Last week, the Department of Health published Sir Robert Naylor’s review of NHS property and estates. The review was commissioned to support the Department’s overall targets to release £2bn of assets for reinvestment, and deliver land for 26,000 homes. So far, so good? The review estimates that the Department’s overall targets could potentially be met using the NHS’ estate alone, identifying potential capital receipts of £2.7bn for under-used land and property, or – and here’s where our concern was piqued – ‘perhaps substantially more with beneficial planning permissions’ (p3).
Unfortunately, as we’ve said before, there’s a fundamental tension between disposing of public land to plug a funding shortfall, and releasing land for the kind of housebuilding which serves the public interest. When any public sector body sells land, they are obliged to seek ‘best value’. And in a competitive land market – where land traders and developers make increasingly aggressive assumptions about what they believe a site can bear in order to maximise their land bid – achieving ‘best value’ means accepting the highest bid, which offers the worst deal for the community:
Once land is sold at a value reflecting those aggressive assumptions, those assumptions are then the only ones which can be viable on the site. The land gets absorbed into the slow, risky, expensive cycle of speculative housebuilding.
The focus of the review’s recommendations around the disposal of ‘inefficiently used land’, therefore, is around maximising the sales values of the land in question and not its civic value. Suggested ways of doing this include adopting ‘a more commercial approach to obtaining planning consent, negotiating affordable housing quotas and maximising value from the highest value sites in London’ (p16, our emphasis). In other words, adopting the tactics of the most aggressive land traders and developers. The sites sold may well enable the building of 26,000 homes. But if those homes are expensive and potentially poor quality, built out slowly and with few contributions to affordable housing provision or the infrastructure and services needed for new communities to thrive, then this is not a sustainable solution to the housing crisis.
This aggressive approach is also contradictory to other recommendations within the report. Recommendation 14 states that ‘land vacated by the NHS should be prioritised for the development of residential homes for NHS staff, where there is a need.’ (p6). This includes affordable housing for lower-paid staff, possibly to be delivered in partnership with housing associations (p29). But it’s entirely inconsistent with other stated aims of the review, including suggestions that affordable housing contributions are a risk to be mitigated and minimised (p20).
Selling land for the maximum amount possible, and then attempting to claw back some public benefit through the provision of affordable housing for NHS staff is naïve at best, and releasing public land for housing under these terms won’t help to tackle our chronic housing shortage. But even if the primary aim of this land disposal strategy is to maximise returns in order to fund the necessary maintenance and improvement of the NHS’s estate (p2), even the most aggressive of the strategies suggested will only generate just over half of the £10bn estimated requirement (based on an upper bound of £5.7bn returns (p20)).
And once that land is sold, it’s gone – there would be only a one-off capital receipt. We believe the public sector would do better to take a longer term vision, investing its unused landholdings into development partnerships, as we set out in our vision for New Civic Housebuilding. By doing this, they generate a revenue stream with returns coming in steadily over many years – exactly the sort of income needed for a sustainable approach to estate maintenance and investment.
The review does allude in places to the idea of forming development partnerships, both with housing associations and commercial developers (recommendation 5). We welcome this. But as outlined above in relation to affordable housing provision – it’s wholly inconsistent with the stated aims of maximising sales values. There’s no magical solution here which will allow for having your cake and eating it.
The next steps for the review will be for Government to consider its recommendations and issue a response. We urge them to take into consideration the contradictions inherent to this approach to public land disposal. Government has already welcomed the New Civic Housebuilding approach – now it’s time to start putting it into practice.