UK to sell land worth £10bn for 100,000 homes

By Reuters
Updated: 10:21 EDT, 8 June 2011

Britain plans to sell £10bn-worth of public land in attempt to allow the building of 100,000 homes and to help cut a record budget deficit.

Plan man: Minister Grant Shapps

All government departments with significant landbanks will be asked to identify, by the autumn, land suitable for sale for homes, Housing Minister Grant Shapps said today.

This will be used to build 100,000 homes over the next three to four years, in a scheme that is expected to support as many as 25,000 jobs.

The estimate of £10bn of surplus land is based on government figures for land values in England in 2005, supplied by the Town and Country Planning Association (TCPA).

'As one of the country's biggest landlords, the government has a critical role to play in making sites available for developers so we can get the homes this country needs built,' said Shapps.

'Over the coming months, property specialists will work to make sure no stone is left unturned and no site is left unused, and every department's plans will come under the close scrutiny of a cabinet committee.'

Some of the land will be sold under a 'Build Now, Buy Later' deal. The first three sites were named today. Work has already begun on some, under a pilot scheme:

• Fairmile in Oxfordshire - a 40-hectare former hospital site owned by the Homes and Communities Agency, beside the Thames in Cholsey, Oxfordshire. It will have 354 new homes, including flats in the Grade II hospital buildings. The first new homes are due to be completed by developer Linden Homes this month.

• New Covent Garden Market - This is part of the Nine Elms Opportunity area which includes Battersea Power Station and the future home of the American Embassy. It includes a a 57-acre site in Vauxhall, South London, that will be redeveloped with 2,300 apartments, a hotel, shops, a major supermarket store and 'community facilities'.

• Bath - 1,000 new homes will be created from sold off Ministry of Defence offices in the historic city. But planning permission is yet to be passed. Bath and North East Somerset's Core Strategy is going to a public inquiry in September 2011.

'It will be a boost in the arm for housebuilders,' said a spokesman at the Home Builders Federation, a 300-member trade association which represents builders such as Persimmon, Barratt Developments and Taylor Wimpey.

'We only built 100,000 homes last year and, if implemented practically, this could mean an extra 30,000 homes a year, which is clearly a significant increase.'

Mark Clare, chief executive of Barratt Developments, said: 'This is a big step in the right direction. The rapid release of publicly owned land has the potential to be an effective catalyst for increasing the supply of land for new homes in this country during the next few years.'

The UK's housing shortage

The HBF estimates a shortage approaching one million homes in England, and forecasts 232,000 homes need to be built per year to close the gap.

Britain's housing market has been slowing since the middle of last year and recent data show mortgage approvals fell in April to just half their long-run average, before the financial crisis, of 90,000 per month.

Last week it emerged housebuilders are in talks with British banks to find ways of helping buyers overcome tight lending conditions, which have caused market gridlock.

Housing organisations are concerned the land may not be sold at subsidised levels, leaving few incentives for developers to build affordable housing, of which there is a chronic shortage.

'With the Treasury under pressure to generate high sales receipts, decisions as to what kind of development takes place and where could be driven simply by the highest bidder,' said Hugh Ellis, Chief Planner at the TCPA. 'The private sector could be left having to squeeze every penny out of development.'

Does £10bn help with Britain's debt problem?

In the new age of big numbers, the £10bn windfall from selling off land is not huge but it does make a decent contribution to the deficit.

The budget deficit - the amount of borrowing the government needs in a year - is currently running at £139bn, down from £156bn the year before.

The Government has staked its reputation on being able to fulfil a promise to eliminate this deficit by 2015. In other words, to stop our debt growing by 2015 - but not to cut it. Total debt today is £2,252.9bn. With bank bailouts stripped out, the figure is £910.1bn.