David Bainbridge, Partner, Bidwells, assesses the land deals being done to deliver more homes to the market.
Confidence is key to successful business and the market for housing land is no exception.
Whether a stock market listed national or privately owned regional, the business models for house builders are similar. If there is confidence that new homes will sell at or above the volume and price predicted, then more land will be sought for more building.
Sir Oliver Letwin’s Independent Review of Build Out found that house builders do not land bank but there is an untimely lag between receiving planning permission and delivering new homes.
Before and after land receives planning permission there is a land deal to be done.
Whilst some divisions of house builders are not currently willing to go unconditional on a land purchase, this is likely to be temporary and not a trend. Deals are continuing to be done to ensure the residential land supply holds-up.
It seems the deal or no deal uncertainty in respect of the UK’s exit from the EU has not had the negative effect feared by some.
The confidence factor is understandable given the positive market dynamics of low borrowing rates, good mortgage availability and the imbalance between supply and demand for new homes.
Looking back isn’t always a good indicator of the road ahead but if it were then confidence should be high following strong half-year results from Barratt and Redrow. Profits before tax grew 19% and 5% respectively with positive sentiments on the future market.
In his statement as Barratt Chief Executive, David Thomas, said: “The land market remains stable and we continue to see excellent land opportunities that exceed our minimum hurdle rates.”
Barratt expect to approve land acquisition for between 18,000 to 22,000 housing plots per annum over each of the next three financial years. Therefore, plenty of deals to be done.
Growth deals
A different type of deal is the emergence of growth deals between local government and central government. The first of which was the Oxfordshire Housing and Growth Deal which was sealed in March last year and is in the process of being implemented.
In return for £215m the local authorities in Oxfordshire have settled on delivery of 100,000 new homes by 2031 and are out to consultation on vision and objectives for development to the year 2050. The sweetener in this deal is protection from so-called speculative planning applications for new housing as the Government has lowered the housing land supply to three years across the County and in so doing practically turned-off the supply from land not already consented.
Further growth deals, possibly with even sweeter recipes, are anticipated in Milton Keynes, Northamptonshire and Bedfordshire which all sit within the Oxbridge Growth Corridor.
In the east of the corridor progress has been made over joint working and plan-preparation for Cambridge City and South Cambridgeshire District with both Councils having issued a call for sites to better understand what land is available for development.
Confidence in the housing market remains such that land deals continue. Land is one of the key components of development and the availability of land and ability to secure planning permission are vital parts of growth deals intended to deliver on the Government’s objectives for the economy and delivery of new homes.
David Bainbridge, MRTPI, Partner, Planning at Bidwells, has 20 years’ planning experience. He has successfully delivered planning permission and land allocations for residential, industrial, leisure and mixed-use developments. David is a former Chair of the East Midlands Royal Town Planning Institute, having qualified in 1999.
