12 Jun 2018

Could affordable land be the key to unlocking affordable homes at scale?

Could affordable land be the key to unlocking affordable homes at scale?

I was recently at a fascinating event on community-led housing around the world organised by the Royal College of Art and StART, a community land trust from Haringey in North London, writes Chris Brown, Executive Chairman of Igloo Regeneration.

At the end of the event participants were asked for one change that would most boost community-led housing.

One idea that subsequently got traction on social media was the idea that public land should be sold, as the first option, to community groups.

This is a concept that throws those infected with the received wisdom of public land disposal in the UK into a flat spin. Obviously, they say, public land must be sold to the highest bidder.

But it isn’t obvious at all. Even Treasury would say that the non-financial costs and benefits of various disposal options should be considered. And this is reflected through much of the guidance around local authority disposals (s123 of the Local Government Act), the governing statutes for other public bodies and the State Aid Rules.

Essentially, pursuing the largest amount of cash is just a lazy, and often grossly inaccurate, proxy for doing the best thing with public assets. That’s not to say that cash receipts aren’t important, as they can easily be used for other forms of public benefit, but maximising public benefit on an individual disposal is a little more complicated.

If the principles of the Social Value Act applied to public land disposal the country would often get more bang for its public-land buck. Government is looking closely at this and there are increasingly loud murmurings that changes to the Act are approaching and this might be one of the directions of travel.

And public land disposal is a powerful lever to influence the entire development industry.

This debate is very similar to the Petersfield local plan example. For years the received wisdom was that a site couldn’t be allocated in a local plan for a specific method of housing delivery. But this turned out not to be correct, as it so often does.

Model German planning system

My frustration with our, sometimes dysfunctional, UK system was magnified on a recent Igloo team ‘study tour’ to Freiburg.

Being somewhat better at this, the Germans have identified that selling public land for the highest price usually doesn’t produce the best outcome.

Their approach, which is available to any UK public land owner, is to first value the site, then allocate it to a particular kind of delivery, for example Custom Build, and then sell it, competitively, with the price fixed at the valuation level, for the ‘best’ scheme. Best depends on the public policy objectives they are trying to achieve.

In Freiburg this was often a combination of greatest social mix of residents and highest, and most achievable, environmental standards.

This land sale process helps shape the market. Large speculative developers churning out unloved identikit houses are pretty much unheard of in Freiburg. The small developers that operate successfully are frequently delivering many of the same benefits as community-led groups even though they aren’t directly competing for land.

This approach also produces some of the best modern places you can see anywhere in Europe. And, apparently, robust non-financial benefits like happier and healthier citizens. Some might argue that this is the objective of public policy.

But if the policy-making function in the UK struggles with this relatively simple aspect of policy what hope can we have that they will be able to transform the entire structure of the new housing supply industry?

No magic wand for Custom Build

I was asked some time ago by the chair of the Communities Select Committee, Clive Betts, why Custom Build wasn’t delivering on the promise that we had all seen in Holland.

And the answer is simple. Changing a market is complicated and the policy makers (and most of the rest of us) simply don’t have the understanding to get it right. Policy initiative after policy initiative fails.

For example, the CIL exemption is scarily complicated, potentially risky for purchasers and applicable only in places where the land values are highest, and therefore the least accessible for a thinly-capitalised, nascent industry.

Similarly, the Custom Build Registers deliver little benefit for those people signing up, are a cost to the local authority at a time when they are under pressure and potentially produce for them the negative consequences of uncontrolled development. So, the local authorities hide them away, charge for them and erect eligibility hurdles.

This in turn means that the somewhat derisory numbers of people signing up to the registers aren’t indicative of the demand for Custom Build. This then undermines other areas of public policy, like planning policy and, of course, the approach of local authorities to public land disposal. I could go on!

At the first meeting of the Right to Build Policy Commission we looked at NaCSBA’s model of this problem. It is easy to understand when graphically presented, but fiendishly difficult to describe in words.

Essentially delivering Custom Build is like a car engine. It has several pistons, all of which need to be firing at the same speed and in precise sequence, and this both draws in fuel and is accelerated by that fuel.

For Custom Build, the pistons are, in no particular order: public awareness; planning; land; construction; Government funding, and; mortgages. The fuel is effectively the money the Custom Build Enablers need to buy land and service plots.

So even if we fix one of the policy areas, like public land disposal for example, unless we have all the others fixed, the engine will still be stuttering and Custom Build delivery will cough and splutter along at the side of the road.

Because this is complicated, like an engine, it takes time to refine and improve it. Think of the journey from the birth of the motor car via the Model T Ford to the power of today’s Formula One cars where the challenge is to stop them going too fast through regulation.

Experimenting with alternative designs for the public land disposal piston would be a start.

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