Healey: New sites will lay the foundations for new deal in housebuilding
17 February 2010
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Housing Minister John Healey has today hailed the start of a new deal in housebuilding with the first Government-owned land being made available under the Public Land Initiative for much-needed new homes.
Mr Healey described this as a drive to make better use of Government-owned land to build more homes, to lower costs and to increase competition in housebuilding.
The Minister named the first three sites which, subject to planning permission, will deliver nearly 500 new homes – many of which will be made available for affordable rent or sale. The Public Land Initiative is expected to deliver up to 1,250 homes overall.
Under the new deal, Government provides the public land but takes out the upfront costs and risks involved in site purchase and preparation as contractors pay for the land only once the completed homes are sold. A panel of approved partners have been selected, reducing the contract bidding and procurement costs for public agencies that want to build homes this way. But in exchange for this reduced risk, developers take a smaller profit.
Some of the biggest names in the construction industry have not been house-builders before – but Mr Healey sees this new initiative as a way to inject more innovation and competition into housebuilding by encouraging them to enter the industry.
The Public Land Initiative could create up to 1,700 jobs and apprenticeships – with workers expected on the first of these sites within the next few months.
Two of the first three sites are owned by the Homes and Communities Agency – with more sites being considered. The third is owned jointly by the Regional Development Agency One North East, Newcastle City Council, and local development company 1NG.
The Minister made clear he expects other public bodies to follow suit, and identify land they have available for housebuilding. Latest estimates suggest there is enough public sector land in England to build nearly 300,000 much-needed homes, including 100,000 on council land and others on old NHS, transport, military and school sites.
The first three sites to be made available under the Public Land Initiative will be:
- Bentley, Doncaster – 178 homes are planned for this site, of which 47 will be affordable. Subject to planning permission, work is expected to start this Summer
- Kingsmead South, Milton Keynes – this site will deliver 200 homes, of which 60 will be affordable. Work is expected to start this Autumn
- East Bank, Ouseburn, Newcastle – a joint venture between ONE North East, Newcastle City Council and 1NG, this will deliver between 90 and 100 town houses and larger apartments, 22 of which will be affordable. Work is due to begin in May.
The Public Land Initiative forms part of the Prime Minister’s June £1.5billion Housing Pledge, which saw Government funds switched into the building of new homes.
Since then, John Healey has released over £2.8billion for more than 51,000 new homes across the country.
The Minister has also put in place special contractual conditions so developers, councils and housing associations benefiting from this multi-billion pound investment in housing must provide apprenticeship and local job opportunities – including those contractors working on Public Land Initiative sites.
John Healey said:
'The last year has been tough for everyone. Every business, household and individual has had to respond to the pressures and to rework the plans and budgets we had before the recession. But we have proved that, with the power of public investment and Government action, we can get through.
'We have to innovate and test new ways of funding and building the homes we need. So I’m offering a New Deal for public-private housebuilding, with new partnership terms in which companies take a smaller profit because Government takes more of the risk by lowering costs and increasing competition in housebuilding.
'This is a drive to make better use of Government-owned land to build new homes. Where the HCA and Newcastle are leading I expect other public bodies to follow. And I am now looking to new companies to bring a new competitive edge to the industry. We are looking to test this new business model on the first three sites I am announcing today, with the first builders on site over the coming months.'
Sir Bob Kerslake, chief executive of the Homes and Communities Agency said:
'The PLI is a significant new model for creating strong public-private partnerships that share the risks and rewards of delivering new homes. These first three sites will be an important test bed for the initiative and its aim to spearhead the wide-scale delivery of homes that meet Level 4 of the Code for Sustainable Homes.'
David Curtis, regional director, Homes and Communities Agency, said:
'This former coalfields site in Yorkshire and the Humber will provide much needed new affordable homes that will be built to high environmental and quality standards through the HCA’s Public Land Initiative.'
Tim Roxburgh, Projects Director for Milton Keynes Partnerships said:
'We are delighted that a site in Milton Keynes has been included in this new initiative. It is vital that we continue to find ways to help boost our economy as well as increase the housing supply locally.'
Peter McIntyre, Director of Planning and Programme Management at 1NG said:
'Public Land Initiative is a wonderful opportunity for the Lower Ouseburn Valley - the creative heart of Newcastle. These high quality homes will be the catalyst to drive forward the completion of this strategic site, adding the much needed residential component to the urban village which is already the largest creative cluster in the North.
'Living by the riverside and the vibrancy of the NewcastleGateshead Quayside will be very attractive. When combined with the stunning topography of the Ouseburn Valley and the accessibility of this location, the project has great potential to become a national showcase.'
Ends
For further media information from the HCA please contact Gemma Thompson on 020 7881 1054 or email gemma.thompson@hca.gsx.gov.uk
Notes to editors:
Announced in June 2009 as part of the Prime Minister's Housing Pledge, the Public Land Initiative (PLI) offers a new deal for developers in house building. Under this £53m scheme, Government provides the public land but takes out the upfront costs and risks involved in site purchase and preparation. Over the next three years, the HCA will oversee the building of1,250 new homes on publicly owned land, 500 of which will be available for affordable rent and low cost home ownership.
The main objectives of the Initiative are:
- To establish new and more efficient procurement processes
- To supply de-risked sites, allowing tighter operating margins by the developer
- To establish a mechanism for deferred payment regarding the site
- To mitigate sales risk through targeted affordable housing or other tenure options
- To set standards for high quality homes
- To engage with new and existing housing delivery partners in a new way.
Further information about the PLI is available here.
The Homes and Communities Agency (HCA) is the single, national housing and regeneration delivery agency for England. Our role is to create opportunity for people to live in high quality, sustainable places. We provide funding for affordable housing, bring land back into productive use and improve quality of life by raising standards for the physical and social environment.