Is it quicker to build homes on large sites, or small?

Too slow, guys. Image: Getty.

The associate director of planning consultancy Nathaniel Lichfield & Partners explains why large new housing sites aren’t a silver bullet.

Most people now agree that we need to build significantly more homes than we currently do – and the government wants planning to think big in how it goes about achieving this objective.

With its “locally-led” garden towns and villages agenda, and last December’s consultation on proposed changes to the National Planning Policy Framework to encourage new settlements, local planning authorities and developers are being encouraged to look closely at bringing forward large-scale housing development projects.

On paper, this emphasis on large sites is useful: with just one site of several thousands of homes, a district can meet a significant proportion of its housing requirement. Moreover, their sheer size can stimulate the local economy and drive innovation as the site and infrastructure are developed.

However, large sites are not a silver bullet. Their scale and complexity mean that they take time to plan and require significant upfront capital investment. Furthermore, there is a need to be realistic about how quickly they can deliver new homes – such sites are not immune to the challenges and risks of the market.

Our latest research report, Start to Finish, analyses the lead-in times, planning period and delivery phases of housing sites. Here are our key findings.


Planning period

Before any homes can be built on-site, an outline or full planning application needs to be submitted and planning permission (followed by reserved matters approval for outline applications) has to be granted. A Section 106 obligation will generally need to be entered into. Pre-commencement conditions need to be discharged before any development start on-site. 

Our research shows that both the planning period (from application to decision), and the period of time between permission being granted and the first home being built, depends on the complexity of the site, which frequently correlates with its size.

And the larger the site, the longer the planning application determination period. Sites outside of London of between 100 and 499 units take, on average, 2.5 years – at least half the time required for sites of over 1,000 units – reflecting differing levels of site complexity.

By contrast, smaller sites take longer to deliver the first home after planning approval. This period of development takes just over 18 months for sites – outside of London – of under 500 units; but, perhaps surprisingly, this is significantly quicker on larger sites – in particular, on the largest 2,000+ dwelling sites, the time period from planning to first completion was under a year. This could be because larger sites may more often have larger housebuilders on board by the time an implementable permission is secured, thus be able to mobilise resources quicker.

Planning period by site size. Source: NLP analysis.

Housing delivery rates

It is widely recognised that build rates on sites are dictated by the number of sales outlets and market absorption rates. Self-evidently, large sites will frequently have more than one housebuilder building and selling homes. The larger the site, the greater the number of different housebuilders on-site and the faster the delivery rate. 

Based on our research, we found that, on average, sites of 100 to 1,000 units will typically deliver 60 units each year, while sites of 2,000 or more will deliver over 160 units per annum.

However, it is worth noting that while larger sites have a higher delivery rate due to the number of additional outlets, they take longer to plan and start on-site. There is also significant variation from the average: some sites can be quicker, others slower. And there are fluctuations from year to year.

Housing delivery by site size. Source: NLP analysis.

Our analysis shows that markets really do matter for housing delivery rates. Using estimates of land value with residential planning permissions at local authority level – as a proxy for market demand and economic strength – relatively stronger markets tend to have higher delivery rates.

This raises an important point about absorption rates: in stronger areas, housebuilders are able to build homes at a faster rate and sell them at the value they expect.

Housing delivery rates and market strength. Source: NLP analysis.

Where viable, housing sites with a larger proportion of affordable homes deliver more quickly. For both large and small-scale sites, developments with 40 per cent or more affordable housing have a build rate that is around 50 per cent higher, compared to developments with less than 10 per cent affordable housing.

The relationship between affordable housing provision and delivery rate is complex and rests on a variety of factors including viability and the level of grant or subsidy available to housing associations. On large sites, securing affordable housing “sales” can benefit housebuilder cash flow by providing financial certainty, which can be beneficial, particularly early on in a larger scale development.

However, it does demonstrate that – where viable – a tenure mix that extends beyond just housing for sale can help overcome the natural limitations associated with absorption rates. So the introduction of self-build and private rented properties might similarly increase rates of development.

Affordable housing provision and housing delivery. Source: NLP analysis.

If we are serious about achieving the Government’s target of one million homes built by 2020 – or indeed, deliver the 300,0000 per year that are needed – we need to recognise that it is about much more than just having a headline number of units in plan allocations or with planning permission. We need to understand trajectories of development: the length of time it takes for sites to come forward and the rate at which they deliver homes.

Every site is different, and there is a need for local authorities to understand the barriers and drivers of delivery in their area, seek to allocate appropriate housing sites in response and then closely monitor their progress.

Joe Sarling is associate director of planning consultancy Nathaniel Lichfield & Partners. This article was originally posted on the firm’s blog

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The ATM is 50. Here’s how a hole in the wall changed the world

The olden days. Image Lloyds Banking Group Archives & Museum.

Next time you withdraw money from a hole in the wall, consider singing a rendition of happy birthday. For today, the Automated Teller Machine (or ATM) celebrates its half century.

Fifty years ago, the first cash machine was put to work at the Enfield branch of Barclays Bank in London. Two days later, a Swedish device known as the Bankomat was in operation in Uppsala. And a couple of weeks after that, another one built by Chubb and Smith Industries was inaugurated in London by Westminster Bank (today part of RBS Group).

These events fired the starting gun for today’s self-service banking culture – long before the widespread acceptance of debit and credit cards. The success of the cash machine enabled people to make impromptu purchases, spend more money on weekend and evening leisure, and demand banking services when and where they wanted them. The infrastructure, systems and knowledge they spawned also enabled bankers to offer their customers point of sale terminals, and telephone and internet banking.

There was substantial media attention when these “robot cashiers” were launched. Banks promised their customers that the cash machine would liberate them from the shackles of business hours and banking at a single branch. But customers had to learn how to use – and remember – a PIN, perform a self-service transaction and trust a machine with their money.

People take these things for granted today, but when cash machines first appeared many had never before been in contact with advanced electronics.

And the system was far from perfect. Despite widespread demand, only bank customers considered to have “better credit” were offered the service. The early machines were also clunky, heavy (and dangerous) to move, insecure, unreliable, and seldom conveniently located.

Indeed, unlike today’s machines, the first ATMs could do only one thing: dispense a fixed amount of cash when activated by a paper token or bespoke plastic card issued to customers at retail branches during business hours. Once used, tokens would be stored by the machine so that branch staff could retrieve them and debit the appropriate accounts. The plastic cards, meanwhile, would have to be sent back to the customer by post. Needless to say, it took banks and technology companies years to agree common standards and finally deliver on their promise of 24/7 access to cash.

The globalisation effect

Estimates by RBR London concur with my research, suggesting that by 1970, there were still fewer than 1,500 of the machines around the world, concentrated in Europe, North America and Japan. But there were 40,000 by 1980 and a million by 2000.

A number of factors made this ATM explosion possible. First, sharing locations created more transaction volume at individual ATMs. This gave incentives for small and medium-sized financial institutions to invest in this technology. At one point, for instance, there were some 200 shared ATM networks in the US and 80 shared networks in Japan.

They also became more popular once banks digitised their records, allowing the machines to perform a host of other tasks, such as bank transfers, balance requests and bill payments. Over the last five decades, a huge number of people have made the shift away from the cash economy and into the banking system. Consequently, ATMs became a key way of avoiding congestion at branches.

ATM design began to accommodate people with visual and mobility disabilities, too. And in recent decades, many countries have allowed non-bank companies, known as Independent ATM Deployers (IAD) to operate machines. The IAD were key to populating non-bank locations such as corner shops, petrol stations and casinos.

Indeed, while a large bank in the UK might own 4,000 devices and one in the US as many as 12,000, Cardtronics, the largest IAD, manages a fleet of 230,000 ATMs in 11 countries.


Bank to the future

The ATM has remained a relevant and convenient self-service channel for the last half century – and its history is one of invention and re-invention, evolution rather than revolution.

Self-service banking and ATMs continue to evolve. Instead of PIN authentication, some ATMS now use “tap and go” contactless payment technology using bank cards and mobile phones. Meanwhile, ATMs in Poland and Japan have used biometric recognition, which can identify a customer’s iris, fingerprint or voice, for some time, while banks in other countries are considering them.

So it’s a good time to consider what the history of cash dispensers can teach us. The ATM was not the result of a eureka moment of a single middle-aged man in a bath or garage, but from active collaboration between various groups of bankers and engineers to solve the significant challenges of a changing world. It took two decades for the ATM to mature and gain widespread, worldwide acceptance, but today there are 3.5m ATMs with another 500,000 expected by 2020.

Research I am currently undertaking suggests that ATMs may have reached saturation point in some Western countries. However, research by the ATM Industry Association suggests there is strong demand for them in China, India and the Middle East. In fact, while in the West people tend to use them for three self-service functions (cash withdrawal, balance enquiries, and purchasing mobile phone airtime), Chinese customers consumers regularly use them for as many as 100 different tasks.

Taken for granted?

Interestingly, people in most urban areas around the world tend to interact with the same five ATMs. But they shouldn’t be taken for granted. In many countries in Africa, Asia and South America, they offer services to millions of people otherwise excluded from the banking sector.

In most developed counties, meanwhile, the retail branch and the ATM are the only two channels over which financial institutions have 100 per cent control. This is important when you need to verify the authenticity of your customer. Banks do not control the make and model of their customers’ smart phones, tablets or personal computers, which are vulnerable to hacking and fraud. While ATMs are targeted by thieves, mass cybernetic attacks on them have yet to materialise.

The ConversationI am often asked whether the advent of a cashless, digital economy heralds the end of the ATM. My response is that while the world might do away with cash and call ATMs something else, the revolution of automated self-service banking that began 50 years ago is here to stay.

Bernardo Batiz-Lazo is professor of business history and bank management at Bangor University.

This article was originally published on The Conversation. Read the original article.