The Homes and Communities Agency has put pricing at the forefront of its land disposal policy in response to concerns that developers were withdrawing or choosing not to bid on its sites.
The HCA has approved recommendations, released to Construction News under the Freedom of Information Act, which aim to give buyers greater consistency when bidding for land.
One of the recommendations will see the introduction of a maximum 30 per cent ‘non-price’ element on tender assessments, ensuring pricing is the primary assessment for potential buyers.
According to the HCA, non-price elements include considerations such as whether the purchaser would be able to build what they intend to build, the likelihood of gaining planning permission, and whether the buyer has an understanding of and the capacity to deal with technical issues around site remediation.
As part of the review process, the Home Builders Federation had warned that acquiring public land had become “too complex… and ultimately too costly” for many developers, despite the government’s push to expedite the sell-off of public land assets.
One developer told Construction News his company had previously avoided bidding for public land due to these concerns.
But he said the new target “seemed to make the bidding process much simpler” and that he would now consider bidding for HCA land as a result.
When a developer or housebuilder is interested in buying public land they must submit a tender assessment based on price and non-price elements.
Previously, the non-price element had ranged between 30 and 70 per cent of the assessment, depending on individual project requirements and “local aspirations”, the HCA said.
This is set to change after the HCA’s programmes and finance committee gave the green light to the recommendations earlier this summer.
In its review, the HCA said it needed to:
- Strengthen the connection between its corporate targets and its approach to the disposal of land at a programme and site-specific level.
- Ensure the disposal of each site is based on a sound disposal strategy that reflects corporate targets, local characteristics and a good understanding of technical and market issues.
- Ensure its disposal process is fit for purpose, striking the right balance between risk and certainty (of returns) and is based on a better understanding of this dynamic.
- Ensure the agency’s tender assessment process is robust, credible and fit for purpose.
The changes came into effect for any new land disposals from 17 July this year.
Feeding into the review, the HBF said: “Publicly owned sites for new housing are in a more competitive market than has been the case in recent years.
“It is important, therefore, to recognise that if public land acquisition is too complex, overburdened with red tape or prescriptive conditions, and, ultimately too costly to purchase and develop, then housebuilders will look elsewhere for their most important raw material: land.”