The Housing Market A Brave New World

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The Housing MarketA Brave New World
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John GallacherHead of Housing
RegenerationBell Scott
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• Deal structures
• The new Planning System
• Land price recovery
• Questions

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• Deal structures

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• Armageddon or what?

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• Alternative Deal Structures
• Wider Market
• Housing Market

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• Joint Venture Structures
• Joint Contractual Arrangements

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• Joint Venture Structures
• Limited Company
• Limited Liability Partnerships
• Partnerships
• Limited Partnerships
• REITS

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• Joint Contractual Arrangements
• Joint Venture Contracts
• Development/Ground Leases
• Promotion Agreements
• Collaboration Agreements
• Framework Agreements

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• Its life, Jim, but not as we know it

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Peter AllanDirectorPPCA
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Bell Scott SeminarThe Housing Market A
Brave New World24th June 2009

• The New Planning System in Scotland and the
  credit crunch
• Presented by Peter Allan
• Director PPCA Ltd Board Member
• Planning Aid for Scotland

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Looking ahead gives ground for Optimism.

• Housing need greater than ever!
• Scottish Government standing
• firm on the need for more land!
• New talent on the block!
• But first New legislation
• must be scrutinised.

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What the new legislation is not.

• New Legislation
• Inclusive
• Objectors charter
• Delays.

The 2006 Act is not easy to read
. it has to be read alongside the principle Act
(1997)
Committee report outlined the challenge to those
without a law degree.
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New Legislation and Regulations.

• Planning etc (Scotland) Act 2006 (amends extant
  1997 Act).
• Town and Country Planning (Development Planning)
• (Scotland) Regulations 2008.
• Town and Country Planning (Development Management
  Procedure) (Scotland) Regulations 2008.
• Town and Country (Planning Appeals) (Scotland)
  Regulations 2008.
• Plus Regulations on Accepting Reporters
  Recommendations Hierarchy of Developments
  Permitted development regulations.

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What's currently in progress?

• Community Engagement.
• Schemes of Delegation.
• Review Bodies.
• 3rd August Development Management Procedures-
  Rush to meet deadlines.
• Development Planning regulations.
• Big question will Councils accept reporters
  recommendations (S.25 18 years old).
• NPF2 and National projects and procedures. Accept
  in order to accelerate growth in Scotland.

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Development Plan Schemes.

• Baby Bulge.
• 32436 DPS each year.
• Can not afford not to engage.

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Legislation does NOT deal with.

• Third party rights of appeal.
• Aspects of Community engagement,(S.75s, SPGs).
• Interplay between Local Housing Strategies, etc.
• Infrastructure Payments, how to pay.
• Planning Gain/Planning obligations.
• Credit Crunch.

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Positive factors

• Planning Aid Scotland
• Scottish Governments chosen partner in promoting
  community engagement.
• Instrumental in endorsing community engagement
  in
• Development planning- Right to participate first
  time since 1947.
• Development Management- Formal engagement process
  for large applications.
• Process of education and importantly
  participating in promoters schemes.
• Improves competitiveness.

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Positive Factors

• Rise of the Facilitator
• Examples Banchory and Leggart Armadale
• Castlandhill Inverkeithing
• Opportunity for experienced
• developers to get involved.
• New Sites are getting oven ready for end of the
  recession.

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Back to Basics
Development Planning
Development Management
Community Participation
Issues Report
Neighbour Notification
SPG
Draft Local plan
Action Plan
Earliest Date
Community Participation
Hearing
Adopted Plan
S75 Planning Gain
Determination S25 Other Material Consideration
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Whats the planning system for?

• Opportunity to focus again on the basics and
  influencing outcomes.
• Getting it wrong - the glut of 2 bedroom flats,
  long before the credit crunch. Focus on meeting
  needs.
• House builders to build houses facilitators to
  raise the cash and provide the up-front capital
  for infrastructure.
• Public participation at the development planning
  stage can reduce delays at the development
  management stage.

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The System is Purged

• Credit crunch.
• The banks.
• Now the politicians.

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Conclusion

• Substantial opportunities for those who are
  prepared to go with the new order.

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John BrownDirectorDTZ
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Land Price Recovery

• You may just have had yer tea!?

John Brown
June 2009
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Land Price Recovery

• Downturn in the 90s
• Scotland better placed than the UK
• Prices fell by 13
• Real prices by 33
• Prices not recovered until 2002

• House prices from then to now

House prices (1988 2009)
Upturn Market takes off 2002 to 2007
Now Credit Crunched
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Land Price Recovery

• Downturn in the 90s
• Prices fell by 34
• Prolonged recovery

• Land prices from then to now

Land prices (1988 2009)

• The Rapid Rise
• Brownfield
• Availability of money
• Buy-to-let
• PPG3 effect

• Now
• Rapid fall
• Transactions limited
• 45 reduction in a year

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Land Price Recovery

• Relationship between house and land prices

The obvious peaks
House and Land price indices (1984 2009)
1988-89
Market buoyant for house sales before the 90s
1997-2007
Clear change in 2001 Why? BANKS, CREDIT
etc.!!
2008-09
Going down but how far?
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Land Price Recovery
Relationship between house and land prices

• Strong consumer earnings
• Increased credit availability
• Rising consumer expectations
• Interest rates/ affordability/ LTV
• Confidence
• Credit Crunch
• Confidence
• Banks in crisis
• Interest rate/ affordability/ deposit/ LTV
  change
• Unemployment 3m beckoning in UK
• Rise of union power

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Land Price Recovery
So what happens next for house prices?
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Land Price Recovery

• Three house price scenarios to consider
• So how will land prices be affected?

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Land Price Recovery
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Land Price Recovery

• What are the signals we should look out for?
• Second hand sales have to improve first
• Mortgages more freely available
• Confidence to buy
• Unemployment
• Effects of Government interventions through
  Social Housing
• Change in attitude to planning and
  infrastructure commitments
• Demand alterations from consumers return to
  standard house types
• The greatest fear is (or is it?) inflation
• Interest rates have to rise
• Tax for Government securing banks

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Land Price Recovery

• Time to think inflation?
• Compare with the 1970s

1975
1980
2009
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Land Price Recovery

• The UK banks will return to the past, and
  investment banks will be the lenders
• Labour will continue to try to win by not acting
  too punishingly, Conservatives know whats coming
• Next government will raise taxes, interest rates
  will rise. Mortgage margins will rise, already
  at 5 or above base lending rate. Abbeys fixed
  rate etc.

Land could be a better hedge than index linked
gilts or gold!!!
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Land Price Recovery
ilandi,Welbeck

Funds being set up to buy...
Conclusion It will be positive, and equity
funds will lead the way. Sleep well tonight!
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Questions?
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The Housing MarketA Brave New World