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Adam Hesse

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Developers have been made the whipping boy for alleged land banking when it’s the planning system that’s at fault, says Aston Mead

370 230 Aston Mead Land and Planning | Land with development potential across Surrey

Leading land agent Aston Mead has questioned new recommendations to penalise developers who fail to build new homes on sites they have acquired, despite having been given planning permission.

The suggestions have been made in a wide-ranging report on the government’s proposed planning changes, published by the Housing, Communities and Local Government (HCLG) Committee.

The report urges the government to ‘set a limit of 18 months following discharge of planning conditions for work to commence on site’, after which permission ‘may be revoked’. Following a further 18 months for development to be completed, the local authority ‘should be able to levy full council tax for each housing unit which has not been completed’.

Aston Mead Land & Planning Director Adam Hesse said: “Firstly, the idea of charging council tax on uncompleted homes is a complete non-starter. Any barrister worth their salt working on behalf of a developer would be able to point out that this would be charging for services – like maintaining roads, collecting bins, and cleaning streets – which were not yet being provided. They would have to create a new levy instead, but it wouldn’t be council tax!

“Secondly, all of this presupposes that developers are deliberately sitting on land they’ve acquired and doing nothing with it – or what has become known as ‘land banking’. But to be honest, we are at a loss to see where these claims are coming from.

“As land agents for the past twenty years, we’ve been working day in, day out, with people who buy and sell land. That’s what we do. And I can honestly say that for every single site that we’ve sold in that time, I don’t know any company which hasn’t built out as quickly as possible.”

An investigation into land banking in the housing industry conducted by Sir Oliver Letwin under Theresa May’s government and published as recently as 2018 concluded that it was not an important factor in slow build rates.

Adam Hesse says the perception that developers are land banking demonstrates a fundamental misunderstanding about how housebuilders run their businesses.

He explains: “Housebuilders’ profits are generated from selling homes, not from an increase in the value of land they own. The idea that they spend their time acting like financial investors, speculating over future land values is a myth.

“If anything, it’s the absorption rate which is slowing delivery; most housebuilders simply build out sites at the pace demanded by local market conditions. Admittedly, they could help themselves by producing a wider variety of homes in each development, differing in size, design and setting, to increase the appeal to a range of markets. That could accelerate built out rates substantially.

“But the truth is that developers have been used as the whipping boy for the slow pace of development, when actually it’s the planning system which is at fault. One minute it’s Nimbys protesting about development, the next it’s MPs saying you’re not building fast enough!

“So rather than beating developers with a stick, time and money would be better spent on making sure planning departments were fully funded, to enable permissions to be given more quickly. That’s the only way we’ll get to building the target figure of 300,000 homes per year the government are demanding.”

AM PRESS RELEASE

Aston Mead welcomes move to ban councils from gambling on the property market

370 230 Aston Mead Land and Planning | Land with development potential across Surrey

Adam HesseLeading land agents Aston Mead have welcomed proposals to ban local authorities from making risky investments in commercial property and say councils should spend the money on affordable housing instead.

The move follows revelations that since 2016 local authorities have borrowed £6.6bn to buy shopping centres and office blocks, to replace revenue lost by government cuts – 14 times more than in the previous three years. Over a third of that spend was made outside their boroughs. Last month it was reported that the Treasury now intends to “severely restrict councils’ ability to borrow for the sorts of out-of-area investments which are for yield rather than for policy reasons”.

Aston Mead Land & Planning Director Adam Hesse said: “We’ve been warning councils about their wild property gambling spree in a series of press releases, articles and interviews for the past two years.

“For instance, we know of one local authority which bought a shopping centre for an eye-watering £40m just weeks before the lockdown came into effect. Not surprisingly, more than 90% of its stores are now shut. And there’s another which paid £6.2m for a hotel that the tenant has said will go bust without a rent cut of up to 80%.

“Let’s face it – the authorities concerned are hardly experts in property speculation. And yet they are risking vast amounts of taxpayer-funded debt on commercial premises, often outside their districts, and about which they know next to nothing. These councils are massively over-exposed and putting public services in jeopardy. I’d be astonished if they got half of their money back or half of their rents paid!”

The British Property Federation says that only one third of retail rents and two thirds of office rents were paid on time in March of this year. It expects those figures to halve again this month. Meanwhile, Property groups are finding it difficult to sell retail parks even at rock bottom prices, and analysts forecast lower office rents for years to come, as more people chose to work from home.

However, it has since been suggested that the proposed ban may contain a major loophole because whilst the plans will force councils to hire a qualified independent accountant, it appears that they may not have to follow the advice provided.

Adam Hesse said: “This is absurd. For this ban to work, it should be mandatory to follow the guidance given. No exceptions, no exemptions, no excuses.

“In fact, we would propose that councils go even further. Local authorities have been funding their property speculation by borrowing from the Public Works Loan Board at incredibly low rates.

“No one begrudges councils being able to access money cheaply, of course. But we think that this cash should be used to build affordable homes on council-owned land instead.

“Local authorities are some of the largest landowners in the UK. As one of the South East’s most proactive land agents sourcing sites for our developer clients, we are amazed at how much council development land there is in our town and village centres, and yet they’re doing nothing with it!

“We suggest that councils could continue to invest in property by selecting their own sites on which to build, provide the planning permission required, and decide how many properties should be constructed – all in their own local regions – the circumstances and needs of which they intimately know and understand.

“The homes would enhance the value of the land, as well as provide a regular rental income for the council. The level of risk the authority would be exposed to would immediately diminish, and it would mean that we could start to construct the affordable homes that people in this country so desperately require.

“Perhaps the Government should issue Compulsory Development Orders on local authority land where there is an acute shortage of affordable homes to offer those on the waiting lists.

“It’s estimated that this country needs to build 100,000 genuinely affordable homes over the next five years – many of them for key workers. Our proposal would be the perfect way to thank them for their sterling efforts through the Coronavirus crisis.”

Adam Hesse

Stirling Prize award proves good housing design is possible everywhere, says Aston Mead

526 315 Aston Mead Land and Planning | Land with development potential across Surrey

Leading land agent Aston Mead says the award of the RIBA Stirling Prize for Architecture to a development of council houses in Norfolk is proof that good design is possible for properties in all price brackets.

Goldsmith Street in Norwich became the first social housing project ever to win the prize from the Royal Institute of British Architects. Judges described the development of 105 homes as a ‘modest masterpiece’ and ‘an outstanding contribution to British architecture’.

Aston Mead Land & Planning Director Adam Hesse said: “For too long we’ve put up with the excuse that good design is too costly to be applied to lower value homes. But what happened in Norwich has put the lie to that argument at a stroke. This is quite a modest development of 50 one, two and four bedroom flats, together with a similar number of two-bedroom houses – but now it has been recognised as a pioneering example for other local authorities to follow.”

The properties in Goldsmith Street have been built to eco-friendly ‘Passivhaus’ standards – ultra-low energy buildings which need little fuel for heating or cooling. Over a quarter of the site is communal space – lushly-planted, with a secure alleyway connecting neighbours at the bottom of their garden fences.

Adam Hesse says that a similar approach can be found at the Prince of Wales’s new town of Poundbury on the outskirts of Dorchester, Dorset, which started in 1993 and is expected to be completed by 2025.

He explains: “Poundbury demonstrates that it is possible to build high-quality housing at affordable prices. Around a third of the housing there is being built by housing associations for rental or shared equity ownership by people on the local housing list. But just as in Goldsmith Street, emphasis is placed on the quality of design and materials, landscaping, and attention to detail – even down to street furniture and signage.

“However, crucially at Poundbury, there is no zoning. The social housing is interspersed with – and indistinguishable from – the private housing nearby. This is just the way it should be. When quality runs throughout the development, rather in privileged ‘pockets’, not only do those residents tend to take more care of their properties, but the private homes nearby prefer to have them as neighbours as well.

“Previously, people may have thought that it was only kudos and publicity generated by the Prince of Wales’ connection with Poundbury that allowed such a development to take place. But as the houses at Goldsmith Street in Norwich prove, the truth is that good design should be possible everywhere.

“In fact, with ambition, careful thought, and attention to detail, there is no reason why similar examples of high quality design for properties in all price brackets should not now be created all over the UK.”