From Start to Finish: How quickly do large-scale housing sites deliver?
This is a vital read for those affected by the trials and tribulations of planning permissions and development.
‘From Start to Finish’ is a new report written by Nathaniel Lichfield – an expert in planning, design and economics. The report examines delivery of large-scale housing schemes.
We read the report from start to finish with great interest to us and of great importance to our clients.
Here are the 5 key findings from that report…
1. More land should be released if more homes were to be built. Confidence in delivery through the planning system relied on ambitious and robust local plans. Where plans were not forthcoming there should be a fall-back mechanism to release land for development when required.
2. Planned housing trajectories. These should be realistic, accounting and responding to lapse rates, lead-in times and sensible build rates. Allocating more sites rather than less and a sensible approach to evidence and justification were needed.
3. Spatial strategies should reflect that building homes were a complex and risky business. Stronger local markets had higher annual delivery rates and although large sites could deliver more homes per year over a longer time period, they also had longer lead-in times. To secure short-term immediate boosts a good mix of smaller sites was needed.
4. Plans should reflect that, where viable, the affordable housing supported higher rates of delivery. Trajectories should differentiate expected rates of delivery. Some areas will want to consider spatial strategies that favour sites with greater prospects of affordable or other types of housing delivery.
5. Large-scale brownfield sites delivered more slowly than greenfield and the very largest had very long planning approval periods.Self-evidently, many brownfield sites also faced barriers to implementation that meant they did not get promoted in the first place. In most locations outside the biggest cities, a good mix of types of site was required.
And now, the answer to that question is…
How quickly do large-scale housing sites deliver?
In figures, according to Nathaniel Lichfield:
- 70 large sites were assessed
- 9 years was the average lead in time for large sites prior to the submission of the first planning application
- 1 years was the average planning approval period of schemes of 2000+ dwellings. The average for all large sites was c. 5 years
- 161 was the average annual build for a scheme of 2000+ dwellings
- 321 was the highest average annual build rate of the schemes assessed, but the site has only delivered for three years
- 40% is an approximate increase in the annual build rates for large sites delivering 30%+ affordable housing compared to those delivering 10% to 19%
- 50% more homes per annum are delivered on average on large greenfield sites than large brownfield sites
Expanding on that, in the report were 2 key questions:
1. what were the realistic lead-in times for large-scale housing developments?
2. Once the scheme began to deliver, what was a realistic annual build rate?
A desk-based investigation of the lead-in times and build-out rates on 70 strategic housing sites of 500+ homes were contrasted with 83 “small sites” of 50 – 499 homes to look at trends in lead-in times and build rates at varying scales.
Lapse rates: Interestingly, bearing in mind the current focus on unimplemented planning permissions, it includes an analysis of lapse rates, noting that DCLG had identified a 30%-40% gap between granted permissions and starts on site. Nathaniel Lichfield said it was not realistic to assume 100% of planning permission granted in any given location would deliver homes.
Planning permissions could lapse because:
1. The landowner could not get the price he wanted for the site.
2. The developer could not secure finance or meet the terms of an option.
3. The development was not considered to be financially worthwhile.
4. Pre-commencement conditions took longer than anticipated to discharge.
5. Supply chain constraints hindered a start.
6. An alternative permission was sought after approval, perhaps when a housebuilder sought to implement a scheme when the first permission had been secured by a land promoter.
The housebuilder’s model: Return on Capital Employed (ROCE) – incentivised a quick return on capital after a site was acquired, building and selling homes as quickly as possible, at sales values consistent with the price paid for the land. There was little incentive to hoard land with permission.
The LGA’s identification of 400-500,000 units of ‘unimplemented’ permissions, even if accurate, was equivalent to two years pipeline supply. The data was significantly overstated unimplemented permissions because it referred to units on sites where either the entire site was not been fully developed or the planning permission had lapsed – a stock-flow analysis where outflow (homes built) was ignored. Insofar as ‘landbanking’ existed, it was in London. Read more in the report here.
Delivery of large-scale sites: One allocation of several thousand homes could (at least on paper) mean a significant proportion of the housing requirement in a district had been met but their scale, complexity and sometimes up-front infrastructure costs meant they were not always easy to kick-start. There was also a need to be realistic about the speed of delivery with housing land supply gaps opening up as a result of over-optimism. Read more in the report here.
Lead-in Times: Larger sites generally took longer to complete the planning application and lead-in processes than smaller sites because they gave rise to complex planning issues (the principle of development and the detail of implementation). There was rarely a way to short-circuit planning.
Commencement could be accelerated if a coherent first phase could be ‘carved-out’ and implementation fast- tracked through a focused first phase planning application, together consideration of the wider scheme through a Local Plan or wider outline application.
On average, after receiving permission, smaller sites took longer to deliver their first dwelling than the largest sites (1.7-1.8 years compared to 0.8 years for sites on 2,000+ units). Read more in the report here.
Build out rates: There was a positive correlation between the strength of the market (as measured by residential land values) and the average annual build rates achieved. The annual average build-rate for the largest sites (of 2,000 or more units) was c.161 dwellings per annum; delivery increased for larger schemes, reflecting the higher number of sales outlets possible on large sites but was not a straight line relationship: on average, a site of 2,000 units would not deliver four times as fast as a 500 unit site because of the limit to the number of sales outlets and overall market absorption rates. For the duration of the development period, the average annual build rate was 239 dwellings. Read more in the report here.
Brownfield/greenfield: Brownfield and greenfield sites came forward at broadly similar rates, although at the smaller end of the scale, there was some ‘bonus’ in speed of decisions for previously-developed land. For the largest sites (of 2,000+ units) an extended time period (3.6 years longer) was suggested compared to the equivalent greenfield sites, once started, large-scale greenfield sites delivered homes, on average, 50% quicker.
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