Blog: Creating ‘oven-ready’ sites can unlock the value in Scottish council land assets
Investing in new homes to help solve the housing crisis while dealing with government budget cuts is a balancing act that all Scottish local authorities are facing.
However, while ramping-up housebuilding activity at such a time sounds like a challenge, it is also an opportunity for councils to think creatively about how they can use the value locked up in their assets and deliver a much-needed revenue return, at the same time as delivering new homes for their communities.
The demand for new housing is beyond doubt. While housebuilding activity has been increasing, we have still not built enough homes in Scotland to meet demand for several decades.
The symptoms of this shortfall were highlighted in the Commission on Housing and Wellbeing report which showed in 2015 that more than 60,000 households across Scotland live in overcrowded housing and more than 150,000 are on the waiting list for a home.
The Scottish Government should be applauded for exceeding its target on the construction of affordable homes but more needs to be done to build homes of all tenures.
At the same time, Scottish councils face a shortfall of more than £500m in just two years’ time, public spending watchdogs have warned.
By then, analysis suggests more than a third of Scotland’s 32 local authorities will face a funding gap that is greater than the amount of cash they have in reserves. This could greatly affect the ability of Scottish local authorities to tackle the housing crisis.
Developers who may want to buy brownfield land from local authorities are most interested in “oven-ready” sites. An “oven-ready” site is one that has been packaged and pre-prepared for construction, allowing builders to get their spades in the ground sooner and developers to put homes up for sale more quickly.
For brownfield sites of this type, this means offering land for sale which has had contaminants removed already and has achieved outline planning permission. By creating sites that are “oven-ready” councils can speed up the process of building new homes maximising the value of their land assets.
A perceived obstacle to the development of brownfield sites is the costs associated with remediating previously developed land assets. Local authorities with multiple sites in their portfolios may have limited understanding of individual land values, and the scale of the remediation work required on each site. This sounds like a challenge for local authorities, but with the right help it should be viewed as an opportunity for councils to unlock as much value from their land as possible.
As a contaminated land and geotechnical consultant, and specialist remediation contractor, one of our main roles is to provide integrated strategies to help local authorities assess and evaluate their landbanks and to navigate the planning conditions attached to contaminated brownfield land.
Over the past 20 years, we have tackled brownfield land of all descriptions, including cost-effectively cleaning sites that were previously thought to be economically undevelopable. We aim to reduce the costs that councils face when remediating land by between 50% and 90%.
Prioritising which sites to develop
The best way to do this for each site is to carry out desk-based work in the first instance. By taking a look at the site history you can investigate pertinent risks from former landfill sites, areas of mining, to flood risk.
Understanding the difficulties each parcel of land faces means local authorities can better quantify the value of their land bank, prioritise which pieces of land to bring forward first, and understand where targeted remediation work can add the most value.
Once the preliminary investigations have been carried out local authorities should commission a detailed site investigation to provide a comprehensive view of both geotechnical and contaminated land risks.
The remediation of land may not be as extensive or as expensive as councils initially believe, and may not even be necessary at all. If land remediation is required, it is important to keep the work in perspective and to seek a second opinion if you are not happy with the solution. Sometimes additional investigation work and risk assessment can de-risk a site so that minimal or even no remediation is required.
Ground investigation is by no means a high cost activity. The LK Group’s data shows that ground investigation costs rarely exceed 1% of a total development contract value, and typically the costs are between 0.2% and 0.5%. As such it is hugely worthwhile investing in thorough site investigation, to provide certainty for prospective buyers.
As a business, which specialises in tackling the land remediation projects that others will not, we are well placed to advise on the minimisation of costs. As a result, we were able to remediate one of the most polluted sites in Lancashire for one our clients and saved them 90% of the cost of cleaning that site in order to get it “oven-ready”.
One of the main considerations of remediation is to minimise waste to landfill, and maximise the re-use of suitable site resources while causing minimal disruption to local communities and the environment. For example, in some projects there may be scope to utilise recycled aggregates generated on-site for re-use in construction of roads.
With local authorities now facing renewed pressure to bring forward their land assets for development, as well as reductions in funding, it has never been more important for them to maximise the value of their land assets and put in place a strategy to make sure as much of their estate as possible is “oven-ready”.