ROOF Blog

The value of development land fell by an average of 50 per cent during 2008, research from Knight Frank has found. Every region was affected – prime London, which had remained relatively resilient, has the largest drop with land falling 33 per cent on average in the final three months of 2008. Urban land values in Yorkshire and Humberside experienced the steepest fall at 64 per cent.

Meanwhile fifty housing associations have seen the value of their homes and land plummet, and may be forced to write down their value and make ‘impairment charges’. The write down could have a devastating effect on their income and expenditure, and impairment charges may cause landlords to break covenants in their loan agreements resulting in ‘horrible consequences’. Associations have landbanks currently valued at £1.4 billion, half of which were concentrated in London and the South East, while they are also holding 10,060 unsold homes across the country.

Barratt Developments and Redrow have released their half yearly figures and both showed big losses in revenue. Redrow’s income fell 58 per cent in the last six months of the 2008 to finish the year with a pre-tax profit of £46.2 million it reported yesterday. Meanwhile today Barratt reported a fall of 23.7 per cent in revenue during the second half of the year, bringing it to a pre-tax loss of £592.4 million. Both firms say they had been hit by falling sales and reduced house and land prices.

The proportion of homes built on previously developed land increased in 2007 as did the density of residential development. Figures released by the UK Statistics Authority for land use change show that 77 per cent of homes, including conversions, were built on previously developed land, slightly up from 76 per cent in 2006, and only 2 per cent of new homes were built within the greenbelt – a figure unchanged since 2004. New homes were built at an average density of 44 per hectare, compared with 41 in 2006.

There will need to be a 67 per cent increase in the amount of land available for new housing if the government is to meet its housing target, according to research by Hometrack. It says that developers are cutting outputs of flats in favour of building larger homes, shifting the near 50:50 split between the number of houses and flats built towards a ratio of 75:25 in favour of houses. According to the research, the shift will impact on density of development and ultimately land values, and the ‘planning system will need to supply a lot more land in order to maintain levels of development’.

The Homes and Communities Agency (HCA) will do everything it can to change the way that housing is supplied and would encourage the development of housing schemes that mixed affordable rented housing with homes at intermediate rents, as it plans to buy land from house builders in a bid to build new developments and boost the stagnant housing market. The agency plans to make land available for development, unlock surplus supplies of public sector land and target the acquisition of private sector land banks.