Grosvenor: Councils lack the skills to meet housing demand alone

COMMENT: Earlier this quarter, Sir Oliver Letwin published his final review for the government on housing build-out rates. In it, he called for local authorities to act as master developers to meet housing demand. However, they can’t do so in isolation, argues Alex Robinson, director of development for strategic land at Grosvenor Britain & Ireland. He suggests private sector expertise, capacity and capital is vital to making the model work and to build more homes to a higher design standard. [caption id="attachment_958387" align="alignright" width="150"] Alex Robinson[/caption] The last quarter of 2018 has seen a significant shift in housing policy, with the Letwin Review’s final report and Homes England’s five-year strategy signalling an important change of focus for future housing delivery. Whereas government backing previously concentrated on removing barriers to entry through initiatives like Help to Buy, there is now a tacit recognition that a policy framework is needed to bring more product to market, faster. Both Letwin and Homes England’s papers contain much that the development industry can get behind, from unlocking and enabling land through to infrastructure investment and removing obstacles for smaller housebuilders to play a larger role in delivery. But there are also things that will ruffle feathers, including proposals to cap residual land values for large sites. Here, in particular, a more nuanced conversation needs to be had to ensure this approach results in more new homes and drives diversity of housing tenures, without discouraging landowners from putting forward their land for development. The main change of direction, however, comes around who is best placed to deliver new homes: the private or the public sector. Letwin proposes that local authorities take on a master developer role, but many lack the skills and resource to do so. The private sector, on the other hand, is already deploying this model and is well placed to plug the gap. Driving local authority delivery We should not underestimate what a departure Letwin’s report is for a Conservative government, especially its emphasis on local authority delivery. For the first time in decades, the proposed use of local development corporations or infrastructure development companies challenges accepted wisdom around who should take the lead in unlocking sites and driving development. Inevitably, this is not as straightforward as it seems. We should welcome local authorities taking a more direct approach, but right now few have the resources and expertise to perform the master developer role required for local development corporations and infrastructure development companies to be effective. Over time, skills and experience will build within local authority teams, but in the interim we cannot afford to lose momentum on housing delivery. New home completions are already at risk of plateauing, with official statistics showing that completions for 2017-18 only grew by 2% on 2016-2017. By pooling local authorities’ and developers’ complementary skills, we will be in a much stronger position to reach the target of 300,000 new homes a year. In contrast to local authorities, private developers have been fulfilling the master developer role for a number of years – with positive results. Rather than seeking to reinvent the wheel by shifting this burden of responsibility, local authorities should work with developers, drawing on their knowledge and funding to build capacity in the public sector. A change of approach Making best use of the private sector’s experience, capacity and access to capital doesn’t, however, mean that it should be business as usual for developers. We need to address the fundamental challenge raised by Letwin and Homes England: how we deliver more homes, faster, and to a higher design standard. For us, that means working with partners to provide private sector investment and expertise to curate successful communities delivered at pace, but still characterised by high-quality physical and environmental design. It’s a model that we’ve put to good use through our partnership with Oxford City Council at Barton Park, an 885-home sustainable urban extension for Oxford. Here, our approach has allowed us to set out a stretching standard for what the development should deliver in terms of design and social impact, while building new homes faster by working with a number of housebuilders for different phases of delivery. The master developer model works because it combines private funding and development expertise with councils’ detailed knowledge of what communities want and need, both now and in the future. It allows partners to build strong ties with existing communities so that they benefit from associated infrastructure and amenity improvements. Ultimately, this approach aligns with the principles of Letwin and Homes England’s strategy, but recognises that meeting their ambitions doesn’t have to rely on local authorities taking sole responsibility for delivery. Reaching the government’s annual homes target is no easy task and Letwin is right to call for a change in direction. However, the public sector cannot realistically take on a master developer role in the short term. In comparison, private developers are already adept at doing this, although we acknowledge that it is not always the norm for them to follow this model. By drawing on private sector experience rather than trying to replicate it, local authorities will be in a stronger position to deliver homes and infrastructure at the scale, pace and quality that the country needs.