02 Aug 2018
As the government cuts red tape in a bid to boost delivery across the sector, Environment Analyst and Development+Infrastructure investigate how housebuilders and their consultants are managing the environmental impacts of development. Delta-Simons Divisional Director, Simon Clennell-Jones, contributes to the findings...
Housing crisis or opportunity?
In 2008 the UK housing market fell off a cliff as the credit crunch sent shockwaves through economies worldwide. Property prices plummeted and construction all-but ground to a halt as developers withdrew and waited for the dust to settle. Almost a decade later, new-build rates have yet to exceed their pre-recession levels but the market is experiencing steady growth.
This post-recession recovery can be attributed to a number of factors, namely: demand and policy. For some time the UK has been on the verge of a housing crisis, as high prices prevent first time buyers from stepping onto the property ladder, in part driven by a lack of supply. This has placed pressure on Westminster to make the market more accessible and increase the number of available homes.
To help solve the issue, ministers have set targets and introduced planning reform in a bid to speed build-out rates. In 2007 Labour set a target to build 240,000 homes annually by 2016. In 2015 former-Housing minister Brandon Lewis targeted 200,000 homes a year up to 2020. The latest commitment from chancellor of the exchequer Philip Hammond pledges to supply 300,000 homes per year with current annual new build rates at c147,000.
In amongst these, the introduction of the National Planning Policy Framework (NPPF) in 2012 marked a key step in the government’s deregulation agenda overhauling the planning system. Thousands of pages of planning guidance were cut and the environmental impact assessment (EIA) screening threshold for housing was raised from developments of 15 homes to 150. More recent planning policy changes include the introduction of the 2017 housing white paper which sought to speed up consenting times, providing additional resources for planning departments and reiterating the government’s intention to build on brownfield land.
These changes appear to be having an effect as in 2016 the value of property construction finally exceeded its pre-recession peak of £94bn, reaching £99bn in real terms. According to Environment Analyst’s consultancy market figures this has translated into work supporting the construction/property sector representing around 16% of their total environmental consulting market revenues.
Divisional director of Delta-Simons, Simon Clennell-Jones, outlines the trends the firm has seen over the past few years, stating: “Our traditional market was commercial property, but with our growth we have seen an increase in the proportion of work in the housing sector.”
Consultancy service trends
Market growth combined with intermittent regulatory updates creates happy hunting grounds for environmental consultancies. The market provides opportunities to planners, ecologists, air quality modellers, flood risk specialists, landscape experts and remediation professionals. with many firms choosing to bundle them, offering a one-stop-shop for housing developers.
Gareth Wilson, partner at 365-strong planning and design consultancy Barton Willmore explains: “Major projects typically go to market with EIA, planning and landscaping tendered as one package. Our USP is that we can bring all these services to one project offering a holistic approach.”
Clennell-Jones concurrs: ”We have seen significant growth in our ecology and environmental planning teams; more and more projects now have a need for joined up environmental offerings. These services are particularly important for the longer-term derelict brownfield sites which have come forward in the past few years.”
"Clients don't want to step into a development where there are unknown risks." (Boyd, WYG)
Earlier this year a CPRE report found there is enough brownfield land to support the development of over one million homes in England. But only around 44% of land currently used for housing in 2017 was brownfield. With local authorities identifying suitable sites, and triggering permission in principle, the onus is on developers to make use of brownfield land. However, such sites can come with hidden risks, with responsibility for dealing with any unknown contamination falling squarely on the developer. This can yield opportunities for consultants in the form of pre-purchase due diligence or the assessment of remediation options. WYG’s head of geo-environment, Michael Boyd explains: “We are spending more time helping clients to de-risk sites early on . . . clients don’t want to step into a development where there are unknown risks.”
Key environmental challenges
As part of Development+Infrastructure’s recent Housing and the Environment (H&E) readership survey, industry representatives identified contaminated land as the most likely environmental factor to derail a housing scheme at the planning stage, closely followed by poor stakeholder engagement and flood risk.
However, contaminated land is not the only risk associated with brownfield sites. By their nature sites are typically located in urban areas meaning they can present higher levels of complexity in terms of noise impacts. Ramboll’s Stepan Ruzicka describes how his firm has tapped into this niche, investing in noise modelling enabling consultants to forecast noise levels during the design phase of a project. He says “noise is a good USP for us and is a driver for consultancy in this sector as accurate noise assessments and innovative acoustic solutions are highly desirable in urban environments that are getting increasing dense”.
With the UK’s urban areas often home to centuries old history and culture, developers also have to contend with historical features and conservation areas driving demand for built heritage expertise. I expect demand in this area to continue particularly on city centre urban regeneration projects where high density development or tall buildings are proposed”.
While the regeneration of brownfield land makes sense in terms of efficiency, the finite size restricts the volume of homes which can be delivered as Wilson explains: “As brownfield sites tend to be in urban locations they are often limited in their size. This means they cannot support a high number of properties making it harder to hit the 300,000 annual housing target. A mix of brownfield and greenfield sites is going to be required.”
Greenfield vs brownfield
To facilitate the delivery of properties en masse the government dreamed big, backing 17 large-scale, complex garden village and town projects in 2017 which combined could deliver almost 200,000 homes. These sites are typically located on greenfield land, the development of which has increased rapidly in recent years. Recent research by CPRE found greenfield development has risen 58% in four years. However, respondents to Development+Infrastructure’s H&E survey were split as to whether planning policy changes over the past six years have made it easier to gain planning permission on green belt land, with 47% voting yes and 53% no.
"A mix of brownfield and greenfield sites is going to be required." (Wilson, Barton Willmore)
Greenfield developments by their very nature may avoid environmental complications such as contaminated land, but can still come under fire for their landscape and visual impacts. Furthermore, due to their rural location such projects can require additional work to plan and coordinate the necessary infrastructure. This is a factor Barton Willmore has capitalised on, launching a dedicated infrastructure and energy team enhancing its offering to better meet the demands of large-scale, mixed-use developments. Wilson explains: “In 2018 we launched our infrastructure and energy team, which strengthens our ability to support large scale, mixed-use opportunities such as the Cambridge growth corridor. Projects like this require planning and consents support for rail, road, energy, employment and housing.”
Sector sustainability in focus
Although the trigger threshold for housing development EIAs has been relaxed, sustainability is increasingly coming to the fore as an issue for the housing sector. For example the 25 Year Environment Plan aims to embed the principle of environmental net gain into development, including housing and infrastructure. It is also hoped the re-working of the NPPF may give local authorities the freedom to increase sustainability standards in new homes. Furthermore, environmentally sensitive developments are often looked on favourably by stakeholders and investors: providing a PR opportunity.
Respondents to Development+Infrastructure’s H&E survey rated developer Barratt Homes as the most sympathetic to environmental issues, closely followed by Berkeley Group, Redrow and Crest Nicholson. However, perhaps even more notable is that no single developer attracted more than 14% of the vote with 70% of respondents suggesting none of the top ten housing developers are perceived favourably by the industry.
According to Barratt Homes’ 2018 sustainability framework the firm implemented a number of initiatives and ambitions in a bid to become “the leading national sustainable housebuilder”. These include, “creating a net positive impact for ecology and biodiversity across our developments by 2020; ensuring all applications for full or outline permission (excluding reserved matters or re-plans) have a biodiversity action plan in place; and continuing dialogue with major lending stakeholders to promote sustainable housebuilding.”
Emerging environmental challenges
Looking ahead, what environmental factors do our consultants predict will present the greatest hurdles for developments?
"I don't see hurdles, but opportunities." (Ruzicka, Ramboll)
“I don’t see hurdles, but opportunities,” says Ruzicka. “I think, looking forward, the industry will focus on adding value through the creation of multifunctional liveable public realms, utilising ecosystem services of green spaces such as water attenuation, heat dissipation or noise-scaping. There also needs to be an increased engagement of communities in urban space creation, thus re-invigorating the causal link between quality green environment and public well-being and health.”
Many environmental planning consultants are convinced air quality will continue to rise in importance. The issue has gained a high profile in recent years in the wake of emissions scandals and health-threatening pollution levels. In 2016 the High Court ruled that the government’s 2015 national air quality plan failed to tackle the issue. Since then the government has reworked the plan, although it was still criticised for passing responsibility to local authorities. More recently, Mayor of London Sadiq Khan has sought to tackle the air polution in his 2018 London Environment Strategy
(D+I 07-Jun-18). The strategy proposes a range ofschemes to improve air quality which may impact future development in the capital such as tackling poor indoor air quality and using an air quality positive standard to ensure building developments contribute to cleaning London’s air.
Ruzicka believes air quality will remain a significant driver for developers to seek of consultancy services as it climbs the government agenda and the public perception of its link to human health is increasing. According to Ruzicka, this will be particularly visible in London, while Wilson thinks the issue will continue to rise up the agenda across the UK, particularly in congested urban areas where “investment in road infrastructure improvements is key to resolving this issue alongside advancements in technology and alternative modes of travel,” he says.
The government’s renewed commitment for brownfield development could also present a range of challenges for developers. According to Ruzicka many of the midrisk sites have already been developed, leaving developers chasing the “marginal land” to choose between the smaller low-risk sites and larger but often highly complex or contaminated sites. This is partitioning the market need for consultancy services towards either low cost commoditised and often local advice or a highend integrated multidisciplinary development consultancy services.
Such contamination can bring developments to a halt and requires high-level, expert input from consultants. According to Clennell-Jones, Delta-Simons has witnessed such a trend: “We have seen growth around higher-value service offerings such as the provision of expert advice on stalled development/remediation schemes and more difficult issues around ownership of liability.”
Boyd highlights the incoming legislative changes – such as the revised NPPF – which he feels “will drive the brownfield agenda”. According to Development+Infrastructure’s H&E survey, such changes to the legislation and requirements underpinning housing development could be a decisive driver for change, as over 40% of respondents identified planning requirements as the primary driver of environmental mitigation in housing schemes.
Clennell-Jones predicts asbestos in particular could be a key driver for growth in the contaminated land sector. “Over the past decade, the investigation of sites for asbestos has become much more frequent and concern over the regularity with which asbestos is found is rising. The lack of guidance (until recently) on assessing and addressing asbestos in soils had resulted in significant variability in the quality of assessment and remediation approaches. . . there is a great opportunity for professionals with skills crossing between traditional asbestos surveying and removal, and land contamination assessment to undertake proportionate and robust assessment of asbestos contaminated sites, and develop robust and well managed remediation
schemes. The perceived asbestos risk now exceeds many other concerns on projects” he explains.
Is the future as safe as houses?
If economic forecasts are to be believed the UK faces potential economic upheaval at the hands of Brexit. But with the government still battling to meeting current housing demands, which way do our consultants think the scales will tip for the market?
First and foremost, there are concerns as to whether the UK will actually hit the ambitious housing targets. Clennell-Jones comments: “It is clear that the housing shortage remains high on the political agenda. Nevertheless, getting anywhere near an annual target of 300,000 homes seems to be unlikely in the current climate and, indeed, there remain many who continue to benefit from a shortage of supply, so really significant change seems to be some way off.”
Ruzicka agrees: “Delivering 300,000 homes per year is not feasible now. Although the government has sought to simplify legislation to accelerate this it is not enough, there is still a lot of conflict between various development policies, which needs to be resolved.”
“The government is over 100,000 homes short of its 300,000 annual housing target” adds Wilson. “The planning system needs to be able to respond to demand, plan and invest in key infrastructure proactively to prevent delays. Good design is increasingly relevant with greater neighbourhood planning powers being passed to parish councils.”
Indeed, Brexit may exacerbate the issue of delivery, as Clennell-Jones suggests: “Even if meaningful planning reform did result in a significant increase in suitable land with planning permission in place, there remains a skills shortage on the construction side which has the potential to get worse depending upon the final form of Brexit.”
However, the general consensus is that the housing market should remain robust in spite of any economic blips as the government continues to push toward its high, if over-ambitious targets. Ruzicka says: “In terms of housing, the UK still needs homes and I can’t see Brexit changing that. We should see growth in the housing market, in particular beyond the traditional areas (such as London and the south-east) with growth expected around new infrastructure hubs such as HS2.”
WYG’s Michael Boyd concurs: “Although we don’t want to put all our eggs in one basket, having seen the ramifications on the market following the global financial crisis, the housing market looks very strong and we are quietly confident about its future.”
And on the outlook for the sector, Wilson concludes: “The underlying demand for housing and commercial floorspace is still strong and the government is investing in major infrastructure to facilitate growth.”
Copyright: Environment Analyst