Finding a development site might have become a bit easier thanks to the Government’s new Right to Contest initiative. However, in the rush to find out exactly what public sites are up for grabs, the opportunity to re-invent and regenerate our towns and cities should not be missed.
Under the new rules, the right to challenge local authorities where land or property is empty or under-used is extended to land and buildings owned by central government. We can now nose through a ‘Rightmove-style’ database of all government property to find out what sites are available, irrespective of whether they are vacant and occupied, and come up with a plan to turn them to better use.
Instead of being directed towards problem or priority public sites, the creative mixed-use developer can now see the full picture and possibilities presented by a town centre and, armed with such information, put forward a bigger, broader and bolder proposal for economic growth.
So far, so good, but why the need to sell? In speeding up the sale of public land and property, the Government needs to remember that once these public assets are gone, they are gone forever.
In launching this new policy, the Government has been keen to point out that it has raised over £1bn since May 2010 by ‘selling buildings and getting out of properties’, on the back of its assertion that hard working taxpayers expect them to save money. For local authorities, the message seems quite clear; now is not the time to hoard land and property, now is the time to sell for a ‘fair price’.
Faced by the pressures of funding capital projects, maintaining and improving local facilities in an age of unprecedented funding cuts, many local authorities may feel they don’t have any other choice. The temptation to sell to the highest bidder to ensure other important local projects and services are safeguarded is understandable, but will it lead to better towns and cities?
The UK badly needs new homes but a fire sale of public land risks valuable sites simply being acquired cheaply and sold on at a premium.
For private property developers, the traditional development model has been to get hold of land and assets for as little as possible, sell them for as much as possible and treat obligations to the public sector as exactly that: demands to be met, never exceeded.
With this in mind, it is time for the UK to adopt a more creative, prudent and longer-term response to the pressures of the national deficit by sweating instead of selling these assets, with local authorities retaining ownership and working in partnership with right-thinking private developers to turn public land and buildings to good use.
Local authorities don’t have the cash, so the question is how they use their physical assets to create an equity position, in order to retain control of a development or delivery process.
In practice, this translates to equitable partnerships between public and private sectors; Public Private Partnerships (PPPs) where private developers gain options on land and deliver much needed public facilities in return for building profit-making development on the rest of the site.
The public facilities are not owned or operated by private developer, they are public property and in many cases, the developer’s profit can be capped and any overage shared with the public sector partner above certain agreed thresholds.
The most forward-looking councils are already embracing this approach, realising the assets they have by hanging on to them and taking a forthright and entrepreneurial role in a partnership with the private sector to create something valuable out of something fallow. In good PPP deals, the private developers will take a lease on the land, making an investment in public services and leaving the asset to return to the public purse at the end of the lease period.
If you are clever, you can create a lot of value; so much more than that to be had from a standard residential land deal. If one could focus on the very best blend of property value, recurring public tax income, wellbeing and socio-economic value then you might have the perfect public private model – buried somewhere deep between a free market and planned market approach.
Combine this approach with the fact that public bodies, local authorities and central government are the largest landowners in the UK with £600bn in assets, then you have one of the most powerful opportunities for regenerative change at your fingertips.
The private sector has a major role to play in financing and building public facilities today providing the opportunity to lever in capital expertise, delivery experience and innovation without mortgaging public finances or submitting to the lowest common denominator in terms of quality.
Cathedral Group has done just this in collaboration with Lambeth Council on the Clapham One PPP. The typical spec-developer, free market approach on a project like Clapham One, where Cathedral delivered a new public library and leisure centre funded completely by a doctor’s surgery, public and private housing, would say: ‘How can we make the library as cheap as possible?’
Our approach was to ask: ‘How can we build an amazing library and still make it stack up financially?’ Our competitive advantage is that we strive to deliver more than the brief. This is socio-economic develop-ment and few developers can be bothered to do it properly in the suburbs and regions – there are easier profits to be had.
Many ‘mixed-use’ developments are delivered by predominantly residential developers, who do not understand how to create truly mixed-use places and, after paying lip service to the intent of planning consent, will appeal in an attempt to challenge the inclusion of commercial space if no tenants are apparent.
The focus should be on creating great places to live and work – real mixed-use development that supports all use-classes proactively and sustainably
If it is to remain relevant and viable, the development community must come up with more creative answers to such challenges and, if towns and cities are to avoid stagnation, the public sector too must question its assumptions about how partnership with the private sector works.
Without such progress, we will have a golden era of building which destroys the essence of what is great about this country – the history, the ambition, great architecture and a glorious sense of local community.
Richard Upton is chief executive of Cathedral Group plc.
