“I am a housebuilder, I want to experience it,” says Stephen Kinsella, Homes England’s chief land and development officer, of the importance of frequent site visits. “The reality is that if you can’t live and breathe the sites and understand the challenges, you become a little bit detached.”
On this rainy morning, Kinsella could be forgiven for appearing a little detached, sitting in a small meeting room at the department’s Victoria Street office in London. But he lights up discussing visits to sites in Liverpool, Sussex, Cambridge and Nottingham. And the list is growing.
As the government’s housing agency launches a major expansion and recruitment drive, it is seeking to ramp up its operations significantly, and many of the country’s regions look set to benefit.
‘As big as a housebuilder’
“The agency is going through a reorganisation,” Kinsella says.
That revamp will see it structured around three divisions: a development business; an investment business; and an arm known as Markets, Partners and Places that will liaise with stakeholders such as local authorities.
The revamp will come with a new recruitment push. Homes England’s development arm, which owns around 20,000 acres of land with the capacity to deliver up to 70,000 homes, currently comprises 300 people, working across more than 13 offices.
That division will now hire a further 150 land and development professionals, including director-level roles. It aims to hire 30 people for land acquisition, with other positions in planning, construction management and disposals.
The development hiring spree comes as the agency seeks to double in size from 750 employees in 2018.
“That puts us in a position where, as a land business, we are as big as any of the major housebuilders, which is a huge change for us,” Kinsella says. “The core message is that we are growing as an acquisition entity, bigger than people would have expected.”
Homes England will use the new manpower to drive its land acquisitions strategy, picking up mainly large, strategic sites to deliver serviced parcels of land to housebuilders, with a target of 10,000 homes every year. To compare, last year it delivered 6,881 new homes.
“My objective is completions,” Kinsella says. “I want to see keys and chimney pots, that’s what matters.”
This drive is a direct result of fresh government support in the face of the housing affordability crisis, Kinsella adds.
“The main focus of our spend will be where the affordability bites hard,” he says.
While the GLA looks after London, for Homes England this means a focus on the south of England and regional opportunities, supported by a national team and a network of local offices.
“We’ve been given support from government to reorganise the agency, to build a modern, 21st century agency,” Kinsella says. “That involves reorganising our people and we’re also moving our offices.”
The agency recently announced a new national centre in Coventry in a move to a “place-based approach” to accelerate housing delivery in collaboration with local experts. This year, Kinsella says, it will also open offices in Northstowe and Crawley to support its major strategic sites.
Unlocking strategic sites
One of Kinsella’s most recent site visits was to Crawley, and a 480-acre greenfield site at Ifield Golf Club where Homes England is acquiring new land to deliver 3,250 homes, with a vision to ultimately creating a 10,000-home garden community.
The site is complex and requires a large upfront cash commitment for major infrastructure works. The agency will spend £100m, with £70m dedicated to address flooding issues and deliver a relief road to alleviate traffic and enable the growth of the new town.
Homes England’s vast land bank includes a dozen of these strategic sites, each with the potential for more than 1,500 homes. Many of these are legacy, uncompleted sites from the 1960s Commission for the New Towns, which means places such as Crawley and Warrington have the scope for significant expansion to deliver new communities.
The agency has been supercharged through the £1.3bn Land Assembly Fund announced in the 2018 budget. This grant money allows it to acquire land, deliver infrastructure and take sites through Local Plans and planning consent. Homes England then packages up parcels of land to sell to multiple housebuilders.
This year, Kinsella estimates the land team will spend £300m on land acquisitions and £200m on infrastructure.
“We are doing that because we are generating significant land receipts from our land sales and we’ve been extremely fortunate with a huge amount of support from government,” he adds.
As the agency steps up delivery, Kinsella anticipates that turnover could rise from roughly £300m to £500m, allowing more money to be channelled back into major land acquisitions: “We are looking at large, stalled sites where the developers or developments are struggling and there is an opportunity for Homes England to come in and acquire those sites.”
‘Beyond the private sector’
The master developer model, by which an organisation works across several roles in a project, is not unique: Urban&Civic and other large landowners including Grosvenor are gaining traction in this space. But Homes England is “uniquely positioned”, Kinsella says, through its ability to pump finance into infrastructure early on and weather market cycles.
Although Kinsella stresses that Homes England takes “a completely commercial view” of projects, he says a crucial differentiator for the organisation is that it specialises in challenging sites that are “beyond the private sector”.
That means, for example, that it can acquire land from multiple owners to resolve conflicts and bring sites forward through planning and ready for development. Once a deal is wrapped up, Homes England looks to recover its investment over a longer period than most owners – that is, up to 20 years.
“The agency’s job is to step in where the market isn’t operating effectively,” Kinsella says. “We take on difficult sites, we resolve the challenges and we get them shovel-ready for housebuilding.”
In May, Homes England acquired 250 acres at Fairham Pastures (pictured above), a site with which Kinsella was already familiar. Ten years ago, as a director at Barratt Developments, he was tasked with unlocking the site, which was then under option to the housebuilder. The option lapsed and Barratt moved on. But this type of opportunity is ideal for Homes England.
The core message is that we are growing as an acquisition entity, bigger than people would have expected.
– Stephen Kinsella
Fairham Pastures has changed hands a number of times since. Derbyshire-based CWC Group has taken the lead, securing housing allocation as part of the Rushcliffe Local Plan. Now it will work with Home England to bring the site forward.
“The site’s major problem has been fragmented land ownership,” Kinsella says.
The agency’s role has been to step in and acquire land to resolve challenges of fragmented ownership and provide infrastructure loan funding to unlock up to 3,000 homes.
“The agency has lots of collaborations with private sector bodies, but as part of our stepping up to be a master developer, this feels different,” Kinsella adds.
Developing government land
Homes England’s land acquisitions to date have been predominantly from other government departments. Since 2016, the organisation and its predecessor, the Homes and Communities Agency, has acquired around 70 sites, largely from hospital trusts, the Cabinet Office, governmental courts, the Department for Environment, Food and Rural Affairs and the Ministry of Defence.
Such departments have ambitious housing targets to be met through releasing land they no longer require, but are coming up against big challenges as they seek to relocate active operations.
The MoD is aiming to deliver the largest amount, targeting 55,000 homes across a £32bn estate of military bases. According to the National Audit Office, however, the ministry will fall short. By 2025 it is expected that a quarter of the homes, some 12,592, will not have been delivered. The Department for Transport is also expected to miss its targets.
“The issue for the departments is that the land often has active operations,” says Kinsella. “They are expensive to mobilise. You have to move the facilities. They are large sites so they have huge infrastructure challenges, often contamination and large demolition programmes.”
The MoD has had a “mixed experience” working with the private sector, says Kinsella, and has looked to step up its partnership with Homes England to boost its housing delivery.
“We created a simplified version of the partnering deal they have with the private sector, where essentially the agency acts as a development manager,” he says.
This means the MoD retains ownership of its sites and Homes England will fund and manage their progress through planning, infrastructure delivery and remediation, recovering its costs through the sale, but seeking zero profit as a public sector body. Homes England is working on nine sites with the MoD.
“We’re hoping to expand this role,” Kinsella adds.
There is a large amount of work still to do to help achieve governmental departments’ current targets. The agency is not yet working with the Ministry of Justice, for instance, which is still relying on sales to private sector partners, such as Peabody at London’s Holloway Prison, to deliver homes from its estate.
For Kinsella, it is important that the division does not compete with the industry. As Homes England taps the private sector to fuel its expansion it will seek to deliver more flexible, creative solutions, adapting to the demand in the market.
He says this will happen through “a huge investment in technology”, and he points to examples like the joint venture with Urban Splash and Japanese housebuilder Sekisui, building its first 100% modular scheme in Northstowe, Cambridge, following on from a £49m infrastructure contract at the 8,500-home site.
“A housebuilder would deliver some infrastructure and some housing. We’ve gone in and delivered the major infrastructure, which means we can have multiple parcels at the same time.”
“We don’t want to be an institution which is crowding out the private sector,” Kinsella adds. “If a site can deliver housing and it has some barriers, our job is to go look in our toolbox, scratch our head and find a solution for it.”
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