Development Land - Where to?

The development land market died in late 2007 or perhaps early 2008 and has barely twitched since.

Availability of funding to developers has polarised at the top end ie to the large volume builders, reducing competition and constricting choice for land owners.  And the desire to build houses in many areas eg the east coast former coal field areas of both Northumberland and Durham has largely evaporated.  Mortgages remain problematic and buyers need serious deposits – up to 25%.

Against this backdrop the Government needs to take a lead and its professed policy seems to do that.  Their “localisation” agenda, coupled to an incentive of a £1 billion pot called the New Homes Bonus by which Local Authorities will receive 6 x community charge for every net gain house consented is part of this policy and seems sensible.  But what does it mean?  Is it “civic engagement” linked with “collaborative democracy” to create a “bottom up” system?  Or, will it merely fire up more “nimbyism” – is a well organised community going to be at all swayed by the New Homes Bonus if it feels a house building scheme is not right for their village/town?  Rural people, for too long excluded from the democratic process in favour of the more populous and arguably more influential urban dweller – and definitely, in the north east, relegated in favour of the “hot” economic areas of the south east – may well feel a glint of hope that Local Authorities will allow localism to filter down but frankly this will not help the need to build more houses which is a particular problem in County Durham where house numbers are badly under target, unless realism can prevail over personal preferences.  If however village communities can see that building new houses in their community might for example create the critical mass of population to allow the village shop to reopen then maybe we will see movement.  Indeed if “localism” means allowing a local entrepreneur to relocate and run his business from premises within a village then we could see economic regeneration contributing to rural economies.  We should not, after all, necessarily have to drive to a fringe urban business park or industrial estate to get to work.

As to the market, we at Youngs Chartered Surveyors are seeing rekindled interest in large strategic development sites in certain areas but it does tend to be almost entirely from the volume builders only.  Smaller sites which do not give the required economies of scale remain slow; and the former coal field areas are for the large part “no go” bar some pockets of activity.  At Youngs Chartered Surveyors we can see “green shoots” as builders realise the need to rebuild their land banks and to look to the future for the hoped for (not necessarily expected!) upturn but the figures are rather less than they were 3 years ago, both on land values and option payments.

One thing is certain, Local Authorities need to try and place fewer obstacles to development to try and get activity going.  If “localism” means sensible decisions can be made by and to benefit local people then good.  But if “localism” means “nimby” based protectionism then little may change and development may polarise to those communities who are less vociferous.

So hats off to the Government for trying to revive the corpse, but is the reconciling of development and local communities always going to remain just too complex to really get house building going?

If you have a development land issue you want to discuss or you have been approached by a developer ring John Turnbull, BSc, FAAV, FRICS on 0191 5261191.