments over a defined size threshold to be affordable, with, say, 20 per cent to be provided by social housing landlords for rental. The land for the affordable housing portion of the development would in effect be free with the cost of the affordable units being limited to construction cost, plus agreed constructor profit and overheads . That requirement in itself would tend to deflate directly the land cost component of supplying new housing.
HSPP would focus directly on the core outcomes of: achieving on a sustained basis a housing supply target at national, regional, and local level that is consistent with medium term demand requirements; securing greater social sustainability in terms of terms of an improved tenure balance; and of securing greater stability in house prices with attendant macro-economic benefits.
It would also offer to the private sector greater certainty in its business planning processes by replacing the vagaries of housing market boom-bust, which, hitherto, has so bedeviled the efforts of the construction industry to improve its health and safety, productivity, and innovation record, with a known and certain annual production target. Developer profit would in future derive from construction, not landhoarding or speculation – activities that can also lead to large losses and even bankruptcy. A refocus of their business planning focus on construction rather than speculation should help significantly to improve design, build quality, and sustainability outcomes, as both public and private sector focus on certain and clear shared ends.
HSPP could be rolled out on public land gifted free in monetary terms but subject to restrictive covenants consistent with the above.
Further infromation can be obtained:
http://asocialdemocraticfuture.org/Affordable_Housing_Partnership_Planning.doc
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