Government Backed Funds to Unlock Brownfield Land Opportunity

Brownfield Land presents a significant opportunity for developers. It is favoured in local plans as priority areas for new build, it revitalises urban centres and prevents sprawl. 

But there is also the potential risk of contaminated land based on the past use of any site. It can affect the economic viability or block the go ahead, in the absence of financial support.

Recognising that this is one of the roadblocks in the path to meeting supply, Housing secretary James Brokenshire has announced two new government funds to speed up the house building process.

A new partnership with Barclays Bank will offer development finance to small- and medium-sized housing developers. The £1 billion Housing Delivery Fund is an attempt to diversify the range of housing providers, with a mix of smaller, artisan providers alongside the larger, more established firms.

Homes England, which is committing £125m to the funding pot, will administer the scheme and provide funding between £5m and £100m for new homes, including social housing, retirement living and apartments to rent.

Barclays is reported to be looking at raising its usual limits of 65% loan-to-cost and 55% loan-to-value to 80% and 70% respectively, significantly reducing the amount of non-bank finance that developers need to find.

The Government is looking for innovation and pace in delivery and are keen to prioritise offsite manufacturing in publicly funded projects from next year.

Homes England will be able to use the funds to help the government deliver its promise of building 300,000 homes a year by the mid-2020s.

There is some scepticism that this can be achieved, however, Just 1 per cent of respondents to a developer survey carried out for estate agent Knight Frank this summer believed the government would hit its target of 300,000 new homes each year by 2022.

This is supported by the findings RIBA’s latest Future Trends Survey, which expected the volume of work for private house builders to fall sharply. Its Confidence Index in September dropped from +18 to +7.

Opening up Brownfield Land

Ministers readily agree that further action is needed to overcome problems such as land contamination, infrastructure requirements and ownership complexities that prevent builders from getting on sites.

Many brownfield land sites occupy intra-urban plots ideally suited for social housing and apartments for multiple households that need easy access to city centre workplaces. The “brownfield first” policy is also a key driver in meeting housing demand through planning changes in the National Planning Policy Framework (NPPF).

The £1.3 billion Land Assembly Fund will be also used to acquire land that needs work and prepare it for the market. The government says this will make it less risky for developers to invest in it and build homes. Outside of London, this work will be undertaken by Homes England.

The Small Sites Fund, which is worth £630 million, aims to help public landowners and local authorities that are struggling to build on land in their area. Money will go towards getting the right infrastructure in places quicker on stalled sites.

The government added that it would work with the Greater London Authority to help guarantee that the funds deliver additional homes in the capital.

Sir Edward Lister, chairman of Homes England, said: “Homes England is stepping in where the market isn’t working… the funding will need to be combined with an increased propensity to utilise compulsory purchase powers if it is to yield its full potential”.

Preparation is Everything

Brownfield land requires significant due diligence ahead of acquisition to understand their past history.  It does not necessarily mean that the site will be contaminated and if chemical and material traces are discovered, some simple remediation techniques can enable development to progress

It is therefore essential that developers assess the land quality at the earliest stage. If a potential risk is identified, then a site investigation can be undertaken to confirm if remediation is needed.

If the site is promoted for new build development, then the nature of any remediation would need to be determined through the phased approach, with a schedule of costs formalised as part of any a funding application for support through the new government funds.

GeoSmart provides an essential range of contaminated land desktop reports, including a Phase 1 risk assessment on the past use of the site, with options for providing a site walkover and review of the planning history.

For more information contact us on 01743 297065, email us at info@geosmartinfo.co.uk