What next for public land?
Over recent months at Shelter, we’ve been trying to shine a light on the Public Land for Housing (PLfH) programme, its failure to deliver homes, and some of the reasons why that is.
In part one of this blog series, we broke down some of the data and highlighted how just 15% of the homes that could have been built on former public land have been delivered. A truly shameful record.
Then, in part two, we looked at how the objectives of the programme work against the very idea of land for housing and how capturing the value of land for the public good might require more radical thinking on private land but it’s a bizarre failure on public land.
Now in the final part, we’ve reached our solutions.
Over the coming months, we know that the government has to review its thinking on public sector land and to decide what next. This opportunity is not one to be missed, and in this blog we will lay out our view on what a better public land system might look like and what it would need to include.
Solving the public land puzzle
The starting point of any public land programme should be that where public land is identified as being surplus to requirements it should be prioritised for helping meet housing needs that are not served by the standard development model. Not only would this mean that public land plays a better role in tackling the housing crisis; it would also mean that it plays a fuller role in delivering different types of housing on sites and, therefore, in ensuring sites get built out faster.
This isn’t an argument being made only by Shelter either. In his 2018 review of build-out, former Conservative MP and Cabinet Minister Sir Oliver Letwin made it clear that diverse sites that meet a variety of local needs are what is needed to increase the speed of development. In addition, we know there is political appetite for action on housing, indeed earlier this year 28 Conservative MPs signed on to a letter led by David Davis MP calling for more investment in social housing.
Letwin correctly identified that the greatest limitation on how fast we go from planning consent to homes is the market absorption rate. Or, in simple terms, the fact that private developers can only build and sell market sale homes at a rate which won’t undermine local house prices, to do anything other would be bad business.
The more diversity a site has though, the more different markets it is serving, the faster it can be built. And any government keen to deliver more homes per year should take note of this. Types of housing with huge untapped demand are particularly valuable if you want to increase the speed of build out – and these exist, with the biggest potential source of new demand at the moment being the need for social housing.
All of this is why a priority of meeting local housing need – not just local market sale housing need but all local housing need – is the right starting point. Having set this priority there are then four ideas that the government could follow to make it happen.
Four steps to do better
1. Improve monitoring
It might seem dull, but how we analyse a programme like the PLfH is vital to ensuring it is succeeding?
The Ministry of Housing, Communities and Local Government (MHCLG) should collect and publish data on housing delivery on public and formerly-public land. This should be broken down by tenure and include the types of affordable homes permitted and built, including the social rent homes needed most urgently. This isn’t something that should be considered outlandish to request – in fact the Public Accounts Committee in the House of Commons have questioned, fairly, why this isn’t happening already?
2. Define success properly
Government should shift its measure of success away from sales and potential homes and instead onto the speed at which the new homes we need are actually built and occupied.
As we outlined in part two of this blog series, the objectives of the programme are inevitably key to how it unfolds. If the measure of success is wrong then the results won’t ever be what we need – and currently communities are suffering the results of that original objective setting process.
3. A new viability test
MHCLG could modify the rules for assessing scheme viability on public and formerly-public land to achieve more ambitious affordable housing policies compared to private land. Under current rules, when working out if a scheme is viable we assess the ‘benchmark land value’ and that assessment includes what is called the landowner premium. Very simply the landowner premium is the price that a reasonable landowner would accept. However, there is a difference between your private landowner and the public sector.
Surely, we could expect public landowners to have different incentives for selling? And as a part of the public sector the public landowner surely has a benefit in selling at a price that enables the state to secure more and better homes and other community benefits that then have a knock-on effect on reducing housing need, improving transportation and connectivity and enabling more investment in new schools and health services.
In essence then – why don’t we have a different (lower) notion of what a landowner premium should be for public land? This would then allow more land value to be recycled into social housing
4. Introduce clawback or overage for all schemes on public land
Clawback might sound like a violent form of retribution but, in housing, it’s actually an established method to ensure that a good day for a developer can also be a good day for a local community. In essence, ‘clawback’ and ‘overage’ both mean that instead of negotiating with a developer once around what the profit on a new scheme is, the costs and the community benefits that can be provided, you both negotiate and review.
In fact, this is much the same as giving a developer the right to come back and ask for changes to an agreement if their circumstances change for the worse. It’s just about making sure local authorities can do the same if the opposite happens– and question whether things actually went better than expected. In our view all public and formerly-public land should be subject to review as schemes progress and once the housing is actually built and the scheme completed. This would ensure that where a developer has gone on to make more profit than they originally expected that extra profit can be recycled into delivering more social rent homes.
Public land is a valuable asset and one that could play a vital part in helping to solve the national housing emergency we face and that has been underlined by the additional challenges of recent months.
Learning the lessons of our failures to date we can, and must, ensure that moving forwards things change for the better.