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Window of opportunity for development

A shortage of housing across the UK has created a ‘crisis’ where rents and house prices are rising with many people struggling to buy homes. Alex Black reports

 

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Window of opportunity for development

According to figures from Yorkshire Bank, the UK Government has missed targets for building new homes by 1,199,180 since 2004. In May, it pledged to build 1 million homes by 2020 to tackle the crisis and this could provide an opportunity for landowners looking to develop their land.

 

Councils are currently creating local plans for their areas and have to undertake public consultations on where to build. Landowners who believe they may have suitable land for development now have an opportunity to submit plans to their councils for new builds and conversions.

 

Catherine Whittles, solicitor at Bowcock and Pursail, said she did not know of any council which had its plans fully in place. “There is a window of opportunity at the moment as councils struggle to meet their quotas.”

 

It could also make it easier to develop land which may have previously been considered unsuitable. She said: “It is an opportunity for people who were previously told no as land is greenbelt or is unacceptable for development.”


Planning

UK housing statistics

Needed: 250,000 houses per year (Barker Review of Housing Supply)

Built (2015): 141,850

Deficit: 108,150

The UK Government has missed targets by 1,199,180 since 2004, figures from Yorkshire Building Society suggest

Landowners with enough time and capital can go straight to planning consultants or can use a solicitor or land promoter. A promoter will handle the planning process and costs and market land on the landowner’s behalf in exchange for a cut of the selling price.

 

Ms Whittles said there are simple things solicitors can do to strengthen proposals.

She said: “We look at planning deeds and any tweaks which might make the title more attractive.

 

“Often, as farmland has been passed down the generations, deeds have not been looked at for years.”

 

Landowners could also approach a developer directly for an opinion on whether their land is suitable and many housebuilders have been approaching farmers themselves.

 

Peter Jordan, group planning director at Persimmon Homes, said his firm was looking to build relationships with farmers.

He said: “I do a lot with farmers. I speak to them every day.”

 

Mr Jordan said a housebuilder could handle achieving planning permission for land and the firm would agree a price to buy the land after they successfully achieve permission.

 

He added: “Our costs are deducted from what we pay when we exercise this option.

 

“If getting permission is a long shot, we might offer 80 per cent below value, whereas if it is a certainty we might pay more, maybe 95 per cent.”

Landowners are advised to be aware of their neighbours’ plans, as a joint venture could provide a more attractive proposition.


Conversions

Changes to planning permission have made it easier to convert buildings to residential, flexible or educational uses before 2019.

 

Conversions are subject to a permitted development application, but local planning authorities have been told to start from the premise that permitted development rights do grant planning permission.

 

As there is no test of suitability of location, it may allow development in locations where planning permission may not usually be granted.

However, developments in ‘impractical or undesirable’ locations, such as those without road access or adjacent to poultry farm buildings, may be rejected.

 

Tony Hargan, surveyor at AJH Associates, said prior to the changes, barn conversions seemed like ‘a thing of the past’.

 

He said: “A lot of people had redundant buildings they were not doing anything with. Now, we have done quite a few. We have done both residential and commercial conversions.”

 

However, Mr Hargan said many people were unaware of the changes.

“It is time-limited to 2019, so there is a limited window of opportunity for people to get help diversifying or help with their income.”

The 'Brexit effect'

Before the referendum vote, former chancellor George Osbourne warned house prices could fall by 18 per cent if the UK voted to leave the EU.

 

But CLA housing adviser Matt O’Connell said despite the uncertainty, the UK would still need more houses and a weaker pound may encourage international investors.

 

He said: “The uncertain future agriculture finds itself in at the moment may lead to landowners looking at housing as a good way of diversifying businesses.

 

“In the last recession, land prices actually increased and gave landowners greater borrowing power. Investing in housing could therefore become quite attractive, especially if larger players are reducing their development plans.”

 

The National Housing Federation, which represents local authorities, has made an offer to the Government about the sector’s readiness to build through uncertain times.

 

It argued that with the right support the sector could build 300,000 homes over the length of this Parliament.

 

Following the result, a spokesman for Persimmon Homes emphasised it was still committed to building the new homes the country needs.

 

The spokesman said: “We believe market fundamentals remain strong, supported by long-term unfulfilled demand, and the UK housing market will continue to provide good opportunities for those companies with the right strategic focus and balance sheet strength to navigate future changes in trading conditions.”

 

Rory Stacey, senior associate at Trowers and Hamlins, said major changes in the economy following Brexit could impact on developments.

He said: “If the Government cannot secure the free movement of services in an EU trade deal, and if the pound remains subdued, it may be the export of goods becomes a new growth area.

 

“If food exports features in this, the prospects of securing non-agricultural consents for farmland may diminish, as the demand for productive farmland grows.

 

“Councils may seek to protect farmland from other forms of development through their development plan policies, not on greenbelt grounds, but to protect employment uses and the export economy.”

Key measures of the Housing and Planning Act 2016

  • Targeted powers to ensure all councils get local plans in place by 2017
  • Provision of 200,000 ‘starter homes’ on all reasonably sized new development sites to be offered to first time buyers at 20 per cent discount on market prices
  • Automatic planning permission in principle on brownfield sites
  • There have also been reforms to support small builders, placing a new duty on councils to help allocate land so 20,000 custom and self-built homes can be built by 2020
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