Quick guide: Public Land Initiative
Baffled by the government’s range of house building schemes? Our quick guide explains the latest initiative to get off the ground
We’ve already got schemes for regeneration projects and schemes to get councils to build homes, not to mention billions for housing associations, what does this one do?
The Public Land Initiative is designed to get homes built on land owned by public bodies. Land identified through the scheme will be handed over to builders, who won’t have to pay for it until a later date.
Sound like a good deal, for the builders at least, what’s the catch?
In return for the reduced risk gained by taking out the cost of buying and preparing a site, developers are expected to take a lower profit margin of around 6/7 per cent, compared with typical profits of 15-20 per cent on other sites. By running the initiative in this way the government is also hoping to encourage new partners into the house building market.
When do they have to pay for the land?
That’s the complicated part. The Homes and Communities Agency is working on a mechanism to dispose of the land, and set up an agreement to ensure it is paid for at a pre-agreed trigger point. This could be when the building work is finished, although the HCA is working on toolkit of standard agreements.
So who can take part?
The initiative is open to organisations on the HCA’s delivery partner panel – a group of pre-selected housing associations, developers and consortia split into three regional groups. By reducing the number of agencies involved in bidding for work on a site, the HCA hopes to further reduce the costs of the development.
And what is it supposed to achieve?
So far £53 million has been allocated to the PLI, and it is supposed to deliver 1,250 homes, 500 of which will be for affordable rent or low cost homeownership.
Is it working?
The government has just announced the first three sites for the initiative, which will deliver around 500 homes between them. Work is due to start on all sites by the autumn. The government is still on the look out for more land, however, and has invited local authorities and other public bodies to bring potential sites to the table.
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Readers' comments (1)
John Newton | 17/02/2010 9:34 pm
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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