Healey: 'Public Land Initiative could change face of housebuilding' » Housing » 24dash.com

Housing Minister John Healey will today say that while it is the £1billion the Government has released for housebuilding since June that has hit the headlines it is the Public Land Initiative (PLI) that could change housebuilding for years to come.

Mr Healey will say that through the PLI he is offering a new approach for public-private housebuilding in which companies take a smaller profit because Government takes more risk out of development.

Crucially this could bring in construction companies new to housebuilding who are builders not developers and used to contractor margins of 6 or 7% rather than the 15-20% norm for traditional housebuilding firms. This will mean more choice and more supply.

Under PLI Government will provide public land but take out upfront costs and risk involved in the site purchase and preparation. Government will select a panel of approved partners, reducing both the contract bidding costs and reducing procurement costs for public agencies that want homes built this way.

Mr Healey will today say that there has been a strong response to this initiative from both companies and local authorities. Today he will publish a list of 152 firms that attended a seminar organised by the Homes and Communities Agency in July before formal procurement started.

One hundred and thirty two companies completed a pre-qualification questionnaire in August and the HCA have now short listed 40 – more than a third are construction firms looking to expand into housing development.

Later this week representatives from 43 local authorities have signed up to attend an HCA seminar to see how they can get involved.

John Healey said: “The economy is recovering but there’s no going back to the pre-recession period.  Relying on the ways we have built housing in Britain for the last three decades won’t work for the future.

“We can’t just wait for the market to provide the homes people need in this country, and we can’t rely on the housebuilders alone to supply it. We need a new model for the new economic situation.

“We have to innovate. We have to test new ways of funding and building the homes we need. I want to bring into housebuilding in Britain new firms, new skills, new techniques and new technologies.

“So I’m offering a New Deal for public-private housebuilding. New partnership terms in which Government takes more risk out of development, and companies take a smaller profit in return.

"We can bring in construction companies new to housebuilding, who are builders not developers and used to contractor margins of 6 or 7% rather than the 15-20% norm for traditional housebuilding firms. This will rebalance profit margins to a third of the traditional housebuilding model by taking site costs and risk out of new housebuilding. This will mean that we will have more choice and more supply.

“I announced this as the HCA’s public land initiative in June, as one of four parts in the government’s new £1.5 billion Housing Pledge.

“I am looking to new companies to bring a new competitive edge to the industry, as well as help accelerate innovation in the design and build, as our national challenge is not just to build more homes but to build greener homes in cleaner neighbourhoods.

“We are looking to test this new business model on HCA-owned land, with the first builders on site by April. We will provide public land but take out upfront costs and risk involved in the site purchase and preparation.

"We will select a panel of approved firms, as direct delivery partners, reducing both their contract bidding costs and reducing procurement costs for public agencies that want homes built in this way.

“It is the £1billion I’ve released for housebuilding since June that has hit the headlines. But this part of the Housing Pledge, this reform has the most radical and far-reaching potential. Each step of this process has reinforced my belief in the importance of this initiative, and my confidence in its success.

“152 firms attended a seminar organised by the HCA in July before the formal procurement started. I can also confirm today that 132 companies completed the pre-qualification questionnaire in August at the start of the formal procurement process and the HCA have now shortlisted 40.

"Sixteen of these companies – more than a third – are construction firms looking to expand into housing development; 13 are traditional housing developers, six are firms with both construction and development capacity, four are housing associations and one is a consultant-led consortium.

“That’s the private side potential of this New Deal partnership. On the public side, where the HCA leads with their land I expect local authorities, RDAs and other public bodies to follow. Latest estimates show there is enough surplus public land in England to build nearly 300 000 new homes; including 100 000 on local authority surplus land and others on old NHS, transport, military or schools sites.

“I will announce final decisions on the firms that make the panel as direct delivery partners in December, with the first builders on site by April and the first 50 of the new homes finished within a year of that.”

The Kickstart projects getting the green light today include:

Kalamazoo, Birmingham, West Midlands
50 Homes, £1,768,000 Kickstart Funding
Miller Homes
Formerly a printing works, the Kalamazoo site will receive £1.7m Kickstart funding which will result in a further 50 dwellings available for open market sale, Homebuy Direct and Social Rent. Developers will work with the local Job Centre Plus to create jobs and skills opportunities on site, where work will begin this month.

Tranmere Site E, Birkenhead, Merseyside
56 Homes, £1,078,123 Kickstart Funding
Lovell Partnerships Ltd
The high profile Tranmere project on a the main commute to Birkenhead town centre had stalled due to the economic downturn and market failure. The development will significantly improve the image and perception of the area and provide much needed new family accommodation for local people. £1m Kickstart funding will help deliver 56 houses, 20 of which will be available through HomeBuy Direct. Works will commence in November 2009.

Chenet Park, Great Wyrley, West Midlands
31 Homes, £198,000 Kickstart Funding
Persimmon Homes Ltd
The rural scheme in Great Wyrley will provide much-needed family homes for the rising workforce in the area. £198,000 Kickstart support will help deliver 31 homes, including twelve HomeBuy Direct homes. Work will start on site this month, with Homebuy homes ready to go by December 2010. This scheme will also seek to include local labour and apprentices.

Deers Leap, Cape Hill, Brimingham, West Midlands
52 Homes, £426,660 Kickstart Funding
Persimmon Homes Ltd
Over £400,000 Kickstart funding will be used to provide 52 homes on the site of the former Cape Hill Brewery near Birmingham city centre. The development will eventually provide 200 much needed family homes in the city.

Liberty Park, Coventry, West Midlands
111 Homes, £973, 200 Kickstart Funding
Wates Living Space
Part of a project to regenerate the old Hillside and Meadway areas of Stoke Heath, Coventry , the Liberty Park development is designed with the first time buyer in mind. The development will provide a total 271 new homes, including 67 for affordable rent. The £973,200 Kickstart funding allocated today will help deliver a total 111 of these, with 50 HomeBuy Direct homes completed by December 2010.

Liskerrett Vale, Liskeard, Cornwall
50 Homes, £279,315 Kickstart Funding
Galliford Try Homes Ltd
Liskerrett Vale, perfectly placed for the commute to Plymouth, will receive £279,315 Kickstart funding to kickstart 50 homes to be delivered by March 2011, including 10 to be sold through Homebuy Direct and ultimately help restart a total of 154 homes.

Hazel Grove, Bristol
151 Homes, £897,000 Kickstart Funding
Barratt Developments
£897 thousand funding under Kickstart will enable 151 homes to be delivered by March 2011 including 37 social rent and 42 Homebuy Direct units.

Fusion, Wolverhampton
104 Homes, £348,750 Kickstart Funding
Barratt Developments
£348 thousand funding under Kickstart will enable 104 homes to be delivered by March 2011 including 84 market sale and 20 Homebuy Direct units.

Windsor Road, Redditch, West Midlands
162 Homes, £3,212,500 Kickstart Funding
Persimmon/Westbury Partnerships
A major redevelopment of a former gas works site, Windsor Road lies ½ mile to the north of Redditch Town Centre and will provide much needed housing for the area. Over £3m funding under Kickstart will help build 162 homes, including 34 affordable homes and 128 under HomeBuy Direct.

The Grange, Bowburn, County Durham
59 Homes, £3,309,674 Kickstart Funding
Dunelm Property Services Limited
This large site, close to Durham City, will receive over £3 million Kickstart funding to unlock 80 homes, of which 49 will be affordable, including 10 bungalows for Durham Aged Mineworkers Association (DAMHA).

Easel Sites 5 and 7, Leeds, West Yorkshire
Easel 5: 87 Homes, £1,924,074 Kickstart Funding
Easel 7: 81 Homes, £1,321,451 Kickstart Funding
Bellway Plc
These two developments in Parkway Vale, Seacroft and Oak Tree Drive, Gipton will help to regenerate and improve the market in these deprived estates. The 1.3 million Kickstart investment for Parkway Vale will help to build 81 homes, 41 of which will be made available though HomeBuy Direct. £1.9 million investment in Oak Tree Drive will kickstart a further 87 homes, with 47 HomeBuy Direct houses.

The Meadows, Bristol, South West
53 Homes, £788,625 Kickstart Funding
Barratt Homes
The Meadows is part of a large suburban residential development in East Bristol and will deliver much needed accommodation for local people. £788,625 Kickstart funding will help complete 53 homes, including 41 for Home Buy Direct Support. The site will be re-opened immediately, meaning the development will be completed by April 2010.

Orchard Leaze, South West
55 Homes, £503,550 Kickstart Funding
Barratt Homes
55 homes will be delivered by March 2011, including 20 for sale under Homebuy direct.

New Broughton Main Site and Site U, Salford, North West
Main site: 169 Homes, £7,362,501 Kickstart Funding
Site U: 50 Homes, £658,000 Kickstart Funding
Countryside Properties Plc

Yarn Street, Leeds, YandH
61 Homes, £3,954,000 Kickstart Funding
Miller Homes Ltd

Brewery Lane, Kirklees, YandH
77 Homes, £2,471,000 Kickstart Funding
Miller Homes Ltd

Millbay D1, Plymouth, South West
64 Homes, £1,679,278 Kickstart funding
Galliford Try Homes Ltd

Coopers Edge, Gloucester, South West
53 Homes, £569,250 Kickstart funding
Persimmon Homes

Kingsway, Gloucester, South West
53 Homes, £282,000 Kickstart Funding
Persimmon Homes

Park Central, Birmingham, West Midlands
51 Homes, £3,246,200 Kickstart Funding
Crest Nicholson

Manning Road / Willoughby Road, South Kesteven, East Midlands
69 homes, £2,828,000 Kickstart funding
Larkfleet Homes

Oakham, Rutland, East Midlands
30 Homes, £1,298,500 Kickstart funding
Larkfleet Homes

Hampton VT18, Peterborough, East of England
115 Homes, £1,245,900 Kickstart funding
Persimmon Homes

Portswood Road Scenario 1, Southampton, South East
101 Homes, £5,567,000 Kickstart funding
Orchard Homes and Developments Ltd

Lakeside, Cannock Chase, West Midlands
52 Homes, £1,063,406 Kickstart funding
Barratt Developments Plc