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London councils sitting on land as plans start to unlock development

A CN investigation has found that London’s councils are sitting on dozens of acres of vacant land ripe for development, as the government ramps up plans to unlock stalled private-sector developments.

Following an Institute for Public Policy report calling for the release of publicly held land in London to tackle “the capital’s growing housing crisis”, CN asked nine councils to provide detail on their land holdings (see box).

Wandsworth Council led the table, with around 7.5 hectares of declared surplus land across 26 sites. Just 1.3 hectares had been disposed of in the last three years, with eight contracts awarded.

Five of these were awarded in 2012, with three awarded last year and none in 2010. Among those tendered but not yet awarded was the 2.2 hectare Elliott/Westleigh site.

Croydon was hot on their heels with 6.23 hectares, and just eight contracts awarded to develop sections of the land. The last planning applications submitted to develop the council’s vacant or spare land – the Croydon New Build programmes - were registered in 2009.

In August 2011, communities secretary Eric Pickles asked councils to publish asset lists to enable better property management, estimating that £35 billion could be saved over 10 years.

However, Barking and Dagenham and Newham councils told CN they did not have reliable or “readily available” records of their land ownership records.

Newham Council admitted that their land ownership records were “out of date and unreliable”, and told CN it would be too expensive to obtain information on what land the council owns, let alone how much of that is vacant.

Barking and Dagenham also said it did not hold the information in a readily available form, and failed to provide a response by the time of writing– missing its statutory deadline by over a month.

Construction News asked nine London councils, identified by the IPPR as having the largest land capacity for new homes, to supply data under the Freedom of Information Act on vacant land holdings and contracts awarded for development of that land in the past three years.

  • Barking and Dagenham: Does not hold the information “in a readily available form”.
  • Barnet: One site disposed of this year – long-leased to a housing trust for £0. Nine sites sold for substantial amounts in past three years – most for around £600k; 12 more authorised.
  • Barnet: 11 sites sold for between £0 and £12m in past three years for total of more than £16m; 12 more authorised for future sale.
  • Croydon: 6.23 ha, eight contracts awarded. Also works with Wates Construction and Sir Robert McAlpine on regeneration projects.
  • Ealing: 26 sites named for disposal, only three taken to market as part of one scheme. Remaining sites estimated worth is £20.73m.
  • Greenwich: 11 potential sites on which 195 affordable houses could be built. Currently “reviewing its portfolio of land and property”.
  • Newham: Land ownership records are “out of date and unreliable” and would cost “at least several thousand pounds” to obtain.
  • Southwark: Denied holding surplus land, saying it was either “held for investment urposes” or sold on open market. Only contracts let in past three years were to surveyors.
  • Tower Hamlets: Three priority sites for disposal, seven possible candidate sites and 18 potential sites for release.
  • Wandsworth: 7.5 ha of declared surplus land across 26 sites. 1.3 ha disposed of in past three years.

“One of the few things that can’t be manufactured is land. So any and every credible opportunity with this limited resource should be used to maximum effect to produce economic and social advantage.”

“Whether for homes or office space, there’s demand and we need practical steps to meet it.”

James Wates CBE, deputy chairman of the Wates Group board and chairman of the UK Contractor’s Group.

The industry is also gearing up for expected announcements from the government next month on plans to boost housebuilding, which could include easing credit flow and using the government balance sheet to underwrite housing association bonds.

Plans to unlock stalled work have come to the fore this week as part of the government’s latest efforts to help the industry return balance to the economy through stimulating private investment.

Taylor Wimpey chief Peter Redfern last week told CN mortgage availability was a key challenge for the industry, while Kier affordable homes managing director Chris King said it was “absolutely imperative” that FirstBuy was extended.

However when asked about reports in the Financial Times that the government was planning to underwrite housing association bonds, slash borrowing costs, and would encourage private housebuilders to collaborate with associations, while boosting Firstbuy and Newbuy, a DCLG spokesperson told CN the reports of a new announcement were “pure speculation” and that the department was “not going to give a running commentary on policy-making”.

But recent moves by ministers seem to lend credibility to the reports, with deputy prime minister Nick Clegg saying at a Lib Dem forum last month that “we could use the government balance sheet to remove risk from them going ahead; it is one of the biggest things we can do to build more homes”.

And earlier this week communities secretary Eric Pickles announced that “expert brokers” will serve as mediators to help developers renegotiate Section 106 deals that were struck in a more hospitable economic climate.

Section 106 agreements often require builders to dedicate a proportion of their investment to infrastructure and affordable housing.

Homes and Communities Agency executive director David Curtis told CN essential infrastructure requirements would still be demanded of developers, but that “there may be some elements that could be deferred to later dates, or could be amended”.

Federation of Master Builders chief executive Brian Berry called the review of Section 106 “long overdue”, as “a lot of those agreements were negotiated during the recession, and developers are having to fulfil those obligations in a very different economic climate. What we need is certainty about what is expected”.

Mr. Berry added that making mortgages affordable should also be a priority for government: “We need to build on the NewBuy initiative, we need to make it much easier for first time buyers.”

“And let’s not forget about retrofitting buildings – there’s a lot of empty buildings in city centres that could be renovated for use.”

But Southend-on-Sea Council chief executive Rob Tinlin said that, even where they had radically reduced affordable housing requirements, projects were remaining on hold.

“There’s lots of other sites here that are stalled but it’s not the s106 that’s the problem; it’s the banks, availability of finance, and having paid too much for sites at the top of the market,” he said.

However, some initiatives to unlock housing are already beginning to bear fruit after Council of Mortgage Lenders data released this week showed lending to first-time buyers in June was at its highest level since July 2010.

The FirstBuy scheme, which provides equity loans to buyers, has received plaudits from the industry but is due to expire in March 2013. Hopes are high for NewBuy, aimed at overcoming the deposit gap for first-time buyers, but housebuilders say it will take time to assess its impact.

Galliford Try managing director of affordable housing and regeneration Stephen Teagle called for “an acceleration in the release of public sector land across the country, and for that to be done in a consistently managed process”.

Mr Teagle suggested a central league table of council land release, adding: “Local authorities all have very different rates of travel – some have really stepped up the mark and are exemplars in terms of releasing land, and other are some way behind.”

Land in London is in high demand, with house prices on average 121 per cent higher than the rest of England and Wales.

“Alongside a lack of affordable mortgage availability, a lack of developable, viable land is the biggest constraint on supply. In the South East in particular, land is at a premium so if more were to become available that would be a huge positive.”

“We have an acute housing crisis in London. If you’re just knocking them down and building like-for-like, you’re not going to address that.”

Steve Turner, Home Builders Federation head of communications

The moves to stimulate the sector follow a string of abysmal statistics on housing starts, registrations and prices. Charities, trade bodies and companies have been calling on government for months to stimulate the sector, release green belt land, simplify planning permission, ease pressure on mortgages and make unused council holdings available.

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