Losing the plot

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Forget about quick fixes. The reality of PPG3 is that greenfield permissions are going to take time, and many will fail. Nigel Moor looks at surviving the land bank squeeze.

Remarkably, despite the uncertainties created by PPG3, many homebuilders have increased their land bank over the past year. But planning minister Nick Raynsford is determined to take a close look at every large greenfield site through the Greenfield Housing Directive, published in October and homebuilders need to be wary of promoting sites that may be turned down.

The Government's desire to achieve 60% of housing completions on brownfield sites is such an over-riding aspiration that it must now be a starting point in any consideration of land banking strategy.

Unfortunately, the Government seems to have forgotten that even under its targets some 40% of housing completions will be on greenfield sites.

Raynsford seems willing to contemplate what almost amounts to a moratorium on greenfield development. Blockages are likely to occur at least until he is satisfied that local planning authorities have carried out urban capacity studies and identified brownfield opportunities.

Many local authorities have embarked on these exercises, but they are going to take time and we know brownfield means complexity of site assembly, clearance and contamination remediation.

In any event, I predict the policy will lead to a major reduction in the flow forward of housing land and the falling away of the building rate - the very opposite of what the Government presumably intends.

Completion rates
Over the last two decades, we have only achieved strategic target housing completion rates by using large greenfield sites. Growth areas such as Lower Earley, Bracknell and Horsham provide compelling evidence. Demographics also come into this. The area where household growth projections are greatest up to 2016 extends from Cambridgeshire southwards through Northamptonshire, Bedfordshire, Buckinghamshire, Oxfordshire, Berkshire to Wiltshire and Somerset (see map).

Anyone familiar with these areas will know an objective of 60% brownfield completions is impossible. In Oxfordshire, the latest survey shows that during the last five years 48% of the county's completions were achieved on brownfield land. Recycled rural sites, such as farmyards, raise the figure to 53%. The past five years has seen planning policy trying to encourage an increase in brownfield completions - but this has relied heavily on windfalls and it is difficult to see that rate changing radically. This is also the view of the county planning department.

My prediction is that Government will have to accept a 50/50 split as being the only workable longer-term policy. In the meantime, homebuilders must adopt both long and short term strategies.

Short term land bank strategy

Keep greenfield planning permissions alive. You do not need to do much physically to effect a legal start, but you must have all the planning conditions sorted out before you start. This is preferable to trying to extend the time for starting the development, because local planners can look again at the basis for the permission if you seek to extend the time period.

Explain to landowners and their professional advisors that now is not the time to seek new planning permissions on greenfield sites. Option clauses will need to be renegotiated to allow more time for permissions later in the lifetime of the option.

Get involved with brownfield land capacity studies. Local planning authorities are inviting landowners/developers to bring sites forward. Explain to owners of these sites that it will be extremely competitive. It will be no good just posting the local planning authority a plan with the site outlined in red. Site appraisals need to be carried out and sites promoted strongly.

Forge strategic alliances with the holders of large tracts of brownfield land like the Ministry of Defence, National Health Service, Railtrack and Port Authorities. I note that Railtrack now intends to ring fence vacant operational land to ensure it is not sold off for redevelopment. Such landowners may have felt they had a monopoly on brownfield, but they will face competition from myriad smaller sites which local planning authorities are being pushed to consider - even if they are not in conformity with the adopted local plan. That is the true message of PPG3.

Affordability could be the strongest weapon when reappraising green assets in the land bank. Provision of affordable housing on marginal brownfield sites can be difficult. Government advice accepts this and most affordable housing has come through on greenfield sites allocated in local plans. Forge alliances with local housing associations.

Rethink the location. Market towns, for example, could prove to be a source of brownfield land. Changes in agriculture mean the closure of maltings, agricultural machinery businesses, livestock markets - all previously developed land which can now be examined for residential or mixed use potential.

... And what you should be doing for the long term

Monitoring local plans will be vital because even though sites in the land bank may already have allocations, they will need to be reviewed in the roll forward of local plans. These reviews will have to take into account the urban capacity studies and it is vital that local authorities are encouraged to embark on these studies and that homebuilders give every assistance they can. If the greenfield site can be retained as an allocation in the local plan post PPG3, clearly this is going to make a call-in less likely. Many larger planning consultancies publish local plan monitors on a regular basis and these will be required reading. In preparing for local plan reviews, the following aspects will need particular consideration.

The sustainability of an allocation can be improved in many ways, but improving public transport connections to the site can be particularly effective. Existing routes need to be analysed and discussions opened with local operating companies. There is now case law that accepts that subsidies to the operating costs of bus services are a legitimate planning gain.

Many allocations can be re-examined for their potential to accommodate mixed uses rather than solely residential development. Again volume homebuilders could develop strategic alliances with leisure and retail companies to explore ways in which allocations in the land bank can be re-examined.

Sustainability of a greenfield land release can be improved if it can be shown to be linked to regeneration initiatives elsewhere. John Prescott refused to call in a major greenfield (and Green Belt) residential allocation in Newcastle because it was linked with a major redevelopment of a worn out inner city area. Regeneration can also be linked to town centre improvements. Homebuilders may be prepared to contribute towards town centre improvements.

Government argues that its new strategy is part of its plan monitor and manage (PMM) approach to planning. Homebuilders need to adopt the same approach to selecting the right land bank strategy. Most land held in land banks by homebuilders will be greenfield and I have already heard speculation in the market that some major homebuilders have taken policy decisions not to acquire further greenfield land at present. I think this is short sighted as ultimately we will move to a more sensible 50/50 split. The current uncertainties present an opportunity to negotiate options on greenfield sites, provided owners and their professional advisors are realistic about timescale and the changes to planning promotion. For example, in PPG3, there is a hint that an extension of an urban area into the Green Belt may be preferable to development on greenfield in a less sustainable location.

Companies such as Bovis, Bryant, Crest Nicholson, Countryside and Redrow have invested heavily in strategic long-term land. Redrow particularly in brownfield. Companies such as Barratt, Beazer and Persimmon have concentrated on short-term land. Usually brownfield land has come on to the market, with or without planning permission, and been purchased outright, rather than banked. Some sites can still be income-generating and this can help to service the acquisition. On larger sites such as the former airbase at Upper Heyford in Oxfordshire, where a consortium of homebuilders has entered into a joint venture with the Ministry of Defence, a long-term planning promotion is being conducted alongside a short term strategy aimed at maximising rental income from the site -achieved through short term lettings.