Landowners should be actively promoting land for development, ready to make the most of the economic upturn, according to land agent Bidwells.
While developers and housebuilders have reined in spending, there is still a need for significantly more houses in the future, senior partner James Buxton says. And, with a general election in the near future and likely tax changes in the pipeline, now is the perfect time to be planning future developments or cashing in on promising sites.
“There is overwhelming pressure for more homes in the UK, and landowners must ensure that they are active in promoting their land, to ensure it benefits from the upturn,” said Mr Buxton.
The government expects to build five million new dwellings between 1996 and 2021 – and is already well behind schedule. This could lead to massive house price inflation once the economy stabilises and frees up mortgage finance.
Landowners should ensure that prospective sites are included in local plans but, with the Conservatives likely to win the next election, planning regimes could be subject to change, he added. This includes the potential scrapping of Regional Spatial Strategies and a review of Local Development Frameworks, which could result in proposed large-scale developments being withdrawn.
“Landowners and developers must resist the temptation to do as little as possible during the recession, and make sure that sites are at least allocated, if not granted planning permission as soon as possible,” said Mr Buxton. “Once permission is granted, it cannot be taken away.”
Developers had expressed significantly more interest in recent months, in anticipation of a recovery in the house market in 2011. This highlighted the importance of investing in sites before the housing market picked up, particularly where they could be threatened by changes in planning policy, he added.
“A number of landowners have opted to promote their land through the planning process, at their own expense and risk. The rewards for this are considerable in the event of success, but for many the cost and risk is too great. The resurgence of interest from developers and builders is therefore particularly good news for landowners in this position.”
There are other reasons to take action. The government plans to introduce a Community Infrastructure Levy in April 2010, which is likely to tax residential and commercial development in order to fund the major infrastructure needed to support it.
“It must also be a matter of months before the government closes the gap between capital gains tax, at 18%, and the top rate of income tax, to be 50% from April 2010. This, along with the new levy, will place a substantial burden on sites – landowners should consider very carefully whether there is likely to be any real benefit in hanging on for a better market.”
One developer, Ashfield Land, is seeking to invest £25m in farmland on the fringe of developments over the next 18 to 24 months. It aims to obtain planning permission on the sites, developing commercial sites itself and selling residential plots to house builders. It is offering landowners slightly over the agricultural land value, plus up to 50% of the profits made when planning consent is granted, within a 5-10 year timeframe.
Director Nick Jones is working with Knight Frank to secure plots with good communication links, from three to 500 acres across the country. “It is in our interest to actively promote the land and ensure planning permission is obtained – we haven’t failed yet,” he said.
With some sites costing millions to promote and get into the local planning framework, this option guarantees farmers up-front capital and windfall potential to cater for inheritance needs, he said.