I was at a SEEC event last week, providing some facilitation for a table of councillors. It was a great event featuring many people already delivering housing and associated infrastructure. Inspiring stuff, but I don’t think anyone will blame me if I say that it was economic adviser Tim Leunig who gave me the most food for thought from the day.
Speaking quickly and with candour he was an excellent closing speaker. There was no shuffling coats on, or packing up of papers, while he set out a challenge for the room. I’ve been turning it over a bit in my mind since, so this post may not be a true reflection of what he said so treat this as “inspired by” rather than “as related by” Tim.
Infrastructure and Housing
One of the most difficult hurdles when delivering housing is the associated infrastructure. Local people, seeing services under pressure, resist more development. And a model of “infrastructure first, housing second” is both difficult to fund and not trusted as a message. However it came across very strongly from everyone that we’ve got to find a way to get infrastructure to accompany house-building and not follow on.
So, says Tim, why not run “A Call for Sites with a Twist ™” ? In this process, land owners would be able to put up their sites for consideration in a SHLAA process *and* they would agree to the council being able to buy the site for a multiplier of existing use value. In this way, the land owner gets a small windfall and the council gets the bulk of the increase in land value from agricultural (£10k / Ha) to housing land (£1000k/ Ha). And this uplift can be used to front-load infrastructure (or swimming pools, or negative council tax, or whatever pressing infrastructure need you can identify locally).
He gave the example of some friends who recently bought a patch of land to protect some ancient woodland for £8k/Ha. It’s near a station, in an area of the SE that people would love to live in. Would they be prepared to sell for £25k/Ha ? Probably. Post consent there is a windfall of over £1m to prepare and develop.
In this way the value created by the development is shared more equitably between the land owner, the developer and the residents of the place. It’s also a more straightforward process than the murky world of multiple options that takes place at the moment – which may be partly to blame for the foggy boundary between land speculation and actually getting on with building things.
At the time I suppose I was guilty of a fairly standard ‘officer’ response:
- For good reasons we are suspicious of get rich quick schemes, and this sounds too good to be true.
- Moreover, land prices are “policy on” – the reason his friends’ land was £8k was precisely because it was undevelopeable because of the ancient woodland.
- Lastly it is the present system’s insistence that councils can demonstrate a 5 year land supply that means councils must allocate land for housing, therefore make land owners millionaires, and begin the process of negotiation over a barrel
However, if you could find a way of making it work it really could be a way of delivering development in a high quality, infrastructure-led way. And using land value to fund it. What a prize.
Tim ended with a clear message – a national approach to betterment was not on the cards, but conversations with the SoS about particular places and particular schemes were on.
As with all potentially brilliant but possibly naive schemes there comes a point where it behoves us to try it rather than just talk about it. I’ve been nudging LGA colleagues to see if we can help to see whether “A Call for Sites With a Twist ™” works. Are there land-owners out there who are prepared to undersell their assets because they want the warm feeling of a well-delivered place ? Or others that just want the certainty of cash in the bank now rather than the possibility of a bigger payoff at some unspecified point in the future ?