Opportunities to develop residential property in Inner London are in short supply. The costs of planning and associated fees have escalated and most inner London boroughs are minded to protect commercial space from the further encroachment of residential conversions, as we predicted in our 2012 Year End report. All of the inner boroughs secured an exemption for at least part of their territory, from the Permitted Development Rights that would have given automatic rights for change of use from commercial to residential.
We have noted a decline in the number of small planning applications with fewer than 10 units. We believe this is, in part, due to the rising costs of submitting planning applications, in addition to CIL contributions and affordable housing and the fees for supporting reports from experts on matters such as sustainability. This has, in our view, squeezed the margins and undermined confidence in the planning system, on all but the largest schemes.
The increased demand for secondary, unadorned commercial property has played a part in this change. Many more landlords are choosing to stick with office use because it is more cost effective to renovate and provides a good income stream.
Larger schemes remain viable because the volume of units improves the margin for the developer and because the more peripheral large brown field sites are often not attractive to office occupiers, or only at discounted rents and so there is less direct competition for the same locations between commercial and residential uses in Clerkenwell EC1.
We remain of the view that after 2015, once the current wave of development has been completed, there is a very real chance that the development pipeline will be severely depleted across Clerkenwell property and Midtown but the pipeline in Docklands property and East London property will remain high.
London development panel
The GLA is one of the largest owners of public land in London and the Mayor, Boris Johnson, is keen to make some of that land available for residential development, to help address London’s housing shortage. To this end, he set up the London Development Panel, with the support of London Councils, to speed up the procurement process. It established a framework agreement with a panel of approved developers so that public landowners will be able to award contracts to developers without having to go through a full procurement process each time.
It also offers the potential for developers to ‘build now, pay later’ for land on some schemes to make them more viable. The panel has a four year term and the Mayor announced a list of 25 developers in May.
The Mayor said: “London Development Panel will act as a one-stop shop for public land owners in the capital, making it quicker, easier and cheaper for them to bring their land forward for development, increasing the number of homes being built, creating jobs and boosting the capital’s economy.”
The list of developers is: Affinity Sutton Homes Ltd; Ardmore First Base Partnership Limited; BDW Trading Ltd; Bellway Homes Limited; Bouygues Leadbitter Consortium; Carillion-Igloo and Genesis; Catalyst Housing Limited; Countryside Properties (UK) Limited; Family Mosaic & Mulalley; Galliford Try PLC; Hadley Mace Holdings Ltd; Higgins Group PLC; Kier Limited Lend Lease Europe Holdings Limited; London & Quadrant Housing Trust; Lovell Partnerships; Notting Hill Housing; Places for People Homes Limited; Redrow Homes Ltd; Regenter Limited; Rydon Construction Limited; Taylor Wimpey UK Ltd; The Berkeley Group Plc; Telford Homes Plc; Wates Construction Ltd.