L&Q deal marks a crucial moment in time for the sector

As housing associations look to significantly ramp up their development pipelines, availability of land has become more crucial than ever. Last year, Clarion revealed its plans for a £1.1bn land-buying spree. They are not alone. Analysis by Savills found that associations bought four times as much land from them last year compared with 2015.

But L&Q’s purchase of Gallagher Estates, first flagged by Inside Housing at the start of the year, is in a whole new league. The move will give L&Q unprecedented access to land, resource and skills - and the means to meet its ambitious development targets.

Gallagher specialises in ‘land purchase and assembly’ - buying land, obtaining planning permission and re-selling. Sometimes this is described as landbanking.

“L&Q’s purchase of Gallagher Estates is in a whole new league.”

The company, which has land for up to 42,500 homes on its books at present, will continue to operate as a stand-alone business. L&Q will get first refusal on land, expected to be sufficient for 5,000 homes annually. Sites not purchased by L&Q will be sold privately, with the profits filtering back up to the landlord.

This pioneering deal illustrates L&Q’s ambition and determination to progress. It is also a moment in time for the sector: the point at which associations first have the means to really join the ranks of some of the largest volume house builders. It reinforces that social landlords are very much part of the solution on supply.

That achievement highlights an important debate, which so far has been set to one side: the question of additionality.

So far, the government has focused only on increasing output from each part of the housing market.

In recent years the focus had been on the private sector. Arguably, slow progress from private house builders prompted ministers to re-engage with housing associations. Now it looks as though development from the private sector, housing associations and local government will all be welcomed.

So far, so good. Associations are rightly stepping up to the plate.

The problem is that markets are complex. Increasing association supply may not increase total supply for a raft of reasons.

If associations build on sites that could equally be built out by private house builders, there is no guarantee that the overall volumes will increase.

Some commentators therefore argue that the role of housing associations should be to build on challenging sites that the private sector would not touch.

Of course their ability to do so is curtailed by the paucity of government funding, which requires them to focus heavily on returns to generate sufficient funds for future development.

There are also important questions about how fast local markets can absorb new homes without affecting values, and the extent to which the need for landbanking reflects an underlying issue with unsustainable land prices and planning gain.

A successful, long-term strategy for housing growth will require some answers to these difficult questions.