Local authority appetite for property partnerships is increasing, but there is a still a gap to close in their understanding of the model
A recent report from the House of Commons Public Accounts Committee points to the government’s failure to dispose of sufficient public land for new homes as a key factor in exacerbating our national housing shortage. The report calls for more public land to be released in a bid to ease the housing crisis.
This comes as no surprise – but it’s not just central government that has a role to play.
Boosted by recent policy changes including the removal of the Housing Revenue Account borrowing cap, some major financial obstacles have been lifted for local authorities, which now find themselves in a better position than ever before to build homes on their surplus land.
However, fundamental challenges remain, as even if a local authority has the land ripe for development, it often lacks the necessary development management, financial and legal expertise in-house to overcome the challenges associated with delivering complex development projects.
The question is, how can local authorities harness the skills required to deliver much-needed housing on their surplus land?
For those of us working in development, it’s no secret that strategic property partnerships are part of the solution. Combining the land assets and bespoke knowledge of a local authority with the specialist skills, resources and development capacity of a private developer, property partnerships offer a framework for councils to drive forward the delivery of new homes, and importantly, to do this with pace and at scale.
Property partnerships enable councils to build high-quality housing as and when they need it, allowing the local authority to upscale and downscale development as necessary – flexibility that is essential when navigating politico-economic cycles. On top of this, successful partnerships generate financial returns for the council which can be reinvested into vital frontline services for communities.
Investors and developers understand the merits of public-private partnerships, seeing them as a viable solution to building the homes we need. But we do face a challenge.
Although it’s not a new concept, many local authorities are apprehensive about partnering with the private sector and are often unaware of the benefits this brings. This is often due to common misconceptions around the success of property partnerships, rooted in the well-publicised failure of schemes such as the Haringey Development Vehicle, and the perception that partnering with developers is akin to “selling off the family silver”.
In reality, successful partnerships are rooted in a shared vision, alignment of interests, transparency and mutual trust, with joint decision-making ensuring councils are in control of housing delivery – not taking a back seat while the private partner calls the shots.
Improving understanding and engendering trust
Clearly, the private sector needs to do more to communicate the benefits of partnerships to local authorities. This will help improve their understanding, engender trust in the process, and ultimately drive forward development.
And, while important, it’s not enough to engage solely with council officers. In reality, elected members will be central to the decision-making process and quite often can hold misconceptions around working with the private sector – this can make it difficult for officers to secure their support, in turn limiting the scope for successful partnerships. By engaging with elected members in the early stages of partnership projects, and communicating the benefits directly to them, the industry can work to establish much-needed political trust from the outset.
Understanding can also be improved by demonstrating tangible results and shouting about the successes of property partnerships. As private developers, we should be using our local authority partners as champions for the property partnership model – councils that have been hesitant to enter into PPPs will often seek the advice of their peers, so it’s important that their insight is positive and encouraging.
Local authority appetite for property partnerships is increasing, but there is a still a gap to close in their understanding of the model. While councils hold the key to unlocking land for development, it’s collaboration between the public and private sector that will deliver the homes we desperately need. It’s up to us, as private developers, to take the lead in improving local authorities’ understanding and trust in the process, and ultimately move forward towards solving the housing crisis.
Andrew Savege is director of new partnerships at Morgan Sindall Investments