To gain a deeper understanding of the housebuilding industry, its complexities and challenges, we're exploring the working lives of individuals in various roles that play an intrinsic part in the sector.
For this article, Joanne McDaid, a senior associate in our Residential team, sat down with a land director to get an insight into the responsibilities they have in overseeing the land acquisition process and their perspective on the industry.
Alongside that, we also spoke with Emma Speight, a principal associate in our Residential team, to find out more about the current challenges and opportunities in land acquisition and residential development. Check out the video below.
1. What's on your desk?
"So, because I'm always working on multiple things at once, there are lots of different things all stacked up. At the moment, there are lots of legal agreements in various stages of negotiation and some historic stuff. We are also looking at some of our internal processes and documenting those so that everyone has something to follow rather than just thinking they know what the land acquisition process is."
This is a familiar story for the land director. The role is all-encompassing, bringing in new sites, securing deals, instructing legals (and the various other consultants required to compile a suitable due diligence pack ready for board sign off) – as well as dealing with ad hoc matters arising on historic sites and communicating with the other internal functions related to planning, technical and commercial that comprise the typical house-building and land promotion business. We make sure that our clients know who they are dealing with from our team, in the form of client service teams and manuals. That way, our client's land teams know who to refer matters to within our land acquisition, tax, planning and other associated service lines. We like our clients to have personal relationships with our people – which is fulfilling for all involved and creates the sense of 'single team'.
2. What is keeping you awake at night?
"Two things, really. The first is the housing market and what's going on with that. It's trickier than ever to predict and it changes on a weekly basis. The second is the proposed changes to the planning system. We have now got to look at the proposed changes and think about whether or not they are actually going to come to fruition or whether they might change again. You need to do so much crystal ball gazing these days. In fact, these days I need more than one crystal ball!"
It is fair to say that the housing market leading into the end of 2022 and starting in 2023 has been volatile. Some weeks sales rates are good and consumer sentiment seems healthy, other weeks our house builder clients are having to work harder to secure their sales and hit their targets. The macro considerations of inflation, mortgage rates, job security and the supply and cost of materials have to be factored in, alongside the micro considerations specific to each site relating to planning potential, lead-in times and delivery. The market is reacting to that – giving more thought to return on capital and profit margins which are absolutely required in order to insulate our clients' businesses against market swings. It's a tough task – but one that the house builders and landowners are tackling together with clever deal structures and terms to ensure that the land pipeline continues to thrive in order to meet housing shortage and the demands of the consumer.
3. What is the next in the housing sector?
"There is so much going on, and lots of it looks at infrastructure. The building of new roads and reinforcing services, the provision of EV charging stations and the move away from gas. We know what is intended and what we need to target, but is the infrastructure in place to deliver and has it all been thought through?
The design of new build schemes is also a huge topic. Government policy is aimed towards 'building better, building beautiful', but in practice and in delivery terms, how does all of that get captured?".
We saw in our 'Building and Buying Better Homes' report in 2021 that the house building industry has accepted these challenges and, in lots of cases, is working hard to outperform policy and regulation. The drivers are three-fold; consumer demand, policy and legacy. House builders are keen to deliver schemes that they can be proud of – but working through the minefield of planning and policy requirements can be tough. Some incredible new communities are being delivered, house builders are forward thinking and planning for the requirements of bio-diversity net gain and we are spending lots of time with financial institutions and borrowers to lead the thinking on green and sustainable lending products. Whether or not these products will start to become more prevalent in the consumer mortgage market remains to be seen – but house builders are keen to properly and materially enhance their ESG credentials and deliver new communities, which give more than they take to existing communities and the current infrastructure.
4. What is the next big opportunity?
"I really hope that Government continues to look at the challenges for young people, especially in terms of getting on the housing ladder, and then alter things in planning accordingly so they are more in favour of house building and the creation of new, enhanced housing stock. If the Government could find the resource to fund an efficient and effective planning system, then the opportunity lies in the huge amount of expertise that we already have in this country to deliver sustainable housing stock, catering for current consumer demands and the way that people want,and need, to live in this post-COVID-19 world".
The stakeholders in the house building industry continue to work with the HBF and policy makers to deliver the shared goal of a more efficient and user-friendly planning system - balancing the need to consult with existing communities and being sensitive to their concerns against the need for more new homes and more sustainable ways to live. It's tough – and for now we continue to help our house builder clients navigate the planning system by helping to support resource-contained planning authorities (by producing sensible and balanced planning agreements, for example), sharing examples of suitable compromise rather than tricky points creating an unnecessary drag on the issue of planning permissions and acting as a mouth-piece for the industry to influence emerging policy and regulation – most recently in respect of the New Homes Ombudsman, for example.
5. What is it about the job that you love?
"I would say problem solving. I love it when you think it is going to be something that you can never get to the bottom of and then you do. And, the variety. Every project is different. It is never boring. When I was younger, I wanted to be a lawyer and I think I have got a bit of a halfway house in my role. I'm obviously not a lawyer but we deal with so many legal issues, which is probably enough for me! The language of all those legal documents I have to read, I think perhaps I am better off not being a lawyer!"
We love working with our house builder clients to help them solve problems, drawing upon the experience that we have as a market leader in the residential market and having our 'finger on the pulse' so far as land acquisition work and the housing market is concerned. For much the same reasons expressed by our land director in the interview, we very much enjoy our role supporting our house builder clients as they work hard to secure and deliver sites and subsequently homes for many thousands of people in new communities each year. There are undoubtedly aspects of the industry which need some attention and support as our clients work very hard to close the housing shortage gap and there currently is some uncertainty in the market as to where values sit, but the appetite and expertise which pervades our domestic new build housing market is well placed to deal with the challenges and to continue to thrive.
This video was filmed on 3 March 2023.
Find out more about how our expert real estate team can support with the full lifecycle of residential development schemes by visiting our Living page.