Residential market slowdown 'will affect long term planning'
The slowdown in the residential property market and falling land values has drastically changed the “dynamic” within the housebuilding sector and could have serious long-term consequences, according to a city planning consultant.
Director of planning at Atisreal, Matthew Walton, said the squeeze on credit coupled with a lack of sales had seen developers no longer taking a long-term view.
He said: “With the scarcity of mortgage lending leading to a decline in residential house sales, the demand and appetite for residential land across the United Kingdom has seen a dramatic regression.
"This has seen the national house builders putting a stop on most new builds (including some mid-build) and acquisitions, and also reluctance to commit resources to investigate new opportunities. With this effective land bank increasing – without any acquisitions – we have observed a reduction in interest for longer term development opportunities that need to be worked through the planning system.
"The concern, within some quarters, is that the achievement of a ‘workable’ planning consent is now a pre-requisite for a sale. Changing economic circumstances have created a different dynamic in the market, where now it is not a question of the profit developers hope to make, so much as the price at which they can sell.
“Existing consented sites are now being looked at by groups such as social housing operators, who historically found it difficult to compete with residential developers. In the absence of robust competition from the traditional market, social housing operators are well placed to meet the key objective of the Government to provide affordable homes. Councils are being urged to look at flexible Section 106 agreements so that affordable housing is only delivered when the economy is doing well (and values are there).
"At the same time, LPA planners are being advised not to concede good design and affordable housing just to meet housing targets, as fears grow that the Government may look to force housing through the system. LPAs are concerned that developers are trying to argue for higher densities because they paid too much for the land in the first place. Many LPAs consider that viability should focus on unforeseen circumstances such as land remediation and not developer’s profits.
“What is clear is that the delivery of affordable housing depends upon viability – 35 per cent of nothing is nothing! Whilst we acknowledge that planning is about housing provision and meeting targets, schemes which are more viable will deliver higher affordable housing contributions, together with other planning obligations.
“It is evident that most developers are sitting tight waiting to see how market conditions develop, but in the meantime, opportunities exist for landowners and local planning authorities to look more strategically at land and to plan for future growth. With vacant and under used employment land, for example, the opportunities for alternative forms of development should be investigated (particularly pertinent now given the impact of rates on vacant commercial property).
“It is generally accepted that the downturn in the housing market will continue for some time yet and this will affect housing delivery, at least in the short-term. Nevertheless, there are definite prospects for those prepared to look at longer term opportunities to steal a march on the rest of the market.”