Unlocking the land – brownfield land fund
Earlier this year, the Government announced, along with a package of other measures, a £1.2 billion Starter Home Land Fund to prepare more brownfield land for starter homes.
The aim is to ensure local authorities have the opportunity to use this Fund to address housing shortage, local growth and regeneration. By supporting the acquisition, remediation and de-risking of suitable land for starter home developments, developers are then incentivised to adopt such sites more readily. Typically, high remediation and other de-risking costs have often rendered some smaller brownfield sites unviable for development.
The Fund will operate over the next three financial years, to ensure construction of starter homes is happening from 2018 onwards. Receipts from the subsequent sale of remediated land to private developers will then be used to support the delivery of more starter homes later in the Spending Review period.
The majority of the Fund will be managed by the Homes and Communities Agency where they will be seeking opportunities outside London. In London, where there are devolved housing delivery arrangements, the Government will be working with the Greater London Authority and London Boroughs to develop a complementary programme.
The Department of Communities and Local Government (DCLG) key focus is on generating affordable starter homes to bring life back into the centre of towns and cities. These are often in marginal, brownfield sites close to transport hubs connecting where young people want to live and work.
To that end, DCLG are seeking a clear pipeline of potential sites from local authorities, which can be taken forward by 2020/21. This pipeline will provide details of the location, size of site, ownership, current use, indicative value/cost, number of homes which could be built, planning status (within the local plan/5 year land supply, existing permissions) and any remediation/infrastructure requirements.
The expectation is that starter homes would account for at least 50% of the homes built on the site, with the remainder as market housing to help with viability. The sites would be largely brownfield; consideration would be given to greenfield sites only if the development is acceptable to the local community.
Supporting the right sites
Specifically, the Fund can only be used for the acquisition of land and/or preparatory work (remediation, demolition, site investigation, ecological works, and essential small scale infrastructure improvements) to prepare this land and other public sector land for starter homes. It cannot be used to gap fund private developers due to state aid considerations.
Priority will be given to those sites which:
- are capable of early starter home delivery, including a reasonable prospect of securing planning permission for residential developments with at least 50% starter homes;
- offer value for money in terms of the average unit cost subsidy per starter home after receipts from the disposal of the sites have been taken into account; and
- contribute to increased housing supply, specifically sites are not already allocated for housing in local plans or, if allocated, either have the opportunity for a higher than anticipated density of residential development or have been stalled with little private sector interest.
Strict requirements for local authority qualification
The offer to local authorities is also met with strict criteria on who will be selected as partners to access the cash. To qualify, they must:
- Demonstrate a strategic vision for the local area
- Have strong local commitment and leadership
- Have a suitable scale to their starter home ambition (in terms of minimum numbers by site)
- Be clear on partnerships – what support they need from government and what public land they are offering up
- Have a commitment to starter homes as a core focus
- Can demonstrate early deliverability of sites without undue hindrance
The Homes and Communities Agency will need to consider investment in each site on a case by case basis. Authorities have until 31 December 2016 to submit expressions of interest to participate in the short listing.
As partners then get selected from next year, it is envisaged that pro-brownfield regeneration sites will get significant priority for successful partner authorities. Understanding the sites past history and how its viability is set-off against fund contributions will be crucial for developers seeking to access the potential of these sites. Therefore, accessing the right data is essential to ensure the sums stack up.
We provide land quality risk assessment, including site walkover, through our EnviroSmart reports. They are the most cost effective way for architects, developers and planning consultants to meet local authority planning requirements and understand the risk arising from potential contamination or geotechnical hazards on the site.