Evidence from Simon Gale, Director Prosperity and Development Services, Rhondda Cynon Taf Council Planning
The challenge across South East Wales
• The need to respond to housing demand is relentless
• There is a gap between supply and demand, across all tenures
• Big builders and the ‘snow line’
• Large stalled sites / post-industrial legacy of sites
• The ‘demise’ of SMEs building houses
RCT Study into stalled sites
There is no overriding reason why sites become stalled:-
• Topography;
• The need for up front infrastructure;
• Contamination on brownfield site and “Abnormals” particularly from past coal mining;
• Personal reasons
• Too may risks not being quantified to give confidence to invest;
• Multiple land ownerships;
• Access to finance;
• No experience in making a planning application.
• Existing site values
There are some emerging broad themes.
• Some sites, particularly in the valleys are simply unviable because the cost of developing them is more than the current revenue.
• Small sites, which historically would have been built out by small, local builders have stalled because those small companies are struggling to access finance.
• Risk of the unknown is a barrier to investment in marginal sites.
• There are a number of sites that on paper are viable but need considerable upfront investment so that cash flow becomes a barrier.
Peak Cash Flow (see table 1 below)
• Key issue arising out of the viability study.
• Not usually picked up in traditional approaches to viability where the focus is on residual land value and profitability.
• Major issue for SME builders.
Table 1
Potential Solutions
· Maximising existing finance opportunities including Development Bank of Wales
· Joining up Landowners with SME developers
· Plot Shops
· Guiding SMEs through the planning system
· De-risking sites