In his recent Mansion House speech, Chancellor George Osborne has claimed that 200,000 new homes could be created by 2020 by accelerating development of disused industrial sites.
Let us put to one side that there is a growing consensus, discussed here on Our Castle’s Strength in May earlier this year, that at least 200,000+ new homes are required each year, let alone by 2020 – we shall return to this observation later. For now, I’m going to focus on the specifics of this proposal: its details, the potential benefits and concerns, and its potential impact.
Behind The Stadium, With You, My Brownfield World
I don’t want to teach you to suck eggs – primarily because I have no idea what the sucking of an egg entails, or why one would wish to suck an egg in the first place – but before we begin it’s probably useful to offer a brief summary of what brownfield land is.
Brownfield land was defined in Planning Policy Statement 3 (PPS3) in 2010 as ‘previously-developed land’, i.e. land which is or was occupied by a previous structure. (For the purposes of this latest proposal, we are referring to brownfield land that has the potential for redevelopment.) There are broadly four types of brownfield site: vacant, derelict, contaminated, and partially occupied/utilised, with 54% of brownfield land in the England estimated to be vacant or derelict.
In 1800, just 10% of the English population lived in towns and cities; now, the figure is 90%. England is the third most densely populated major country in the world, and the population is projected to increase from 52 million in 2010 to 62 million in 2035. Given the number of people living in (and due to live in) towns and cities, we can argue that brownfield sites should be our first source of land for development: new properties can be built in urban areas where people are already and increasingly living. Infrastructure will already exist in the surrounding area, potentially reducing costs for developers not having to provide additional roads, drainage, etc.
This has advantages for the town or city: the development will rejuvenate the previously derelict and abandoned site, improving the area and having a positive impact on local businesses, as people are not ‘sucked away’ to more peripheral greenfield developments, and improving crime rates.
There is also a benefit for those who will live in those brownfield developments, as public transport, education, and employment links will all be readily available due to being located next to an established urban area.
But developers often have many concerns about using brownfield sites. Such land can carry heavy remediation costs – the cost of removing contaminants and health concerns to make sites safe for human health. This process can be complex, and is not always successful: research suggests over one in ten (11%) of new homes built on brownfield land have suffered problems as a result of the land the property is built on, affecting a total of 74,000 homes in the last ten years; problems consisting of flooding, contamination, poor drainage and sewage problems. There is also evidence to suggest that brownfield sites are rich with wildlife, such as nightingales and water voles; the development of such sites can have a destructive impact on these colonies of increasingly-rare fauna.
Beyond the practicalities of using brownfield sites, we have the views of future tenants to consider. Despite the potential advantages for people living on brownfield developments, in the form of readily-available transport, education, etc. the location of such sites may still not be desirable for people. For example, the Barking Riverside site was formerly occupied by a collection of power stations which shut down in the late 1970s and 1980s: enormous electricity pylons stretch as far as the eye can see, running from a nearby substation, and on the opposite side of the riverbank sits a sewage treatment plant. Further up the river is an oil depot. To quote an interview from the Economist: “these are all things that a city needs, but not necessarily things that you want to live next to.”
With a general understanding of brownfield sites established, let’s go down to the old mine (with a transistor radio…) and examine the specifics of the Chancellor’s latest development proposal.
Down In The Hollow Playing A New Game
“This urban planning revolution will mean that in effect development on these sites will be pre-approved – local authorities will be able to specify the type of housing, not whether there is housing.” – George Osborne
Osborne’s proposal is to order local councils to pre-approve planning permissions on 90% of suitable brownfield land by 2020. An initial £5m fund would be made available to help local authorities create the first 100 sites with so-called local development, with potentially up to £400m ultimately provided by the Treasury and Greater London Authority to help prepare further brownfield land sites.
This is not the first time targets have been set regarding brownfield development: in 1998, the Government set a target for 60% of all new developments to be built on brownfield land, and in 2010 it is estimated that 76% of new dwellings were built on previously-developed land. The National Planning Policy Framework (NFPP) of March 2012, however, included no targets for brownfield development, instead leaving local authorities to ‘…consider the case for setting a locally appropriate target for the use of brownfield land.’ – the impact of the growing Localism Agenda on national planning policies?
Regardless, will this new proposal accelerate new house construction of brownfield sites? I am not so sure. Having planning permissions will be pre-approved will not necessarily mean that there are companies willing to develop them. We have already explored some of the reasons developers are hesitant to develop brownfield sites – with an unsettled economy, construction firms will be thinking twice before developing on sites with extensive remediation costs, especially if those costs exceed the value of the land after development.
And what about those costs – will the proposed provision of up to £400m be sufficient to prepare brownfield sites for development?
The Best Practice Note: Contamination and Dereliction Remediation Costs from national regeneration agency English Partnerships provides some guidance as to the costs involved in remediation work on brownfield sites in order to prepare them for residential use. Obviously costs vary depending upon a range of factors, including the size of the site, sensitivity of the planned redevelopment, site context, the duration and nature of use, and geology, but they provide rough figures for the purposes of our analysis. Below are indicative costs for preparing a large, complex brownfield site for residential use:
- £30-180,000 for removal of redundant services
- £150-200,000 per hectare for demolitions above ground
- £50-60,000 per hectare for demolitions below ground
- £690-770,000 for total fees
- £200-300,000 for total site investigations.
NB: Where the land is contaminated, the costs for its remediation need to be calculated separately.
Using this guidance, we arrive at a cost of £200,000-£260,000 per hectare – assuming both above and below ground demolitions are required – with additional costs totalling £920,000-£1,250,000 per development.
The Home and Communities Agency estimates 61,920 hectares of suitable brownfield land in England (2009 figures) – using our estimated costs, development of this land would cost £12,384,000,000-£16,099,200,000 just to address requisite demolitions above and below ground, let alone an additional £1m per development for other site fees…and we have no way of determining how many sites our 62,000 hectares cover.
Based on the above, at least twelve to sixteen billion pounds are potentially required to develop all available and suitable brownfield sites – suddenly provision of £400m doesn’t exactly set out hearts a-thumping, does it, my brown-eyed girl?
Now, look, let’s not get carried away with this analysis. For a start, Osborne’s proposal centres around only 20 housing zones (with odds-on favourites set to be Enfield, Tower Hamlets, and other London boroughs), rather than the full spectrum of available UK brownfield sites I have used to calculate the above. Also, it is based on indicative costs and an absolute worst-case scenario where every brownfield site requiring above and below ground demolitions and for every site to be large and complex; these factors will clearly not be true in all cases.
I’m sure more astute analysts in the fields of construction and finance will be able to rip serious and embarrassing holes in my brief exercise. Still, it serves to highlight my concerns about the Chancellor’s proposal: even if planning permission is pre-approved, and developers are theoretically prepared to develop on sites, will the cost of developing brownfield sites simply be too prohibitive? Based on my own experience with pricing extensive asset maintenance and redevelopment programmes final costs are inevitably higher – rather than lower – than indicative costs, and you always need to keep additional funds aside for unforeseen development costs: remember, the above analysis doesn’t even factor costs for remediation of contamination, which we’ve already established is a major long-term concern for 11% of brownfield developments.
Further, in an administration that is cutting welfare funding like it was a fine Italian sausage, where is the Chancellor finding this £400m anyway? In short, the bulk will be taken on as debt: Dave Hill offers a succinct breakdown of this funding here.
My, How You Have Grown!
“We’re determined to make the very best use of derelict land and former industrial sites to provide the homes this country desperately needs in a way that protects our valued countryside.” – Eric Pickles, Communities Secretary
Perhaps the reason the Eye of Osborne has shifted its ocular attention onto brownfield sites is that property prices are now high enough to make such unviable land…well, viable. If property prices were not so high – and, consequently, potential profit not so high – would the government feel as confident that obligating councils to pre-approve planning permission would entice developers to consider building on brownfield?
Arguably, there is an unfortunate ‘ratchet’ effect with the current planning system – as easier, more desirable brownfield sites are built on, increasingly higher property prices, i.e. financial returns, are required to sustain the same level of building…a level of development that is in danger of crashing hard should property prices suddenly drop. Talk of a ‘housing bubble’ could quickly unravel the Chancellor’s proposal, even if sites are pre-approved.
More than that; as we have already discussed, people may not want to live in brownfield developments, given the local industrial geography. It wouldn’t be the first time that properties were built and left empty. The private rented sector has seen plenty of this with the boom in ‘luxury’ apartments, many of which now stand empty or unfinished due to lack of take-up – understandable, when luxury apartments serve neither families, who necessarily need more space, or those who require accommodation at an affordable, not ‘luxury’ cost. You can bring people to a waterfall, but you can’t get them slipping and a-sliding if they don’t want to…or can’t afford to.
And now to return finally to our very initial observation: this proposal suggests 200,000 properties could be built on brownfield sites by 2020…but the cry from housing professionals is that 200,000+ new homes are required each year to meet demand and smooth housing prices. Even if councils do facilitate building on all suitable brownfield sites, and developers are willing to do so despite the financial risks, the 200,000 properties delivered by 2020 will not even be close to the required supply of new homes England desperately needs.
So Hard To Find My Way Now That I’m All On My Own
“[W]hen campaigners such as the Campaign to Protect Rural England suggest that there is an easy solution in brownfield land, they are deluding themselves. It’s not just that there isn’t enough of it.” – D.K., The Economist
My main concern with this proposal is that it is a political smokescreen.
It sounds like it is addressing housing supply concerns, but the promised numbers are far below what is needed.
It sounds like it is cutting down bureaucratic red tape that had previously stopped eager developers, but is it actually the prohibitive development costs of utilising brownfield, rather than planning paperwork, that stop developers?
It sounds like money is being made available to tackle these costs, but I don’t believe the money promised will truly incentivise developers given the remediation costs of many sites.
It sounds like the proposal will radically change the face of house building in England, but I think the reality will be anti-climatic. I don’t like the idea of this proposal being championed as a solution, when it solves the housing crisis as much as a plaster solves a bloody chainsaw injury.
How much of it is politically motivated to appeal to home-owning rural England? The proposal implies that by accelerating brownfield development greenfield sites can be protected and our ‘traditional’ countryside preserved, but only a fraction of England has actually been built on – as little as 2% according to the UK National Ecosystem Assessment – and unless we sensibly expand into greenfield sites there will never be enough homes to meet demand
More homes are good – they are desperately needed – but we can’t rely on brownfield sites to be a panacea for the UK housing supply crisis…and we definitely can’t wait until 2020.
Boris Johnson: brown fields and green elephants, The Guardian, Online: http://www.theguardian.com/uk-news/davehillblog/2014/jun/16/boris-johnson-london-housing-brownfield-zones?CMP=twt_gu, Available June 2014
Brownfield and Public Land, Homes and Communities Agency, Online: http://www.homesandcommunities.co.uk/ourwork/brownfield-and-public-land, Available: June 2014
Brownfield Sites, Sustainable Build, Online: http://www.sustainablebuild.co.uk/brownfieldsites.html, Available: June 2014
Brownfield vs Greenfield Sites: What are the issued involved?, Using ICT in KS4 geography. Idea 16 – Brownfield vs Greenfield sites, Online: www.geography.org.uk/projects/ks4ict/idea16, Available: June 2014
Chancellor says 200,000 homes could be built on brownfield land by 2020, The Guardian, Online: http://www.theguardian.com/business/2014/jun/13/200000-homes-brownfield-land-2020-george-osborne, Available: June 2014
Derelict brownfield land contaminated remediating costs published by EP, Rudi.net, Online: https://www.rudi.net/node/19159, Available: June 2014
Designing Buildings Wiki, Designing Buildings, Online: http://www.designingbuildings.co.uk/wiki/Brownfield_land, Available: June 2014
How to Kill Nightingales and not Build Houses: Insist on building on Brownfields, Spatial Economics Research Centre, Online: http://spatial-economics.blogspot.co.uk/2013/04/to-kill-nightingale-and-not-build-houses.html, Available: June 2014
New brownfield sites could bring big trouble, PROPERTYdrum, Online: http://propertydrum.briefyourmarket.com/Newsletters/JUNGLEdrum-The-newsbeat-from-PROPERTYdrum25/New-brownfield-sites-could-bring-big-trouble.aspx, Available: June 2014
The brownfield delusion, The Economist, Online: http://www.economist.com/blogs/blighty/2013/05/planning-and-housing, Available: June 2014
The Great Myth of Urban Britain, BBC, Online: http://www.bbc.co.uk/news/uk-18623096, Available: June 2014
Title, sub-titles, and occasional odd phrase courtesy of lyrics from Van Morrison’s classic song ‘Brown Eyed Girl’