Titillated by Transport for London, captivated by King’s Cross and hypnotised by HS2, the government has decided to cash in on rail-related property assets.
Forget housing, Network Rail was the real story of this week’s Budget.
That’s not to downplay the scale of the chancellor’s intervention in the housing market. Curbing non-dom tax benefits, a thoroughly justifiable policy in itself, is likely to further depress the top end of the housing market. Tax changes for buy-to-let investors deliver on the chancellor’s stated intention of cooling that market. Meanwhile, social housing providers face the budgetary challenge of implementing a 1% annual rent cut over this parliament.
Refreshingly, George Osborne had plenty to say on devolution, too. Devo Manc will gather pace with a land commission for a city that is the engine of the northern powerhouse. A county devolution deal for Cornwall was apt for Seythen Kews Kernewek (Speak Cornish Week), but appeared less economically necessary and more politically expedient. His confirming talks with other city regions, including Liverpool, Leeds and Sheffield, about similar deals to that in Manchester are more promising.
But all that will take time to deliver results. The decision to establish a “dedicated body to focus on pursuing opportunities to realise value from public land and property assets in the rail network” will have greater short-term impact. Like almost one in 10 trains on the network, it is long overdue.
Ministers and civil servants have seen the successes of King’s Cross Central, the 67-acre scheme developed by Argent and owned jointly by taxpayer-funded London & Continental Railways, and the International Quarter at Stratford. They will also have noted the promising work being done by Transport for London in capitalising on the value of its own estate, particularly through creating retail outlets in locations that have greater footfall than most high streets.
Osborne promises nothing less than a transformation of Network Rail as it attempts to keep pace with the huge increase in passenger numbers. High Speed 1 chief executive Nicola Shaw has been recruited to advise on the long-term future shape and financing of the body. She will work with new chief executive Sir Peter Hendy, who has been brought in from TfL.
The new body will be charged with maximising benefit to local communities and reducing public-sector debt by selling off land currently owned by the taxpayer. It will build on the opportunities created along the HS2 routes – from Birmingham to Manchester to Leeds – by focusing on other high-footfall stations. It is early days yet, but expect major terminuses with development potential (Clapham Junction?), commuter hotspots (Guildford, anyone?) and busy regional stations (Ipswich, perhaps?) to be among those assessed first. If this new thinking were able to speed up decisions around the Old Oak Common superhub in west London too, so much the better.
The review will be concluded before the Budget next year. Between now and then, the government will need to tread carefully where there are live commercial considerations.
As recently as May, Capital & Counties bought Kier Property’s share of its Solum Regeneration joint venture with Network Rail. Solum is exploring opportunities for future redevelopments on and around significant railway station sites in and around London. Those arrangements should proceed unhindered.
There is no shortage of opportunity on rail-related land. And it’s encouraging to see the government move decisively to help deliver it.
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