Site stage

Finding the right site, or existing building, is often the hardest step.

There are a number of ways that you might find the site to build some new homes, or the buildings to renovate.

It can be much quicker and easier to start by renovating existing homes. In many parts of the country these can be bought quite cheaply, often from councils, and it isn't difficult to get a loan that you can pay back by selling or renting the homes.

If you want to build new homes, here are popular options:

  • buying private land allocated for housing, which can be difficult if the local land market is very competitive unless you have a lot of money, a partner able to bid for you, or a land agent to help.
  • buying private land on the edge of a village, which you might get planning permission for as a 'rural exception site' and can then be bought at near-agricultural values. 
  • buying, or leasing, public land, which requires strong support from the public land owner and the capacity on their part to go through a disposal process or asset transfer.
  • being part of a larger development, perhaps fulfilling a developer's 'section 106' obligations to provide affordable housing, or obligations to provide self-build plots.

There are different ways to secure a site. You can buy it outright, known as a full unconditional purpose; buy an option agreement or a conditional contract, which give you the right to buy it outright once you have planning permission; or lease the land on a long lease, which should be for at least 125 years, paying an annual rent rather than a lump sum at the start.

Often groups acquire sites at lower prices to make affordable homes viable. This is most common where there are local landowners that care about their community, or public bodies that have policies for affordable housing or other socially valuable provision. But there are strict and confusing rules governing what charitable and public bodies can do, known as 'best consideration' or 'best value', so talk to your local enabling hub for support.

A site finding brief

Unless you already have a site or building in mind, you should draw up a brief for your own benefit and for any consultants and land agents you might employ to help you.

The brief should cover:

  • Group details and contact
  • Project purpose
  • Preferred geographical areas
  • Required access to facilities, utilities and transport
  • Project size
  • Project type (general housing or specific needs)
  • Type of site (just land or land and buildings)
  • Funding and finance availability to secure the site
  • Consultants appointed

If you do appoint consultants or agents, check if they have some prior experience working with community led housing groups, and make sure you are clear about their services, timescales and fees.

Investigating sites

Before securing a site or building you need to thoroughly check that it is suitable, that the finances will stack up and that you could get planning permission.

You may have expertise within your group, and from your local enabling hub, to do a lot of this. But you may also need the help of:

  • A planning consultant to advise on whether the project is likely to gain a planning consent and what conditions may affect viability.
  • An architect to produce a sketch scheme layout and can arrange specific reports from experts.
  • A quantity surveyor to facilitate price negotiation and settling Heads of Terms for land purchase.

They will help you to investigate issues such as:

  • Local planning context: is it in a development area? What are the constraints to development? Are their any specific requirements on density, open space, community facilities or parking?
  • Topology and ground condition: is the site straightforward to build on? Are their any issues with the ground conditions or slope of the site? Are there any trees that may require removal? Are there any pipes or cables running under or over the site that would prohibit building or be costly to re-route? If the site is brownfield could there be contamination and what remediation works are likely?
  • Ecology and archaeology: are there likely to be other constraints such as these that need to be assessed, and which might have been assessed already? You might also think there are positive opportunities here, as well as constraints.
  • Highway access: roads and infrastructure are very expensive, both on site and to access the site.
  • Proximity of services: water, sewerage, electricity and gas. If not nearby the cost of getting these to a site needs to be considered.
  • Flood risk: is it in a flood risk area that will require additional costs to protect against?
  • Are the site boundaries clear? Are there any retaining walls?

With these and other issues in mind, you can draw up a sketch plan, working out the number and type of homes and other facilities and the likely works needed to make the site suitable for your project.

From this, you can develop a viability assessment. This helps you check that you can afford it, and tells you how much you can pay for the land. You start with your likely income from any sales, rents and grants. Then you deducts your running costs and the cost of the development. Whatever remains is the amount you can pay for the land, known as a residual land value.

You should check this residual land value against an independent valuation for the site. The main professional body for valuers in the UK is the Royal Institution of Chartered Surveyors (RICS), which have standards of professional practice that a valuer should follow, known as the 'Red Book'.

Securing the site or building

When you come to negotiate on the site or building, you will need some more professional sevices:

  • A solicitor for conveyance of the land/property, inputting on price negotiation and future contingency payments.
  • An accountant to ensure the transaction is structured in tax efficient way to cover VAT, stamp duty and capital gains taxes.

The taxes you pay will depend upon a few factors including: what legal form your group has taken (as some, such as charitable organisations, can benefit from tax relief); and whether you purchase land (which attracts VAT) or homes already under construction (which doesn't).