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- Joined: Tue Jul 15, 2014 10:50 pm
Tue Aug 13, 2019 7:11 pm
https://www.walesonline.co.uk/news/local-news/cardiffs-missing-millions-developers-asked-16745257
The article focuses on those developments where initial requests for contributions to affordable housing and local infastructure have been significantly downgraded after negotiation: there are other developments where this has not happened (or has happened to a much lesser extent).
However, I can't help but feel the problem is that obligations are not obligatory. Developers will bid more for the land or properties they want to develop if they know they can negotiate any obligations away. Once they have paid that high price they can then claim it wouldn't be viable to cover the full obligations they have been asked to - providing the basis for that negotiation.
If obligations were made truly obligatory, developers would be less willing to bid up land/property prices. Usually the difference between residential and e.g. industrial or sub-prime office location property is so big though that it will still be worth the owner selling it at the new lower price. And its then viable to meet the actually obligatory obligations.
House of Commons have been looking at this issue in England - where I think the problem can be even more acute (certainly housing affordability is). Its time to look at it in Wales.
I think its tricky because people think being flexible on these obligations must mean "at least we get something" by way of contribution. But if they know you'll be flexible, they price that in to what they are willing to pay, etc., meaning you'll get less than if you were less flexible.
And if any change is made, one's gotta be prepared to call developers bluff. Because the market is pretty concentrated with a few big developers, and because their fixed labour costs are pretty low (they use self-employed and sub-contracted builders a lot of the time), they will try to scare government in to reversing course by holding back developments saying "they're not viable". So be prepared for such behaviour, sit it out, and eventually they will have to start developing/building again.
The article focuses on those developments where initial requests for contributions to affordable housing and local infastructure have been significantly downgraded after negotiation: there are other developments where this has not happened (or has happened to a much lesser extent).
However, I can't help but feel the problem is that obligations are not obligatory. Developers will bid more for the land or properties they want to develop if they know they can negotiate any obligations away. Once they have paid that high price they can then claim it wouldn't be viable to cover the full obligations they have been asked to - providing the basis for that negotiation.
If obligations were made truly obligatory, developers would be less willing to bid up land/property prices. Usually the difference between residential and e.g. industrial or sub-prime office location property is so big though that it will still be worth the owner selling it at the new lower price. And its then viable to meet the actually obligatory obligations.
House of Commons have been looking at this issue in England - where I think the problem can be even more acute (certainly housing affordability is). Its time to look at it in Wales.
I think its tricky because people think being flexible on these obligations must mean "at least we get something" by way of contribution. But if they know you'll be flexible, they price that in to what they are willing to pay, etc., meaning you'll get less than if you were less flexible.
And if any change is made, one's gotta be prepared to call developers bluff. Because the market is pretty concentrated with a few big developers, and because their fixed labour costs are pretty low (they use self-employed and sub-contracted builders a lot of the time), they will try to scare government in to reversing course by holding back developments saying "they're not viable". So be prepared for such behaviour, sit it out, and eventually they will have to start developing/building again.