Much of the development opportunity is in strategic sites of more than 250 unit capacity, which provide a total development capacity of
1.5 million new homes. These sites account for some 45% of the five-year land supply pipeline identified by local authorities, where specific sites have been identified in Annual Monitoring reports.
Some 53% of their capacity is in stronger markets and, as shown
in the map, many are close to higher value markets, such that provision of affordably priced homes will attract demand from higher value markets.

These sites have been difficult to bring forward since the 2007/08 downturn, because of their greater requirements for both scarce development finance and costly infrastructure.

As the steady pace of refinancing of banks and developers continues during the next five years and market recovery ensues in due course, balanced against higher build costs, a growing proportion of sites will become deliverable, providing land for the higher number of new homes completions that we are projecting. Whether this materialises will be a central test of the new National Planning Policy Framework and how it balances growth with sustainable development.

Surplus public sector land is part of the land opportunity, albeit much of it is in mid to lower strength markets. Of the land identified by Government as having a development capacity of 100,000 new homes, 65% lies in the local authorities with below average market strength, so structuring the right land deal and planning consent will be crucial.

Planning opportunities?

Delivery is falling short of housing requirements in most markets. A significant proportion of local authorities do not have a deliverable five-year supply of land. As an example, Savills analysis in November 2011 indicated that, in an area of central southern England centred on Oxford, only 13 out of 24 local authorities had identified a deliverable five-year land supply.

In these markets there is an opportunity to obtain consent to provide for those five year requirements. The opportunity is bolstered in those markets that are demonstrably below par on delivery, as outlined above.

Delivery of new housing to meet requirements is in the interest of local authorities, not only to deliver the economic and social objectives of the Local Plan. The money now flowing from central to local government via the New Homes Bonus is substantial.

In 2012/13 this will amount to £432million, equivalent to 9% of the £4.8 billion of centrally imposed cuts in local government spending budgets since 2010/11.

These amounts of cash bonus will increase threefold during the next four years, even if there is no change in levels of housebuilding. The power of the incentive goes further, as central funding of payments in excess of £250 million per annum is clawed back from formula grant. This means those authorities that are building fewer homes than the average are already seeing deeper cuts in funding from central government.

The extent to which New Homes Bonus can support services and investment that would otherwise be cut is a powerful incentive that can and should be part of the discussion with communities.

The local authorities that are delivering most housing are already offsetting 20% of budget cuts with New Homes Bonus, compared with an offset of 5% where little housing is being delivered. Are people living in these low delivery authorities really content to be missing out?

Taken from

Spotlight: Where Best to Develop and Invest in Residential Property Spring 2012