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There was good news for the KBB industry yesterday with the announcement by Housing Minister John Healey that is hailed as the start of a new deal in housebuilding... the first Government-owned land is being made available under the Public Land Initiative for much-needed new homes.

The Initiative could create up to 1,700 jobs and apprenticeships – with workers expected on the first of these sites within the next few months.

Mr Healey described this scheme as a drive to make better use of Government-owned land to build more homes, to lower costs and to increase competition in housebuilding, before naming the first three sites which, subject to planning permission, will deliver nearly 500 new homes – many of which will be made available for affordable rent or sale. The Initiative is expected to deliver up to 1,250 homes overall.

Under the new deal, Government provides the public land but takes out the upfront costs and risks involved in site purchase and preparation as contractors pay for the land only once the completed homes are sold. A panel of approved partners have been selected, reducing the contract bidding and procurement costs for public agencies that want to build homes this way. But in exchange for this reduced risk, developers take a smaller profit.

Some of the biggest names in the construction industry have not been house-builders before – but Mr Healey sees this new initiative as a way to inject more innovation and competition into housebuilding by encouraging them to enter the industry.

Two of the first three sites are owned by the Homes and Communities Agency – with more sites being considered. The third is owned jointly by the Regional Development Agency One North East, Newcastle City Council and with the delivery being led by City Development Company 1NG.

The Minister made clear he expects other public bodies to follow suit, and identify land they have available for housebuilding. Latest estimates suggest there is enough public sector land in England to build nearly 300,000 much-needed homes, including 100,000 on council land and others on old NHS, transport, military and school sites.

The first three sites to be made available under the Public Land Initiative will be:

• Bentley, Doncaster – 178 homes are planned for this site, of which 47 will be affordable. Subject to planning permission, work is expected to start this Summer
• Kingsmead South, Milton Keynes – this site will deliver 200 homes, of which 60 will be affordable. Work is expected to start this Autumn.
• East Bank, Ouseburn, Newcastle – a joint venture between ONE North East, Newcastle City Council and 1NG, this will deliver between 90 and 100 town houses and larger apartments, 22 of which will be affordable. Work is due to begin in May.

The Initiative forms part of the Prime Minister’s June £1.5billion Housing Pledge, which saw Government funds switched into the building of new homes. Since then, John Healey has released over £2.8billion for more than 51,000 new homes across the country.

The Minister has also put in place special contractual conditions so developers, councils and housing associations benefiting from this multi-billion pound investment in housing must provide apprenticeship and local job opportunities – including those contractors working on Public Land Initiative sites.

The week started pretty badly for the industry with the latest Glenigan Index reporting that the value of construction projects starting on site in January was 8% lower than in January 2009 - something that was probably to have been expected, with the arctic conditions we've been experiencing! So it's good to end the week on a high note, isn't it?

Have a good weekend!

Yours,

Jan Hobbs