23 Jun 2023

Land of Opportunity

LDS research shows that unused council-owned sites could deliver millions of homes

What if there were so many unused, council-owned sites that you could build nearly 1.6 million homes?

It’s not a hypothetical question; research by LDS Sales Guarantee and Nimbus Maps, using Land Registry data, has unearthed 318,183 unused “small sites” owned by local authorities in England and Wales.

The sites identified are all of three acres or less, but, when combined, they cover a total of nearly 100,000 acres, or 400 square kilometres-an area roughly the size of Birmingham and Manchester put together.

All are listed as having no current use and no existing buildings. Using hyperlocal data, the researchers were able to work out the average residential density on the streets where each of these small sites stand.

This was then used to calculate how many homes could be built on each site without significantly changing the average density of the local area.

If these sites were developed, they would provide housing for 3.8 million people at the national average occupancy rate of 2.4 people per property.

The obvious conclusion to draw is that this is where SME housebuilders need to be front and centre. Where volume housebuilders focus on larger multi phase sites, SME builders thrive on the availability of small plots of land.

In the most recent Federation of Master Builders annual survey, 63% cited ‘lack of available and viable land’ as the biggest reason they weren’t able to deliver more homes-and some 71% said that the number of small site opportunities was decreasing. Highlighting the number of unused, council-owned small plots should help initiate discussions with councils, the government and Homes England about unlocking growth opportunities for SME housebuilders, who are well positioned to develop sites and play a yet more significant role in increasing
housing completions.

The research, which covered all 355 councils in England and Wales, found that it isn’t just the big county councils that own lots of unused small sites, showing this isn’t a case of the sites being unused because they’re in harder to reach, less urban locations.

The eight English members of the Core Cities group–an organisation that represents the biggest UK cities outside London–collectively own 20,477 unused small sites with the potential to build nearly 100,000 new homes (see table 1).

Overall, Kent County Council owns the biggest number of unused small sites: 10,332. The data showed these could accommodate 37,266 new homes at average local density rates.

North Yorkshire has the second most sites–5,854–with space for 13,863 new properties. (See table 2 for the top 10 councils with the largest number of unused small sites.)

These councils may have the most sites, but when local residential density rates are taken into account, a different picture emerges.

This is likely because the unused small sites owned by rural councils tend to have lower existing housing density. Councils with a more urban character could likely build more units per acre on these sites while maintaining the same housing density as neighbouring areas.

So when it comes to looking at where the most homes could be built, the study found that Durham has the potential to accommodate the most new properties
(51,186 in all), with Kent (37,266) dropping to second.

The need for new homes is critical. The previously set target to build 300,000 new homes a year has not been met. In December 2022, the Public Accounts Committee said the government would miss its targets for number, area and type of new homes.

This follows official data showing 174,940 housing completions in 2021, a 19% increase on the Covid-hit year of 2020.

While this number had been increasing up to 2020, new starts remain below where they were in 2007, when there were 176,650 completions.

In 2017, the government’s Fixing Our Broken Housing Market White Paper observed that in 2007 the number of homes registered by small builders was 44,000. However, in 2015 SMEs only registered 18,000 new homes. The report interpreted this statistic as “demonstrating the potential for growth”. If SME housebuilders once built 44,000 homes, why couldn’t they do
so again, given the right conditions?

The right conditions would be nice to have right now. But rising inflation and interest rates have made many industry insiders pessimistic. At the same time, the need for more housing continues to grow; early data from the 2021 Census showed the population of England and Wales had risen by 3.5 million in a decade. This rise of 6.3% in the total population was the highest ever recorded in a Census.

So how can we open the doors and start the conversations that will allow SME housebuilders to deliver on council – owned sites?

SMEs should be perfectly suited to developing unused small sites, but have faced difficulties in recent decades, particularly in securing finance. This has reduced their role: data from the
Home Builders Federation showed the proportion of new homes built by SME firms has fallen from 39% to 10% since 1988.

Some political leaders are acting to unlock the latent potential of SMEs to develop small unused sites, generating not just new homes but jobs and economic growth.

The Mayor of London, Sadiq Khan, launched a ‘small sites’ scheme to provide a pipeline of suitable land to SME builders. And hard-pressed as councils undoubtedly are, they must take a lead here–they have the assets. What we can do is bring ideas and the ability to unlock sites, delivering a genuine plan for growth for SME housebuilders.

The London scheme is but a small first step on the road. SME revival is essential to reversing the decline in housing output. Growing support to SMEs in accessing finance and helping
remove the structural issues they face is something that needs to happen, and it’s something LDS is having some success with.

The opportunity is there. The sites are there, as are the SME housebuilders who have historically delivered. Bringing the two together will make a major difference to the UK.

Key figures join call for greater small site focus.

This research by LDS and Nimbus Maps, highlighting the potential of small publicly-owned sites, has been welcomed by both industry and the government.

Chris Carr, managing director of Carr & Carr Builders, and National Vice President of the Federation of Master Builders, said: “I warmly welcome the findings of this data and policy paper from LDS Sales Guarantees for outlining the size of the prize for both councils and SMEs and also, importantly, for shining a light on how we can work together to unlock this  opportunity.

“SME housebuilders need small plots of land; this data shows councils have large swathes of unused small plots. “While some parcels of this land will be more suitable for development than others, what we need to do is to create a mechanism to unlock these unused small plots of council land for SMEs. The model proposed by LDS Sales Guarantees outlines an interesting template which could be modified and rolled out to combined authorities and local councils across England.

“I would urge council place departments to read this report to see if there is a policy we can build on to unlock thousands of small sites for SME housebuilders.”

Andrew Lewer MP, Chair of the All-Party Parliamentary Group for SME House Builders, said: “I welcome the findings of this study from LDS Sales Guarantees for highlighting that local authorities own significant portfolios of small sites and for putting forward recommendations to unlock them.

“These sites often go unnoticed and unutilised. That is why I put forward a pro small site development amendment into the Levelling Up Bill and fought to get government support for them. “Unlocking this problem could mean more than just much-needed extra housing. It could also bring a much needed boost to local economies across England and Wales by creating new jobs in the construction sector and boosting the wider supply chain, with particular benefit for small and medium sized housebuilders.”

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