Garden Cities - opportunities for future housing

We've asked David where he sees the biggest potential in the new garden cities, towns and villages and which key features these should have. What’s in it for developers, builders and architects? How can garden cities help re-establish a market for small and medium sized market players? How does this tie in with the new drive for custom build? And where would he see challenges.

Key features

Whether classified a village, town or city each has to be separated from existing development. Historically we’ve been building urban extensions, effectively backing up new plots to the back gardens of existing homes. Existing residents have campaigned that this meant too much loss of amenity (views, access to countryside) for too little in return with extensions of 100 to 500 units rarely adding anything significant to the local community. But the garden cities developments are expected to be at least far away as to not cramp views and to be big enough - typically between 1500 and 15,000 homes - to bring employment, support services likes schools and Primary Care Trusts and even relief roads and real public transport.

Unusual aspect - planning gain

Garden cities sites have mostly not been sold to developers (owned by Local Authorities etc) so they have not all seen their full value as development land already extracted. If the landowner can more directly take a profit from development by building homes for 120k development cost on plots that cost it almost nothing to sell at, say, 250k the landowner makes the development profit (and not the company it sold to). The garden cities expect this profit to be shared so that more profit is invested in infrastructure.

The reason we have not been building large stand alone developments successfully is that these windfall profits have always been siphoned off leaving no spare room to find the planning gain needed to make large new developments work as places. The garden cities route demands the uplift in land value is shared with the new community as investment in its physical and social infrastructure. Recent data from one garden village in the North East suggested it would trump traditional rates of planning gain by a factor of 12 to 15, i.e. more than £60k a plot versus less than £5k.

Historically, new developments have been lucky to get a community building but under garden cities plans, developments will get a range of communal benefits such as employment hubs, sports facilities and healthcare and, including in some cases, homes held in trust for local people to access housing below full market prices and rents.

Opportunities

Value to smaller developers is that Government is asking garden village developers not to pair up automatically with all the usual suspects, but offer serviced plots for smaller and more local developers.

One of the side effects of the National Planning Policy Framework has been that Local Planning Authorities have prioritised larger sites containing many of their local plan allocation at the expense of logs of smaller sites which often require lots of consultation draining LPA resource for a few dozen homes. Under the garden cities initiative it is expected the land will be parcelled up to enable existing and new players to enter. This is especially important to manufacturers of whole house kits as these companies are likely to gain favourable access to sites in situations where they won’t be tendering against the likes of Persimmon.

The garden cities are intended to raise numbers using land and building contractors not already busy elsewhere. This opens the door for anyone who can service the gap created by excluding the core of the industry.

Custom build

Garden cities have a core function of trying to add homes that would not otherwise have been built. This means they need to be built on places that will need to be added to the core strategy with many of the homes supplied by companies not already stretched in these markets. The need to bring in new supply chains naturally prioritises the opportunities for custom build.

Challenges

Despite the Government calling this the Locally Supported Garden village & towns initiative, the idea that any development in England will have universal local support is farcical. Nearly everyone over a certain age is against anything ever be built near them; ever, ever, ever confident that protecting the scarcity value of their home will float them through retirement. However, the chance to build your own home, or to access homes through new less commercially aggressive stock exchange listed housebuilders seeking a minimum 20% profit does mean there will be something in the garden cities for nearly every potential local buyer. If the land promoters can stress the opportunity to procure a bigger home for less or a downsizing option below full market rates, the local community will start to vote with their wallets for new build.

Interested in learning more about custom build homes, click here