Is the government offering enough of an incentive for local authorities and private sector developers with its brownfield housing initiative?
There is enough brownfield land to deliver up to 200,000 new homes across the country,” said the Rt Hon Eric Pickles MP Secretary of State for Communities and Local Government on 13 August. His latest prospectus offers to release funding of £200m with the aim of creating 30 housing zones on brownfield sites across the country. Each of the brownfield housing zones (BHZ) must be a minimum of 750 dwellings, with the hope that many will contain circa 2,000 homes.
So what does this latest offer from the government mean? Essentially, it is a loan to the private sector developer, via a local authority bid to the Homes and Communities Agency (HCA) for a share of long-term investment funding over three years. This is all very positive for encouraging local authorities to prioritise their major brownfield opportunities. First of all though, not only do they need to request for an area to be designated as a BHZ, they also need to bid for investment funding to be paid to one or more private sector development partners.
Funding is, of course, always welcome and the idea is that it should act as a catalyst to genuinely encourage development. The big question, however, is whether this initiative will indeed accelerate the number of homes in the next three years and encourage local authorities to seek out private sector partners.
Planning will need to be delivered at speed, and the question here is whether the local authorities have the manpower and political will to fast-track such large schemes.
With at least 750 homes to be developed on the majority of brownfield land, a BHZ will most likely be located in a major city or, for example, on old Ministry of Defence sites. Planning will need to be delivered at speed, and the question here is whether the local authorities have the manpower and political will to fast-track such large schemes. A further consideration is how the environmental lobbyists will react to such schemes. Potential BHZs will have to demonstrate local support via neighbourhood or local plans, so in other words these plans need to be in place already. Good design is also key, and the inclusion of design codes should be encouraged, but it is worth considering who it is that will decide on good design and whether codes will be signed off quickly, especially on large sites.
There are more problems from the nature of funding. These lie in the fact that so many large brownfield sites are unviable or marginal, even with infrastructure funding. But the government is offering loans, not grants - confirmation that funding will be recoverable by government is required from the private developer. All funding is to be state aid compliant and should not exceed 50% of the total project costs. This could limit the number of private sector developers to those with strong balance sheets and sufficient resources already. The private sector partners need to show how the funding will accelerate the delivery of the development and that they have the capacity, resources and skills to build it out.
But there are benefits for both local authorities and the private sector. For the local authorities, BHZs mean: priority access to expert planning and technical support and advice to help with the progression of the schemes; dedicated central government help to remove barriers to delivery; access to cheap borrowing at the Public Works Loan Board rates; and increased priority for funding under the £5m local development order incentive fund launched in August.
For the private sector, BHZs mean a willing local authority who agrees what the housing needs really are, and more certainty on planning and timescales. They also mean cash flow at the beginning of a major project, and dedicated resource and skills from the local authority to ensure that delivery is a priority.
So the challenge is whether all this can be considered, confirmed and partnerships created in order to submit an expression of interest by noon on 3 October. It is possible that the partnerships between the local authorities and the private sector are already in place, and therefore these sites are allocated and destined for redevelopment. Given the time scales, I would question whether new BHZs can be generated in time with the necessary support of either neighbourhood or local plans and local communities.
On the face of it, we see a £200m funding package, willing planning authorities and local communities, and support from central government. In theory, housebuilders ought to be chomping at the bit to get started, and phone lines should be hot with calls from local councils wishing to engage with the sector. As autumn approaches, only time will tell whether there is indeed the appetite, resource and skill to take advantage of this prospectus.
Debbie Aplin is managing director of Crest Nicholson Regeneration