INSIGHT - Edition Ten - Winter 2021 online - Flipbook - Page 26
DEVELOPMENT LAND...
CURRENT OPPORTUNITIES
FOR LANDOWNERS
The UK housing market has grown from strength to strength since it reopened in May
last year; average house prices have grown by 8.5% and there has been a 36% increase
in housing market demand since the start of 2021 alone. This continued period of
growth has put increasing pressure on the requirement for residential development
land; however, due to a shortage of supply on a national level, there is an immediate
need for new sites to be brought to market. John Turnbull, Chairman at youngsRPS,
delves into the current opportunities for landowners, why they should be taking
advantage, and how we can help.
Whilst there may be a larger requirement for sites capable of
accommodating at least 60 or 70 homes, there is a growing
demand, particularly in the Northern counties, from regional and
bespoke developers for sites beginning at five units. Therefore,
opportunities are presenting themselves at every level.
New build sales currently account for 1 in 8 of all residential
property sales in the UK, and due to a significant increase in market
activity, new developments are filling up quicker than expected.
Nearly half of all home movers in the UK would consider a new
build property, therefore housebuilders are looking to replenish
their land supply in order to keep up with the demand.
Promotion/self finance as opposed to Option Agreements are
currently delivering strong values as we are seeing evidence of
developers trimming profit margins to win sites. The rather rigid
supply/pipeline of sites as a result of local plan adoptions over the
past few years means many housebuilders have gaps to fill, that
won’t necessarily be able to be plugged by 5-year housing supply
arguments. Being able to test the market offers real benefits just
at present.
The Government’s levelling up agenda brings particular focus to
the North and Northeast with the treasury being rehoused in
Darlington, as well as the introduction of the Freeport in Teesside
and the ‘gigafactory’ for the manufacturing of batteries for
electric vehicles in Blyth. With thousands of jobs being created or
relocated to the region, there is a significant requirement for new
home developments. If the Government get the balance right in
their agenda, this presents further opportunity to housebuilders
and landowners alike.
As well as the levelling up agenda, we are expecting the new
Planning Bill later this year. It seems the more radical proposals
set out in the 2020 Planning White Paper for a new zonal planning
system are struggling to gain traction and could be shelved.
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However, increasing housing delivery will inevitably remain
the key focus of any proposed reforms in an effort to hit the
Government’s target of building 300,000 new homes per year.
Given local plans are largely in place in the North East, it is
advisable for landowners to prepare now for a) new local plan
lead in process and b) any slippage in delivery of projected supply
(which might lead to an early opportunity).
It is important to note that it’s not just the residential market that
brings development opportunity to landowners. The commercial
development sector is particularly buoyant regarding roadside
developments driven by new age vehicle charging systems and the
need for new infrastructure to support the country’s increasing
reliance on the freight and logistics sector.
Obtaining advice at an early stage is key to ensuring that the
terms of any agreement are favourable and that you understand
the alternatives. A successful option or promotion agreement
invariably has the developer paying for the landowner’s legal and
agent fees, or at least a proportion of these. The benefits is that
planning permission is fully funded by the developer or promoter
with no upfront costs incurred by the landowner.
The distribution of sale proceeds from a promotion agreement
or the purchase price from an option agreement can often take
place several years following commencement. Therefore, enlisting
the help of an agent will ensure that each party is aware of its
obligations and potential costs and return, resulting in a much
smoother process.
youngsRPS offer a range of services enabling land to come forward
for development, from our dedicated team of planners submitting
planning applications and representations, through to a team of
experienced surveyors negotiating option/promotion agreements
and ultimately the sale of development land.