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Planning White Paper changes will drive increase in land-led development, landlords predict
Proposals to scrap Section 106 and the Community Infrastructure Levy will see more housing associations focusing on land-led development, sector figures have said.
Speaking at the Social Housing Annual Conference, Tracey Barnes, chief financial officer at Sovereign Housing Association, said: “There is an increasing number of reasons why Sovereign and others are all moving very rapidly to try to take further control of our development programmes.”
Ms Barnes cited the plan to scrap Section 106 agreements, through which local authorities require developers to provide a percentage of affordable housing on their developments, as a driver behind its increasingly land-led approach. Sovereign delivered most of its homes through Section 106, before it decided in 2018 to try to grow by building more homes.
The government’s controversial Planning for the Future white paper proposed scrapping Section 106 and the Community Infrastructure Levy and replacing them with an overall Infrastructure Levy.
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Jane Gallifent, development and sales director at Aster Group, said the group is also seeking to reduce its “reliance on Section 106”, which currently accounts for 70% to 80% of its affordable homes.
She said that Aster had already been “moulding [its] strategy” to become more land-led, but the announcement in the white paper concerning Section 106 had vindicated this move.
Ms Gallifent said if other housing associations were looking to move to a land-led approach “you have got about a two-year window to get it all in place”, noting the time it takes to purchase land.
Sovereign’s land-led approach has seen it complete a £27m transaction for a shopping centre in Bristol. It hopes it can use part of this property to develop affordable housing, though it has yet to receive planning approval for these plans.
Ms Barnes said: “We know that this is taking a risk but it’s just signalling our intention to get the right acquisitions. If the worst comes to the worst [and we can’t develop homes on the land], it is actually pretty attractive from a commercial property perspective.”
She added: “Do I think [commercial property investment] will become a major part of our strategy? Possibly. But I don’t see it as being massive. Each deal would be looked at on its own merits and we would be asking: ‘What is the worst that could happen?’”
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