Philip Barnes – Blog

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Everyone agrees we need to increase housing output on brownfield sites.  However the definition of previously developed land (PDL) aimed at achieving this has been largely unchanged since the first consultation draft on PPG3 back in the late 90s. The only substantive amendment has been to weaken the policy as it relates to large gardens in order to avoid garden grabbing.

The time has perhaps now come to amend the current definition of PDL in order to drive more output from brownfield sources. With 20 years of policy encouraging brownfield sites the ‘easier’ sites have gone. In many areas only the unviable, multi-ownership, technically complex sites in the weaker market locations are left. Housing under supply has grown and its disastrous consequences means that we should now explore new sources of brownfield supply.

The first port of call should be those sites which the public view as brownfield but policy does not. Namely the vacant or underused garden centres, glasshouses and golf courses which are clearly capable of accommodating new homes. With homelessness rising and  a million too few new homes since 2000 the planning system no longer has the luxury of regarding such sites as greenfield and unsuitable for redevelopment.

For garden centres the economic and planning opportunity is obvious. As the large DIY stores and supermarkets have entered the market for plants and garden equipment the country has been left with countless vacant or financially unsustainable garden centres and nurseries. Most look the same – large ugly aging structures accommodating a mix of growing and retail operations. And mostly located close to our urban areas and making no contribution to the openness of the Green Belt.

But unfortunately garden centres are classified as a horticultural operation and therefore as greenfield. Whilst case-law has established that those which are predominantly retail operations (with ancillary growing) can be regarded as brownfield the simple reality is that the planning position is at best complex and acts as a disincentive for developers. Indeed some local plans actually seek to protect such uses from redevelopment in some forlorn hope that such an allocation will somehow stem the economic tide.

If the NPPG brownfield land definition could be brought updated to make clear that such uses can be regarded as brownfield this would open up the prospect of a range of ugly densely developed sites coming forward for much-needed well designed homes and open spaces.

Similarly global warming and reduced shipping costs has dramatically affected the UK glasshouse industry. Many are now vacant or financially unsustainable. Whilst some are in remote locations unsuitable for new homes, many are located close to urban areas and offering opportunities for environmental enhancement through redevelopment.

Another sector suffering from structural economic decline is golf. As evidenced by a 20% decline in golf club membership between 2004-13 in England.

Again most are located close to our urban areas where the housing needs are greatest. They are usually ecological deserts with little or no public access. Many are slowly dying due to lack of investment and falling membership rolls. Perhaps the planning system should be working positively with Sport England and the golf industry bodies to define policies which ensure a positive future for redundant or unviable golf courses. Perhaps new country parks, new facilities for other sports, or garden villages. Or all three.

If the local planners and the golf course owners feel the course could have a viable future with new investment then maybe a small housing development on the brownfield part of the course could help provide that investment. We planners need to be proactive and positive in addressing the needs of the next generation of golfers and homeowners and renters.

Three huge potential sources of future housing supply. All housebuilders need is some positive, consistent national and local planning policy. If we get that we will aim to do the rest.

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MIPIM is always a brilliant opportunity to take in hundreds of different views on a vast array of different subjects. This “opinion hoovering” enabled me to finally clarify in my own mind what is going on with land banking. It has long been a cause of curiosity because I know that Barratt do not land bank but there is clearly an issue with some consented housing sites not coming forward fast enough.

So what were the “eureka” realisations?

1. Firstly that land banking means different things to different people. For example a local authority member at MIPIM cited an example of land banking to me. When we delved into the detail it was a site where outline consent was granted a year ago and “nothing has happened”. The reality was that:

  • the outline permission was secured by a land promoter
  • after outline consent the site was marketed and sold to a builder
  • reserved matters consent is still to be granted
  • in fact, it may well be another 6-12 months before development commences – with everyone working as fast as they can to bring the site forward.

That isn’t land banking in my book

2. Secondly, another local authority member felt that if builders are not building out a site as fast as technically possible – that is also land banking.   The reality is that housebuilders, as return-on-capital businesses are not able to build our products at a pace faster than our customers will purchase them, at the market value. We could in theory cut prices to speed up sales but as we have based our land purchase price on the estimated market values so we don’t have this option in practice. Similarly if we put lower sales values into our development appraisals when buying land we would simply be uncompetitive in the land market – our raw material.

In simple terms we build as fast as we can given the market in front of us and in recent years our sales rate has significantly increased. Across the Group we are now selling at 0.66 sales per week per site on average and faster in the stronger market areas.

3. It seems clear to me that housebuilders, LAs and others have different views on what land banking actually is. To me it’s people getting a planning consent and then deliberately either:

a) building out a site at a deliberately slow rate in the hope that rising house prices will increase site revenue, or,
b) delaying the start of a development in the hope that land values and/or house prices rise

4. In relation to (a) I have already explained that Barratt is a return on capital business and we build and sell as fast as we can. Indeed we are currently working with the Government and others on how we can further speed up build and sale without losing competitive advantage

5. In relation to (b) the eureka moment was a discussion with a planning consultant specialising in London. He revealed that:

  • approximately 80% of current workload is housing
  • it splits c80-20 with c80% for landowners/investors and c20% for housing developers
  • for the 20% of work done for housebuilders, the project always proceeds to a site start when consent is granted
  • for the 80% of work done for others the site does not then proceed to a site start in c50% of cases

Clearly a sample size of precisely one but it perhaps does show that there could be a geographical dimension to the “land banking” issue. Namely far more landowners, investors and speculators in the London land market some of whom appear to be using the planning consent for valuation purposes rather than construction purposes.

So my MIPIM 2016 sum up:

  1. Hopefully a few more people realised that Barratt does not land bank, BUT this relies on our definition of land banking as described in (3) above
  2. In terms of “our” definition of land banking there does appear to be an issue in London
  3. For those who think an unbuilt site which secured outline consent 12 months ago is “land banked” then all we can do is respectfully disagree. And the same for those who think land banking is building at a pace unrelated to customer demand

Final point would be my continuing frustrations as to how many people who cite the 475,000 unstarted consents figure without realising that:

  • many of these consented units are on sites where there remains a requirement to discharge pre-commencement conditions so actually can’t be started yet, and,
  • for a site which has started but has say 500 units left to build those 500 units form part of the larger (unstarted) figure.

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Reading about the recent Stoke diaspora meetings attended by luminaries such as Tristram Hunt, Kate Barker and EY Chief Economist Mark Gregory set off some questions about my own home town of Middlesbrough.

  1. Should there be a Middlesbrough diaspora trying to help?
  2. Is there one already?
  3. Could it work as there isn’t anyone named Tristram from Middlesbrough?
  4. What would we talk about?

Going straight to the last one I guess we would reflect on the fact that Middlesbrough is the only North American city in the UK.  A genuine pioneer town created within 50 years after some clever ambitious people realised that with the invention of the railways and the Bessemer process it was pretty handy having iron ore reserves within easy access of a river. From a population of 40 people in 1830 Middlesbrough grew to 40,000 in 1870 and then to 90,000 in 1900.

So riverbank farms and fields quickly changed into the town described by William Gladstone as the “infant Hercules”.  It’s nickname was Ironopolis.  An industrial success story to match Mr Carnegie or Mr Ford and accompanied by unprecedented levels of migration.  Mainly families like mine from Ireland, arriving to serve the mighty steelworks and shipyards.  In 1880 there were more Irish people living in Middlesbrough than London.  Only Liverpool accommodated more.

Then more clever people realised that the salt marshes on the other side of the river meant it was a great place to make ammonia – a core component of fertiliser amongst other things.  ICI started manufacturing fertiliser at Billingham and liked the area so much they then opened a second massive chemical complex downstream at Wilton to make newly invented products like polythene, polyethylene and perspex.  The migration continued.

In 1945 Max Lock (perhaps the leading town planner of the day) produced the Middlesbrough Survey and Plan.  A grand vision of vast industrial complexes, low density private and public housing estates and miles of new distributor roads.  All were faithfully constructed exacerbating the US look and feel of the town.

But then the problems started.

Globalisation and automation led to huge job losses and meant that Middlesbrough had too many people for its economy.  The area remained economically successful exporting vast quantities of different products around the world but there weren’t enough jobs to go round.  With high unemployment the statistics give the impression of an economic backwater.

The reality is quite the reverse.  Even as ICI and British Steel gradually reversed out of Teesside global industrial conglomerates like Sabic and Huntsman have moved in.  Not to mention the opportunities created for entrepreneurs like Steve Gibson with his Bulk haul business picking up the old ICI distribution routes.  The area remains a world-class centre for the process and chemical industries.  The port is one of the best in the UK and was a key reason for attracting Hitachi to nearby Newton Aycliffe.

But the problem of too many people stubbornly remains.  And it skews the economic status and statistics for the town because without sufficient employment opportunities many in the community unfortunately fail to realise their potential.

Clever sociologists might be able to explain why so many people were prepared to migrate to Teesside when jobs were available but, generations later, their ancestors stay when the opportunities are so much diminished.  Indeed out-migration tends to be higher amongst the most qualified rather than least.  One thing is sure – a Detroit-style mass migration out of the town would inevitably leave Detroit-style issues of urban decay, abandonment and social fragmentation.  Albeit we should remember that Detroit now, at last, seems to be resurgent.

Another thing is sure – if there had been a planning system in the 1870s Teesside (and me) would not exist.  Vast areas of land were needed to build the new industries and homes. Development and growth at a rate inconceivable in the UK since 1947 and impossible since the abandonment of the New Town concept.

In today’s planning environment local plan proposals are derived from the household projections which are based on what has happened in the last five years.  In stark contrast Middlesbrough grew on the basis of new inventions, new industries, new means of transport, new ways of raising finance and a new spirit of entrepreneurialism and ambition.  Steel rails from Middlesbrough were laid across the globe.  The current approach of “rationing” growth and forbidding development outside the local plan would have killed Middlesbrough at birth.

So no easy conclusions or answers.  The home town remains a jewel in the UK’s industrial, manufacturing and exporting crown.  A long-term economic success story accommodating huge numbers of highly skilled business leaders and workers exporting to the world.  But the problem remains that it is home to more people than its modern manufacturing economy can support.  As a result too many are leading wholly unfulfilled lives due to lack of opportunity and the statistics perhaps deter talented young people from moving to (or staying in) the town. The solution to that appears far from easy.


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Time to reflect on a year of cities.  I am lucky that work means regular visits to most of the UK’s great cities whilst the need to sully favour with the children shortly to leave home has meant a few overseas city breaks in 2015.


Perhaps the overriding impression from the year is how similar London and New York now are. And how different they both are to any other city I have visited.  In both cities:

  • the current flow of global immigration is palpable.  The millions of people from hundreds of countries are more predominant than the indigenous population creating an incredible diversity and vibrancy in terms of food, shops and culture
  • such is the resident and tourist demand for food and drink there appears to be a coffee shop or some other eaterie every 50 metres. And usually the same brands in both cities
  • West End and Fifth Avenue sell the same products, to the same customers,  from the same high end stores
  • The City and Wall Street are both increasingly crammed with brand new skyscrapers of similar architectural styles
  • Master-plans for the big regeneration opportunities at Nine Elms and Hudson Yards look suspiciously similar
  • Central Park and Hyde Park both still look and feel like magnificent green lungs but both perhaps struggling to provide the tranquility they once did
  • formerly edgy districts like Harlem and Brixton both now offer multi-million dollar flats, cheek by jowl with council estates/high rise projects
  • public transport is constantly full, 7am to 10pm seems to be the rush hour

Above all else the diversity.  London no longer feels like part of England and perhaps New York never felt like being part of the US.  Both are magnets for some of the most talented and ambitious young people in the world and it shows.

But what about the differences between these two great places.  Firstly the public realm. London is consistently fantastic – outstanding design, superb materials and high quality maintenance. New York simply isn’t like that – in stark contrast to Boston by the way. In New York the general quality of floor materials, street furniture, shop front design control and public spaces is way below par in most areas. The superb public realm being laid down at the World Trade Centre is in sharp relief to many other parts of Manhattan.

Secondly the infrastructure.  I can only imagine what a regular user of Penn Station must think when entering the fantastic Kings Cross/St Pancras or perhaps viewing the transformational plans for Crossrail or Euston. And the snails pace of trains on the “high speed” 215 mile line from New York to Boston. About an hour longer than the 285 miles covered by the 7.04 from Newcastle to London. Plus, having travelled the New York subway for a week I will never again moan about the state of London tube trains again – albeit seems easier to get a seat.

Thirdly the levels of construction.  Cranes everywhere in London but surprisingly few and far between in New York.


Thirty years ago on my first trip to Paris I remember being struck by how similar it was to London.  Albeit with the distinctive Parisian style.  The scale, the variety of independent shops and businesses, the grotty streets so close to the richer ones, the mix of busy and quieter neighbourhoods and the endless symbols of imperial greatness.

Today it seems everywhere within Zones 1 and 2 in London is busy, gentrified and dominated by modern global brands.  In contrast, Paris this Autumn felt surprisingly similar to thirty years ago.  Still incredibly beautiful and well planned but lacking the full-on vibrancy and levels of investment evident in London or New York.  More like Barcelona, Boston, Manchester or Glasgow.

Major cities serving millions of people rather than billions.  All with some architectural masterpieces (both older and newer) and downtowns dripping with wealth and splendour whilst some nearby streets still seem shabby and ripe for new investment in businesses or homes. Economies where tourism and sports branding seem to be playing an increasing role in economic development.


So what am I saying here?  I guess that New York and London both seem pretty full.  Both appear to face increasing difficulties in providing an affordable quality of life (beyond work and cultural opportunities) for the world’s most talented young people.  Will such people make different life choices in the future?  Perhaps deciding that location isn’t as crucial as it once was for engaging with the world’s most successful economies. Could this perhaps drive an economic renaissance of these second tier cities (especially where they can fall within the economic ambit of New York and London) over the next 50 years?

Subject, of course, to essential and expensive caveats about infrastructure, culture and public realm.  And recognising that walking through Wall Street or EC1 does make you realise that many of those who simply want to be be rich and powerful will continue to be drawn there for many years to come.

However, go to Manchester and Boston right now – their talent driven renaissance appears already to be well underway.  Who else next?

Final point.  Obviously never been to any of the great cities in the Far East or Africa.  To be continued hopefully….

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Perhaps the two words I see most in my job are housing crisis.  But by what measure can it be said that we have such a crisis?

The case for justifying the term housing crisis seems pretty clear cut when looking at the statistical measures relating to systemic under supply and lack of affordability.  Not to mention the stripping away of home ownership dreams for a whole generation and the thousands living in poor quality rented accommodation too small for their needs.

But when we compare that statistical position against political or sustainability factors the position seems far less certain.

Lets look first at the three limbs of sustainability – social, economic and environmental.  How does the housing “crisis” relate to these in political importance.

Thinking of an economic crisis most will recall watching the “run” on Northern Rock with horrific foreboding.  The Government response was swift and decisive.  £40bn later most of the UK banking industry was in state hands and the employees of EC1 could breathe again – albeit the rest of us were required to deal with five years of recession.  Again I recall the collective political will act decisively to protect the national economic interest.

Mad cow disease was a genuine social/public health crisis.  A clear risk to health in large parts of the country.  A gigantic Government response costing billions was deployed with military assistance.  It was inconceivable that any politician would have considered arguing against the required response, either locally or nationally.

In environmental terms thoughts turn to the Torrey Canyon disaster.  An oil slick containing 120,000 tons of crude oil caused by a ships master taking a short cut around the Scilly Isles. The Government response involved over 10,000 tons of detergent and a strategy of setting the oil slick alight with the help of RAF bombers dropping 42 incendiary bombs.

So three crises.  All with a swift, decisive and well funded Government response.

But how can the “housing crisis” be called a crisis when some MPs feel able to campaign for election on the basis of stopping new homes being built in their constituency?  How can it be called a crisis when a Member of the Shadow Cabinet campaigned ceaselessly in their constituency against a housing development which the local council was keen to bring forward to meet a clear need?  And how can it be a crisis when local newspapers up and down the land claim victory whenever a contentious housing proposal is refused planning permission?

I guess many people using the words “housing crisis” are those, like me, who have a vested interest in wanting to see more new homes built. Housebuilders, developers, housing associations, housing charities and consultants to the housing sector.  Perhaps out there in the real world most politicians have been happy to talk about a housing crisis in interviews whilst ruling out any “crisis response” actions that may be deemed unpopular to their electorate.

Yet all the while the huge social and economic problems caused by having too few homes pile up and up.

‘Twas ever thus’ – only the use of the term housing crisis is new.  At least now we do seem to have a (second term) Government which seems prepared to introduce some policies which should genuinely increase the supply of new homes.

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One of the big questions for Ministers at the moment is, “why are build rates staying low when consents are increasing?” Or, more importantly, “how can we drive up build rates given the larger stock of consents?”

The evidence is clear.  Consents are currently running at over c250k/year but starts and completions remain stubbornly below 150k/year.


One of the key reasons for this delivery gap is the increasing proportion of larger sites coming out of the planning process.  This gives the illusion of lots more build opportunities but the reality is that a site with a consent for 200 units is not going to yield much more units per year than a site for 100 units.

Another key factor, linked to the site size point, is the lack of competition in the market. Whilst we at Barratt prefer sites over 100 units (to justify our expenditure on sales offices, show-homes and sales teams) smaller builders would be happy with units of say 10 or 20. And again 10 small builders on 10 different sites will likely sell more homes per week than Barratt on our 100 unit site.

Also the larger urban extensions can take longer to get started due to bigger up front infrastructure requirements. Moreover many are located outside the Green Belt around towns where the market may not sustain as fast a build rate as around our major cities. Our current urban extensions are at, inter alia, Aylesbury, Bedford, Didcot and Telford.

We have none around the major cities (where build rates would be higher) because of Green Belt which restricts such schemes.

Most housing consents are secured by land promoters rather than housebuilders.  This means that after outline consent has been granted various stages need to be gone through prior to construction. Namely the site needs to be marketed for sale and a preferred housebuilder chosen.  From there the builder will need to design a scheme and secure Reserved Matters consent.  Then there will be pre-commencement conditions to be discharged and Section 106 requirements to be complied with, followed by getting through the Judicial Review period and preparing the site for build.

This can take two years with everyone working as diligently as possible. Furthermore some land promoters may prefer to dispose of larger sites to housebuilders in smaller parcels in the hope of land values rising as the development gets built out and infrastructure is put in.


So how can we narrow this delivery gap and speed up output?

Undoubtedly the key requirement is for the planning system to release a larger number of sites in a larger number of locations.  Put simply, in one year 10 sites for 100 units will yield around x10 the homes delivered on one site for 1000.  We builders need a greater range and choice of outlets not a few large sites in each district.

There is a need for more competition on the larger sites.  This means more smaller and custom builders building alongside the volume builders.  Given that the smaller builders can’t usually compete effectively on the land market there could be a useful role here for Government to subsidise smaller builders to be able to buy sections of consented sites at market prices. Perhaps such a subsidy could also be used to help PRS operators onto larger sites. PRS is good at creating fast occupancy rates and vibrancy on larger sites.

Meanwhile local plan policies could perhaps play a role in requiring custom builders to play a part in building out major allocations.  Albeit recognising the importance of ensuring that landowners and housebuilders are aware of the requirements at the earliest stage and are able to factor them into the site appraisals.

There could also be a role for public sector landowners to perhaps specify build rates when selling larger sites.  This will likely result in a lower land receipt because requiring builders to sell faster than market demand can only be achieved by reducing sales prices – which will reduce the land value.  However if faster delivery is the primary Government objective this can and should be considered.  For the reason given above this might not be likely to be attractive to private sector landowners.

Another idea would be a more pragmatic approach to phasing of larger sites.  This could perhaps be delivered in two ways:

a. Government subsidies towards the elements which drive faster build and sales rates, in particular on-site primary schools

b. Relaxation of phasing restrictions which often restrict larger sites to one or two outlets in early stages

My final suggestion would be to try and encourage builders to “swap” sites or parts of sites.  This is something that was more common prior to the financial crisis when the industry obviously had a greater risk appetite to grasp opportunities to share and swap sites.  It was often used as a way to drive up volume in a strong market by helping two businesses to secure two new outlets in different market locations.

With the scars of recession still healing there is far more aversion to the inevitable risks relating to site management, marketing and infrastructure delivery associated with multi-builder sites.  Perhaps Government or HCA could work jointly with the industry to both help address these issues and also create greater visibility on sites which are potentially available for swapping.

In summary there does appear to be opportunities for the additional housing funding released in the Autumn Statement to be used to encourage greater and faster levels of delivery.  Although not losing sight of the overriding need – namely to grant more planning consents for a greater range and choice of sites.

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The election result was perhaps a surprise to many, both within and outside the housing sector.  Armed with an overall majority the Government appears to be pursuing a radical agenda primarily aimed at getting the private housing market moving for first time buyers.

Understandably there have been strong criticisms from organisations who were perhaps expecting a different election result and policy focus.  Some of these criticisms have landed at the housebuilders door.  Usually focused on excessive profits, landbanking, failing to build the right type of homes and trying to avoid affordable housing delivery.

On the profit point I can only give a Barratt perspective.  Our shareholders have suffered lean times over the last few years. In the years after 2006 we made losses of £853m and did not pay our shareholders a dividend for 4 years.  Even our great results for FY14/15 only show a 15.3% profit on turnover – hardly excessive compared to some of our peers and other sectors in the FTSE100. And what will we do with that profit? Return it to our long-suffering shareholders or reinvest it in our operations – namely buying land and building homes for our customers.

Which brings us onto landbanking.  Barratt do not land bank.  As soon as we have bought land we go as fast as possible to build and sell homes on it.  We are a return-on-capital business and our business model requires us to do that.  We do not buy land which does not have planning consent.

However we do secure control of unconsented land by means of option agreements – namely the right to purchase a piece of land should we manage to secure consent.  This is our strategic land supply.  Again our objective is to secure planning permission and build homes on it as fast as possible.

We do not sit on any land.  If one of our option sites fails to secure an allocation in a local plan we may then have to sit and wait until the next plan review, as there is usually no chance of a planning permission before then.  That is not landbanking – it is the planning system forcing us (and the landowner) to wait, against our wishes, to secure planning permission. Indeed if we ever were to “sit” or “bank” land we would quickly have lawsuits against us from angry landowners quite rightly expecting us to work faster towards the planning consent which will realise their asset.

In terms of the criticisms that we don’t build the right type of homes, all I can say is that we need to build to the market demand.  Why? Because of the residual land valuation (RLV) model which all housebuilders, landowners and land agents use to value land.  We compete hard for land and we can only secure it when we are able to pay the landowner a competitive price compared to our peers.

The RLV model is simple.  Gross Development Value (aggregared sales prices) minus costs, minus profit = the price we are willing and able to pay for a piece of land.  Therefore unless we put strong market based (but realistic) sales prices into the model we will never be able to buy land as we will never beat our competitors in the bidding competition.

If landowners or land promoters were not solely interested in land value that would be a different proposition.  Barratt would obviously be happy as we would pay less for land.  Our RTPI National Award winning scheme at the HCA owned site at Hanham Hall in Bristol or our multi-award winning scheme on JRF owned land at Derwenthorpe in York (see below) both pay testament to what happens when an enlightened landowner works with us to deliver outstanding quality rather than just squeezing out maximum land price.

So how do you persuade other landowners to do the same?  Well that’s a question for others to answer.  But one thing is certain – landowners will not sell their prized asset unless they are incentivised to do so.

In the meantime perhaps it should be remembered that we increased the number of affordable homes we delivered by 26% last year (2,853 in total) and paid £580m in tax – obviously far more than when we made no profit at all.  Also we supported over 53,000 jobs last year appointing 327 new graduates and apprentices in the year.  We planted 555,000 trees and shrubs and paid £392m in Section 106 payments for local facilities.  Some pretty hefty socio-economic contributions from a private business which operates in rational ways to the planning and market circumstances which are put in front of us.

Comments welcome.

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