Writing in Specialist Lending Solutions last month, Connect for Intermediaries CEO Liz Syms suggested the review had the potential to generate significant opportunities for smaller developers and that they may need to access finance quickly to secure deals.
“This could be good news for the smaller developer as it may well result in parcels of land with planning permission being sold off either shortly before or after the statement. It may also result in the government bringing in maximum timescales for a builder to develop the land after receiving planning permission,” Syms wrote.
While brokers welcomed the possibility of freeing up land for development, they had little faith the government would do anything so quickly.
Searchlight Finance director Simon Allen said despite the high-profile announcement his clients were not preparing for a sudden rush of opportunities.
“All my clients are quite cynical because anything that the government is involved in tends to change several times in the process and take an eternity,” he said.
“So they are just focused on what they are doing at the moment – looking for land and looking for finance of that land.
“Nothing tends to be done quickly where government is involved but if it does happen and there’s more land available for developers, then as long as that finance is available for them, which is improving all the time, then it can be beneficial.
“But I’ll believe it when I see it,” he added.
Compulsory purchase powers
Chancellor Philip Hammond announced the review in the Autumn Budget 2017 in November, noting that if the review found “vitally needed” land was being withheld from the market for commercial, rather than technical reasons – the government will intervene to “change the incentives to ensure such land is brought forward for development” with compulsory purchase powers applied “as necessary”.
However, another broker who also echoed much of Allen’s concerns, queried whether government had the powers to exercise its threats.
Kingfisher Property director James Maunder-Taylor said: “I don’t know how legally they could possibly do it, because if its land that’s legally owned free of obligation by developers, I don’t see how you could force them to give it up or use it.
“The UK doesn’t tend to suffer from retrospective legislation, so I’m not sure how that would work.”
However, he hoped there would be movement in other areas to generate more land availability.
“Elsewhere, where local authorities are able to free up land parcels to enable smaller developers, yes it may well work, but we do need to see more residential development funding options offered, at sensible pricing levels too,” he added.