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Additional 4 per cent of public sector land identified to help meet government targets for housing delivery

Additional 4 per cent of public sector land identified to help meet government targets for housing delivery

28 April 2016

Newly released Land Registry data suggests that the public sector owns significantly more land than previously estimated. 

At least 900,000 hectares - 6 per cent of all land - in England and Wales is in public ownership according to a new report commissioned by Telereal Trillium, carried out by Savills research.

In ’Delivering New Homes on Surplus Public Sector Land, Accelerating Delivery’, the firms state that while previous accounts of public sector land holdings have focused on the 2 per cent of land owned by central government, the actual figure is closer to 6 per cent of all freehold land in England and Wales, two-thirds of which is owned by local government.

Within urban local authorities some 15 per cent of all freehold land is in public ownership, representing a huge opportunity for new homes to be built in areas of great need, and to provide vital financial receipts for local and central government. Within eight local authorities – Brighton & Hove, Barking & Dagenham, Eastbourne, Rushmoor (Aldershot and Farnborough), Gosport, Leicester, Portsmouth and Stevenage – it rises to over 40 per cent. In London, the figure is c. 25 per cent, rising to more than one third in some boroughs. 

Savills has previously highlighted that there is substantial capacity for new homes to be built on the public estate, but only if land can be released from its current use and in places where homes are needed.

However, backed by the Government’s commitment to programmes and boosting housing delivery significantly, public sector landowners are engaging in a variety of strategic reviews and programmes to identify surplus land, including the Ministry of Defence’s footprint strategy, the nationwide strategic reviews being completed by NHS Clinical Commissioning Groups, and the Government Property Unit’s initiatives for both central and local government, such as One Public Estate.

Releasing public land for sale has been relatively successful in the last Parliament, however, translating land sales into the delivery of new homes has been a much slower process. Whilst land for 109,500 homes was sold by public bodies between 2011 and 2015, only c. 1,800 new homes were actually completed[1].

The Government has set ambitious targets for central government to release land for 160,000 new homes during the course of this Parliament, and challenged local government to achieve the same figure. But, the report argues, land release must happen in a way that results in additional new homes being built in a timely manner and in the right places. At current rates of delivery, only 850,000 homes will have been added to England’s housing stock during this Parliament, a shortfall of 150,000 homes against the 1 million target.

To reach the 1 million homes target, 230,000 new homes will need to be added per annum by 2020, compared with current levels of 170,000. To achieve that, it will be necessary to look beyond the major housebuilders who have been the main source of growth in output so far in this cycle. That means bringing forward more land in shovel ready form, on financial terms that allow new entrants and SME housebuilders to increase their output. This is the role of land promotion and enabling organisations, which are playing a more prominent part in the development of privately owned land.  This is a significant part of the solution for public land too. 

Within local authorities in particular, in-house skills have been eroded after many years without active housing development programs. Therefore, active engagement with central bodies (such as the GPU, LGA and HCA) and private sector partners could help bridge this skills gap and share expertise from successful schemes. 

With a broad range of landowners and landholdings, and many different objectives and constraints applying to individual projects, a ‘one-size-fits-all’ approach to public sector site disposals will not be appropriate. However, to ensure that the correct approach for each disposal is selected, public sector landowners should be clear at the outset as to the key objectives they are seeking to achieve. To make an early impact, and reach the widest market, involving SME’s, OJEU procurement processes should be efficient and cost effective for bidders, with greater use being made of panel arrangements so as to minimise the need for bespoke procurements.

Jim Ward, residential research director at real estate adviser, Savills says: “There will be roles for well executed land sale, full public-private joint ventures, promoter partners, developer partners, and for direct development by a public sector body using in-house capabilities. The key will be for land owners to recognise that there is no one-size fits all to land disposals given their different objectives and constraints, together with the size, complexity and risk profile of individual projects.” 

Adam Dakin, joint managing director, Telereal Trillium said: “Overall there is much to applaud in what is already happening to release public sector land for the development of new homes. However, to make a real difference to housing supply and the public sector finances, there is an urgent need for best practice to be shared and for landowning bodies to be able to access additional capacity and expertise.”

Read the full report here >>

[1] Disposal of public land for new homes, National Audit Office, June 2015