Wednesday, 30 July 2014

Planning reforms could see developers pay for land after homes are built

Councils and government departments have been told to stand up and be counted in a bid to get new developments off the ground.

Government departments will be ‘held to account’ for the way they use their land banks to help the delivery of new homes, the Budget revealed on Wednesday. Ministers want departments such as the Communities and Local Government department and the Department of Health to look at handing land to developers and receiving payment only when new homes are built under a ‘buy now, pay later’ model.

Chancellor George Osborne’s Budget put the Ministry of Defence firmly in the crosshairs saying it could earn up to £350 million for estate disposals, helping to deliver 20,000 new homes in the process.

Departments and councils will be encouraged to sell land with planning permission to developers under a pilot land auction scheme. Academic Tim Leunig, who drew up similar plans in 2007, said that if it was rolled out to include private sector land it could deliver as many as 250,000 new homes - raising £17.5 billion in the process.

Dr Leunig said the impact of the scheme as it stands at present would be limited. ‘Why would someone like the NHS want to be involved, if the money will go to councils?’

Paul Beardmore, director of housing at Manchester Council, said using public land to deliver new homes ‘is high on our list of priorities’ but that he had not had discussions with ministers about land auctions.

Geoff Driver, cabinet member for housing at Leeds Council, said it would be ‘looking for every way and means’ to get the money to build new homes.

The government said it would release further details on the auction scheme next week.

The Budget also contained plans to allow councils to change commercial properties to residential use without the need for planning permission.

Richard Petty, head of affordable housing at consultancy King Sturge, said he felt such conversions were often unsuccessful. ‘The structure of office buildings doesn’t lend itself to residential conversion,’ he added.

What the Budget revealed

Planning

  • Consultation on making it easier to convert commercial buildings to residential use
  • Streamline planning applications

Public land

£350 million
potential realised by Ministry of Defence land disposals

20,000
number of new homes government hopes will be delivered on public sites

First-time buyers

£250 million
investment in new firstbuy scheme for first-time buyers

10,000
number of households it will enable to buy a home

What the sector thinks

‘I’m underwhelmed by this Budget. Firstbuy is welcome but it will only help about 400 homes in the north east, which is going to do nothing for overall demand for housing.’
John Craggs, deputy chief executive, Gentoo

‘Ministers are lining up to take pot shots at the planning system and its impact on growth, seemingly not connecting any of their own reforms with aspects of current non-delivery.’
Rob Lucas, chief executive, Turley Associates (planning consultancy)

 

 

Readers' comments (7)

  • Rick Campbell

    The phrases "can of worms" and "profiteering developers" sprimg to mind.

    It's a pity (a gross understatement) that "at least a partial solution to the lack of future housing" doesn't,

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  • Sidney Webb

    I'm going to ask my bank if I can pay my mortgage after I've finished living in my house - I'm sure they will say yes, although Tesco have declined my offer to pay for shopping after I've eaten it.

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  • Rosa Hooses

    PSR - you will have been living in your house 25 years or so by the time you pay your mortgage, so they've kind of agreed already. Tesco won't let me pay for shopping after I've eaten it, but my bank is okay with the idea - thanks Mastercard!

    The idea is not bad in principle, they just need to make sure that the risk/reward is shared - the way it's presented above sounds more like all the risk sits with the public landowner and all the potential reward with the developer.

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  • Rosa Hooses

    PSR - you will have been living in your house 25 years or so by the time you pay your mortgage, so they've kind of agreed already. Tesco won't let me pay for shopping after I've eaten it, but my bank is okay with the idea - thanks Mastercard!

    The idea is not bad in principle, they just need to make sure that the risk/reward is shared - the way it's presented above sounds more like all the risk sits with the public landowner and all the potential reward with the developer.

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  • Sidney Webb

    The only way is debt then, it seems Rosa - I thought the idea was to reduce borrowing and the causes of borrowing, or did I miss something in the presentation of the government's case?

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  • Clearly PSR, the government is like St Augustine of Hippo when it comes to debt, "lord make me virtuous but not yet". Without debt finaced consumption we woudn't have an economy any more, FFS what are we supposed to do ? make things? ewww! dirty old manufacturing is so 1950s anyway we logged all the old machine tools off to china when we bulldozed the last few factories to build flats on ( sorry I mean regnerate the area ) and we can't borrow to buymore machine, as banks only understand property and complex derivatives nowadays.

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  • Sidney Webb

    Are you saying there's no escape harry?

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