Skip to main content

£10 Billion of Public Land up For Grabs to Combat Housing Shortage


In a report in today’s Times it was reported that 1000’s of acres of public sector land that is deemed surplus near hospitals, schools and military bases must be identified by the autumn of this year to enable a potential sell-off.
Part of the proposal is a ‘Build Now, Buy Later’ plan whereby developers can pay for land once homes are completed. It is not clear in the article whether this means physical build completion or legal sales completion. The only way it would help developer/builders with a cash-flow problem is if it were the legal sales completion where money changes hands from buyer to seller.
Let’s just look at the ‘headers’ again:
·         Housing Shortage
·         Surplus Land
·         Developers/Builders with cash flow problems.

There is a housing shortage that is true. It was talked about before the more recent implosion of the financial system that helped create the current recession that has in turn caused a house price correction. House builders will not build at a loss. It’s not their ‘raison d’être’! So if it is not worthwhile building houses then you won’t. This situation has led to an increase in an already apparent shortage. It is worth examining where the ‘shortage’ actually is. Do we have a shortage of 5 bedroom, 3 bathroom, detached homes with triple garages and a pool? No. Do we have a shortage of 2/3 bedroom terrace and semi-detached homes? Probably Yes! I say probably because we are selling these homes that come to the market at prices that are affordable. So the key is price or affordability and it is primarily a social housing shortage.
If you have a shortage of any commodity, be it houses, flour, sugar or oranges then the price naturally rises if there is demand for it. It rises until it reaches a point where the buyers/consumers able to afford it drop off in numbers sufficient to halt further price increases (lack of sales) and the commodity remains on the shelf.
So the only way developers will buy surplus land to build homes on is if there is a market for the properties they build.  The tightening of mortgage lending, by increasing deposit requirements to levels unheard of before, means that the demand for these homes is there (the shortage) but the ability to buy is not. How is this equation solved? Simplistically you sell the land very cheaply so that when the build cost and profit requirement are added you have a total price that is within the grasp of these buyers. Why would any seller sell at the bottom of a cycle? If the land is surplus it was surplus some time ago!
Unfortunately, and I’m thinking out loud here, what happens to the value of similar second hand property in the vicinity of these new homes?
The other way is to create homes built by Government (our money) on surplus land (our land) to provide for the shortage. I think they used to call them Council Houses but today’s term is Social Housing!
Just to address the last point ‘Developers/Builders with cash flow problems’. Why is this the case? Probably because they can’t sell the homes they’ve already built, on land that they paid a lot more money for, at a profit and in sufficient numbers to create that cash flow.
I’m not proposing any answers here because I’m not certain there is any totally correct answer. If you think you might have then give Grant Shapps the Housing Minister  a call!

Comments

Popular posts from this blog

Interesting Rental Market Research

SimplyBusiness.co.uk report on the Changing Face of Britain’s Landlords as Young Entrepreneurs enter the Market Analysis from SimplyBusiness.co.uk has indicated a significant change in both the age and gender of private landlords in the UK. The traditional face of the archetypal British landlord is changing according to the study which shows there is a new, younger breed of landlord entering the private rental market; which would indicate that when it comes to property, many still think that there’s money to be made. Comparative data of landlord insurance policies sold by SimplyBusiness.co.uk in 2006 (versus 2010) shows a marked increase in landlords aged 18-34. Likewise the gender gap is beginning to close as 39% of landlords insured via SimplyBusiness.co.uk are female, versus 36% in 2006. Interestingly, when comparing the types of property being insured, there hasn’t been a statistically significant change since 2006 with terraced housing still accounting for the largest

CHRISTMAS 2019 - RENTAL HOMES

CHRISTMAS 2019   The festive season is not far off and we just wanted to take this opportunity to confirm our opening hours over the Christmas holiday period and also to outline a few procedures: We will close for the holiday period at   Midday on 23rd December . Opening on   27th and 28th December between 9am and 1pm . We will open normally from   2nd January 2020 at 09.00 . Day to day issues which could wait until normal office hours resume on the   2nd January 2020 , should be reported then.   Our contractors may be on call but many of their suppliers close down over the Christmas period so parts can be hard to locate. We will not attend any “lockouts” over the Christmas break but can pass on the details of a good local locksmith if this occurs – the cost of which will, of course, be yours. A small request   – if you have   any   problems with your heating and hot water now or maybe an appliance that is a bit temperamental and you have been meaning to report the

What about afterwards?

It seems hard to believe that this COVID19 situation has been with us for just over 4 weeks. It actually feels like at least 2 months. If you can bear to watch the daily briefings from the government without reaching for a razor blade then you will be hearing that, just maybe, we are reaching the apex of the death rate curve and, just maybe,  there will be a relaxation of movement and a return to economic activity by most of us, subject to social distancing, masks etc. From a property market point of view, I've been decrying the gloom merchants who have been talking about 16% price falls. This is for reasons that beyond economics, people go their own way and predicting human sentiment to situations is not an exact science. I came across this article by a well-respected commentator called Roger Martin-Fagg who seems to see things my way - or I see things his way!  You have the time available so I recommend that if you want a spoonful of positivity then read this post: https: