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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.”

Development for Dummies

Development for Dummies: Understanding the development process.

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

In a piece written for the Estates Gazette (EG), Paul Collins, a senior lecturer at Nottingham Trent University, unpacks the stages of development from market research right through to sale letting and use.

Though intended for a student audience, the article titled Making sense of the development process is a comprehensive and easy-to-understand description of the land acquisition process.

In his article, Paul Collins describes the development process as the act of combining the various factors of production (land, capital, labour, and entrepreneurial skills) in the right quantity and quality to produce real estate assets that people wish to buy, lease and – most fundamentally – use.

Collins emphasises that “getting the right land in the right place at the right time, for the right market” early in the process is key to a successful development strategy.

You can read the full overview of the development process including further information on potential site evaluation, the business case, site acquisition both on and off-market, finance, planning & design, marketing, construction, and completion here.

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.”

Small site planning delays ‘stall the engine’ of UK development, says Aston Mead

526 320 Aston Mead Land and Planning | Land with development potential across Surrey

Leading land agents Aston Mead say that planning delays of over a year are forcing individual building projects to be abandoned, and slowing UK development overall.

Director Adam Hesse says that decisions over even the most modest-sized sites are taking an unacceptably long time to bring to conclusion, forcing some small and medium sized developers out of business.

He explained: “Small, brownfield sites in our towns and villages are often unearthed by SME developers. But quick turnover even for these more modest locations is prevented by a planning process which is clunky, time consuming and not fit for purpose.

“The trouble is, local planning authorities encourage a pre-application meeting on all sites before planning is submitted. But meetings often can’t be arranged for two months or more – and even when they do see the applicants, they seem unwilling to give any meaningful direction or advice.”

“It’s often the case that this means people are submitting an application without knowing if the planning department will approve of what is being proposed. Then it takes six to eight weeks to register, and another eight weeks to be heard. So just on the main application, six months can potentially go by without getting any decision whatsoever. And if it goes to appeal, staff shortages mean that there’s a minimum of an additional six months before the case can be heard.”

Adam Hesse cites a planning enquiry submitted by one of his clients to the district council on 1 May this year. The council replied saying that because ‘workloads are very high’, there was no guarantee that it could provide a response by 26 June – a full eight weeks later – saying ‘we would appreciate your patience if we are unable to do so.’

He adds: “So even if developers pull out all the stops, it can still take between 8 and 14 months to get a decision on even smallish sites. Delays like this stall the engine room of SME developers, and UK development in general.

“Local authorities are always telling us that there simply are not enough staff to handle the volume of enquiries that they are receiving. Employees are being run ragged, which leads them becoming de-motivated, which increases the chance of people leaving, and so the problem continues.

“Council planning departments need to be provided with more funding to cope with the workloads they are currently under. Only then will we be able to return the housing market to full capacity.

“Indeed, the current Strategic Housing Land Availability Assessment (SHLAA), which is consulting with boroughs across the UK about releasing greenbelt for development, would have a far easier job if these smaller brownfield sites could be fast-tracked through the planning process. That way, targets would be more easily achieved, which would reduce the need for the release of additional greenbelt. Everyone wins.”

Aston Mead backs report advocating development of 45,000 homes in UK high streets

526 320 Aston Mead Land and Planning | Land with development potential across Surrey

Leading Surrey & Berkshire land agents Aston Mead is throwing its weight behind a new report which suggests that thousands of new homes could be delivered across the UK by developing vacant space in high streets.

The report, ‘Making Sense of Mixed-Use Town Centres’ produced by planning and development consultancy Turley, says that there is currently around 8 million square metres of unused floorspace across the UK’s urban centres, and that even if only a third of it was apportioned to residential development, some 45,000 homes could be delivered.

Aston Mead Land & Planning Director Charles Hesse said: “People often bemoan the vast areas of empty space in our high streets. But we should see this is as an opportunity rather than a problem. If we started creating new properties where there are currently vacant buildings, thousands of homes could be created.

“What’s more, that figure of 45,000 new homes assumes that any new building would not be carried out above the level of existing properties. If planning regulations were relaxed to allow even a modest increase in height, then an even higher number of new homes could be created.”

Charles Hesse also says that town centres need to embrace mixed-use development in order to thrive. He explained: “We should stop seeing high streets solely as places to shop, and start to recognise them as potential residential centres as well. There are plenty of people who would love to live right in the heart of the action, and having more people move into our town centres would turn them into more vibrant and dynamic areas.

“We’ve all had the experience of walking through high streets in the evening, only to find them deserted, resembling ghost towns, with no real activity until the start of the next working day. They can feel unsafe and unloved, and are hardly enjoyable places to visit.

“By contrast, more people living in the middle of towns would mean that they would continue to be lively even after the shops were closed, helping footfall in local pubs, theatres and restaurants. Having more people around would make them safer, turn them into desirable destinations after dark, and at last breathe life back into our town centres.”

Social Housing

Aston Mead says councils betting £100m a month on property market should spend it on affordable homes instead

526 320 Aston Mead Land and Planning | Land with development potential across Surrey

Leading land agent Aston Mead has hit out at the practice of local councils betting on the commercial property market, saying that they should spend the money building affordable homes on their own land instead.

Land & Planning Director Adam Hesse was speaking out after it was revealed that despite guidelines which are supposed to limit the practice, local authorities are still spending £100m every month buying retail centres, shops and offices, chasing returns to replace revenue lost in government cuts.

He said: “Not only is it an unnecessary risk to bet taxpayers money in this way, but the authorities concerned are spending vast amounts of money on assets which may not be worth anything like what they are paying for them.

“Local authorities may be able to borrow at low interest rates from the Public Works Loans Board, but there are no limits to how much they can borrow, and they don’t even have to prove that they can afford it. Consequently, the risks of councils finding themselves over-exposed are enormous.

“What’s more, they could borrow the money to build affordable homes on their own land and rent them out to tenants on their waiting list. The return from doing so would certainly be better than some of the assets they are buying at the moment, and waiting lists would be reduced at the same time. It’s a win / win solution!”

In the last year, councils have spent a total of £1.8bn on such purchases, and more than £3bn since 2013. In April this year, the government instructed councils to take more care to avoid risk, following warnings that demand for retail space was falling and rents were stagnating.

Adam Hesse added: “This is local government – none of them experts in commercial property investment – gambling taxpayers’ money on buildings which are regularly situated hundreds of miles away from their local area, and often bought at huge multiples of their annual income. It would only take prices to fall slightly, and they would find themselves with a serious problem.

“When it comes to low grade shopping centres and department stores, councils are the buyer of last resort because these are precisely the sorts of properties that no one else wants. So if these so-called ‘investments’ were overvalued when they bought them, goodness knows how much less they are worth now.

“Meanwhile, there are swathes of council-owned land across the country, which could be put to good use building much-needed affordable homes, meaning the councils could keep hold of their assets, at much lower risk and at higher returns than gambling on sub-standard investments on the commercial property market.”