The government has listed five housing sites for what it calls direct commissioning, which basically means the government is setting up as a property developer on sites it owns. What does this mean and what is the government trying to achieve?
PR is probably top of the list. There is little of consequence in terms of delivery.
The first site, Northstowe, near Cambridge, will not deliver any homes before 2018-19 and these will number in the tens rather than the hundreds. This is despite this decision having been taken originally by Lib Dem Treasury secretary Danny Alexander in 2014.
The Old Oak Common site in London, another on the government’s list, is currently little more than a planner’s dream.
Eventually, though not in my working life, this area will have good public transport connections and will be redeveloped. In the meantime, it will see small-scale, piecemeal development by private landowners and a lot of bickering between as they fight to maximise their assets through the planning system.
But from a PR perspective it delivers a tick in the box for London mayor Boris Johnson and his possible successor, Zac Goldsmith.
The other three sites, near Dover, Chichester and Gosport, are about as far as you can get from the jobs in and around London without getting your feet wet in the English Channel.
The sites also have some serious challenges. Connaught Barracks in Dover, which has been on the Homes & Communities Agency’s books for nearly a decade, is unviable given its relatively low values, poor access, remediation needs and historic structure constraints. HMS Daedalus in Gosport has similar issues.
Direct commissioning feels like a sledgehammer to crack a nut for both sites. Instead, the HCA should invest in the roads and site preparation and procure a lead promoter or development manager to deliver a mix of market rent, custom build, speculative and affordable housing to maximise occupancy and build rates.
Equally the HCA could “grant aid” the private sector to do much of that work using the state aid exemptions introduced by the EU for remediation, infrastructure and historic structures.
In the old days the government would have used housing gap funding to overcome viability gaps, but the UK government has lost the plot on this while the Scots have motored ahead.
Only Lower Graylingwell in Chichester, with the potential to deliver around 160 homes, is nearly ready to go. Some 64 of these are promised as starter homes and will displace the affordable and shared ownership homes originally in the planning application – a likely outcome for most sites once the Housing and Planning Bill reaches the statute books and the National Planning Policy Framework has been revised.
So how are these 160 homes likely to be delivered?
As the current policy priority is home ownership, and as the government will want its money back, it seems likely that it will commission a single builder/developer and use the “sell one, build one” model, with the partner responsible for a substantial part of the funding.
As the government is not well adapted to being a property developer – lacking the experience, systems, processes and skills – a partnering approach seems sensible. But don’t expect much work for small builders or developers.
It will also be interesting to see what the government will do about design. It should be keen for its first site to set a high standard, given the policy as set out in the NPPF. But it does not have the in-house skills to design for custom build and only its eventual contractor will be able to deliver a standard house design.
In due course the initial list of sites will be replaced with more achievable sites in other locations across the public land portfolio. But unless David Cameron’s focus moves from a market sale plus starter homes approach to a PRS and custom build, including starter homes, approach, it is unlikely to have a real impact on either the speed or volume of housing supply.
Chris Brown is chief executive, Igloo Regeneration
