Lots of comment recently about the need for bungalows and how naughty and greedy housebuilders are by not providing them. So what’s the position from our perspective?
As is often the case is comes down to land and policy. Land is our key raw material and we have to compete extremely hard for it. And as we all know consented housing land is a scarce resource, albeit slightly less so thanks to NPPF.
Barratt wins the competition for land when the land value we bid (forecast site sales revenue minus the costs) is higher than the competition. Unfortunately bungalows tend to take up broadly the same land area and cost as a house but generate far less revenue due to the reduced floorspace and rooms per plot.
As result if we have 10 bungalows on part of a site where our competitors have 10 houses we have broadly similar costs but dramatically less floorspace and forecast revenues. Result = we generate a lower land value and the landowner does not sell to us the site. So no bungalows.
Easy answer though.
If the LA produces the following:
- demonstrable local need for bungalows,
- reflected in the SHMA,
- set down in policy, following public examination of need and viability
- backed up by a site development brief requiring 10 bungalows.
Then competing housebuilders will work up land bids which reflects the need for 10 bungalows. Whoever wins, the 10 bungalows get built.
This is not one of the things that keep housebuilders awake at night. If we are required to sell bungalows by policy we will buy land on that basis and build them. They generally tend to sell OK when we have to provide them by policy – the issue is simply that they don’t generate a strong enough land value when bidding for a site where there is no policy requirement in place.
One myth that needs busting is that the ageing population means there is a huge unfulfilled demand for bungalows and that affluent downsizers will not leave the family home unless they can get one.
The reality is that some want a bungalow but many others prefer a good spec apartment in a great location. Higher ceilings, bigger rooms, high quality taps and kitchen units, independent shops and cafes nearby. Maybe a Waitrose. We are developing products for this market and the initial signs are, that in the right locations, they can work both in terms of generating a land value to win the site and then also delivering a decent sales rate.
Maybe planners and landowners can help us address these customer demands??