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Cambridge holds the potential to become a hub of new housing opportunities, however Matt Clarke, of Boyer, explains if the current water supply issue isn’t addressed, the government’s Cambridge 2040 vision will be trashed. 

Image: Matt Clarke.

Last summer Housing Minister Michael Gove announced plans to invest in Cambridge as ‘Europe’s Silicon Valley’, including the intention to deliver up to 250,000 additional homes under the government’s Cambridge 2040 vision. Further announcements have followed, including those issued in the context of the Spring Budget and in recent days, which have both tempered the scale of their aspirations (it is now 150,000 new homes, by 2050) and added some more detail on how key challenges to delivery will be tackled.

There is no doubt that investment in Cambridge is an astute economic move: already, the University alone makes a total net economic impact on the UK economy of nearly £30 billion annually – almost four times that of football’s lucrative Premier League. Investing in the University and wider Greater Cambridge ecosystem will have a significant beneficial impact on the overall economic health of the UK.

Cambridgeshire is a popular location for a wide variety of reasons and already has one of the fastest growing populations, most notably within the 25-to-34-year-old age group (+20.6% in the period between the 2011 and 2021 censuses), suggesting a strong pull factor from job opportunities generated by the University and the many tech and life sciences employers, and evidence of the continued success of the ‘Cambridge Phenomenon’.

The Greater Cambridge area has, in recent times, therefore grappled with the challenges of delivering sufficient new homes to fuel this economic growth potential in a sustainable manner. Strategies have included both Green Belt releases and a series of new settlements. Notably, of the five new towns initiated in England in the last decade, two were in Cambridgeshire, at Northstowe and Waterbeach, themselves following on from that at Cambourne.

Housing shortfall

With Cambridge’s housing market characterised by acute affordability issues, the need to address demand through considerably increased supply in order to boost the availability of homes, including those for key workers, is long over-due. According to the government’s recently published report. The Case for Cambridge, the city is the most unequal city in the UK – and this risks jeopardising future, sustained economic growth.

Affordability is an ongoing challenge for Greater Cambridge, with average house prices over 12 times the average salary in 2022 for the city and the affordability ratio for South Cambridgeshire not too far behind, each having worsened over the past decade. According to The Case for Cambridge, in the last 10 years house prices in Cambridge have increased by 78% and pay by only 23%. Furthermore, 31% of all households are now renting, significantly above the English average of 19%. Finding solutions to this affordability problem, most notably through increased housing delivery, will be critical to realising Cambridge’s long-term economic potential.

When the Cambridge 2040 vision was first outlined and then subsequently reinforced at the end of 2023 the local political response was somewhat tentative, with key delivery challenges invariably raised with regards to infrastructure, sustainability and specifically in relation to water supply.

Introducing the water supply issue

In order to deliver committed strategic housing allocations in Cambridgeshire, let alone to accommodate a further 250,000 new homes, the complex issue of water capacity must clearly be addressed.

Climate change has resulted in many regions (especially in the East) experiencing long dry periods. Although storms and extreme weather events deliver rain, the intensity is often so great that the water cannot be captured and stored effectively.

The Cambridge Water supply area relies primarily on ground water. The Environment Agency has stated that any new housing development should do so without increasing abstraction levels and risking deterioration to the existing water bodies in the area. The Agency hasobjected to a number of strategic planning applications on the grounds of water stress and its concerns over the resulting environmental impacts of water abstraction on water courses in the supply area. Recent announcements suggested that as many as 9,000 new homes on committed strategic sites are currently being blocked as a consequence.

Progress on the emerging Greater Cambridge Local Plan has also been impacted, whilst clarity is gained on resolution of this issue – with the net result being that (both current and future) development is delayed and the housing shortage exacerbated.

Two recent planning appeals have challenged this issue through public inquiries, namely the Brookgate scheme at Cambridge North (for 450 homes and employment development) and that at Darwin Green in West Cambridge (phases 2 and 3, for 1,000 dwellings). Both appeals have been recovered for determination by the Secretary of State with the decisions currently awaited. Clearly these will provide a valuable indication of the Government’s stance on water stress in the sub-region in due course, putting recent announcements on related measures to the test.

Government commitment

In The Case for Cambridge, the government commits to resolving the problem, stating: ‘Our first priority is water scarcity, which is holding back development and risks causing environmental harm. It is vital that the city has the water supply it needs to support long-term growth, including a new reservoir in the Fens and a new pipeline to transfer water from nearby Grafham Water. We are also making a one-off intervention to support growth in the shorter-term by delivering water savings through improved water efficiency of appliances in existing buildings that can offset new homes and commercial space.’

The government also promises to deliver a unique offsetting intervention (as set out in Addressing water scarcity in Greater Cambridge: update on government measures) having already established a Water Scarcity Group, in order to unlock the current blockage.

The Water Resources Management Plan

In February this year, Cambridge Water issued its third draft Water Resources Management Plan (WRMP), the earlier iterations having been objected to by the Environment Agency. The 25-year strategy, as required, demonstrates how Cambridge Water will ensure the continued supply of safe clean water while protecting and improving the environment.

The plan’s targets include a 50% reduction in leakage from 2017/18 levels by 2040 (10 years ahead of the government target); a reduction in household consumption (to 110 litres per head per day) by 2050; building on the already low household consumption (as compared to other regions); a 9% reduction in non-household consumption by 2038, and universal metering by 2030.

The supply options include a short-term water transfer from Grafham Water (25 miles west of Cambridge); a proposed new Fens Reservoir, to be located close to Chatteris (25 miles north of Cambridge) and associated transfer infrastructure, and reuse of effluent water which feeds into Cherry Hinton Reservoir in Cambridge.

Due to the significant infrastructure associated with a number of these supply options (which are projected to cost over £700m), the benefits will be staged: the Grafham Transfer in 2032, Fens Reservoir in 2036 and effluent re-use in 2041.

It remains to be seen whether the Environment Agency will support the latest WRMP (albeit the decision to approve this rests with DEFRA and OFWAT), and in turn the extent to which they will support projected levels of future development before the planned supply options are fully in place. A phased approach, balancing longer-term growth with delivery of the proposed supply infrastructure could realistically be anticipated.

Innovative Measures: Water credits system and nature-based solutions

In its update on measures for addressing water scarcity in Greater Cambridge (noted above) published alongside the Spring Budget, the government announced a ‘one-off commitment’ to introduce a water credits system in Cambridgeshire which it believes will help unlock the 9,000 homes and 300,000 square metres of commercial space that are currently held up in the planning system due to water scarcity concerns.

The water credits system, which is due to launch later this year, would give developers the opportunity to offset the water demands of development through the purchase and sale of water credits to ensure they have a neutral impact on water demand. The system would be overseen by a market operator and the credits would initially be provided through the retrofitting of properties (both commercial and residential) with government investment.

Alongside this the government is also undertaking a pilot to understand the scope for nature-based solutions to enhance the long-term flow of water bodies and improve resilience to floods, as well as seeking innovation in agricultural water resource management.

There are no details available about how the credits system would work with the planning process, but the announcement states that the government will work with the local planning authority, developers, the EA, and other key stakeholders on its implementation.

Co-ordination and timing

One of the Environment Agency’s key concerns is the way in which local authorities engage with water companies to plan development in line with available water resources.

Coordinating water supply and new housing development is compromised by the different timescales for local plans and WRMPs and the very long-term delivery of water infrastructure such as new reservoirs. In the Greater Cambridge context this has arguably led to the undesirable position that has ensued with regard to the delayed grant of planning permission, and in turn delivery, of sites whose allocation had been confirmed through Local Plans adopted in line with the current WRMP.

Funding for infrastructure projects is controlled by OFWAT and is reviewed only on a five-year basis, which makes it difficult for the water authorities and local authorities (whose boundaries invariably do not align) to change their infrastructure planning to address significant changes in local circumstances. The scale of infrastructure involved and the typically cross-boundary nature of the required longer-term solutions mean that a good case could be made for a truly strategic planning approach at national, or at least regional level.

Conclusion

Clearly the water scarcity situation must be resolved quickly both to unlock much-needed housing on sites already allocated in local plans and to allow future growth to be appropriately planned, whether in the form of a locally derived housing target or that suggested by the government’s ambitious Cambridge 2040 vision.

Further guidance from government this week would seem to underline that they are serious about doing so. Entitled ‘Cambridge Delivery Group: Establishing a Growth Company’, this sets out next steps for the already established Cambridge Delivery Group, including the task of establishing a dedicated Growth Company for Cambridge on a trajectory towards creation of a Development Corporation.

The guidance note outlines that the remit of such body would include the acceleration of growth, with explicit reference to unlocking development on sites allocated in the current local plan; developing a long-term growth strategy and importantly supporting cross-government engagement to identify solutions to complex constraints. Such an approach would undoubtedly assist or could be argued as essential if government’s growth aspirations for Cambridge are to be realised. However, some degree of local political opposition can certainly be expected, given that initial suggestions in this regard were not particularly warmly welcomed by the local authorities.

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The Liberal Democrats have become the first of the major parties to launch their full election manifesto at an event in London. However, experts have raised concerns, especially with their housing policies.

Yesterday, 10th June 2024, Sir Ed Davey, leader of the Liberal Democrats, took to a make-shift stage on the third floor of a loft space in a converted factory near Shoreditch, London, to unveil his parties policies in a bid to win people’s votes in the next General Election. Although, like the location, Sir Davey’s plans could be described as full of potential but needing a lot of work to become somewhat successful.

This is particularly true for the parties housing policies. In the speech Sir Davey explained the Liberal Democrats will deliver 380,000 homes a year, 150,000 social homes and the construction of ten new garden cities across the UK. In keeping with the green theme, the party have also claimed all new homes would be required to be built at a zero-carbon standard with solar panels, and requirements for landlords to upgrade the energy efficiency of their homes to EPC C or above by 2028 would be reintroduced.

However, since Sir Davey unveiled his housing plans, various industry experts have expressed their concerns. Professionals have claimed that the yearly housing target is too high – our current government have continuously failed to meet the requirement of delivering 300,000 new homes a year and councils will run into problems with landowners should they attempt to construct new properties.

Below are some reactions to the Liberal Democrats new manifesto, which is otherwise known as ‘For a Fair Deal’, and can be accessed in full here.

Colin Brown, head of planning and development, Carter Jonas:

‘There is nothing especially ‘new’ about the Lib Dems’ policies on planning and development and many of their ambitions reflect those of some of the other parties. 

‘What differs most from the current situation is the commitment to 380,000 new homes per annum, which is over 25% higher than the current Government target.  The manifesto says that this will be done by delivering ten new garden villages, but they do not say where these will be or how they will ensure they are delivered in a timely fashion.

“Much of the evidence about garden villages and new settlements generally is that they are difficult and slow to deliver, and politically difficult to land. It is not clear from the manifesto as to how they will implement delivery and require local councils to meet their housing targets. At present, this appears to rely on local authority and local community buy-in, with benefits offered to local authorities when they accept new housing.  This has not been overwhelmingly successful under the current government with CIL and the new homes bonus.

‘One new proposal is to allow councils to buy land at existing land value, presumably with compulsory purchase powers, through a reform of the Land Compensation Act 1961. This will be controversial with landowners, and it remains to see how it would work.  Other parties, specifically Labour, have spoken of capturing more land value, but not necessarily to the level of existing use value which may be agricultural.  I would argue that a landowner should still be able to see a sufficient return to make disposal of the land desirable, as opposed to continuing an existing use.’

Lawrence Turner, director, Boyer:

‘So while the Liberal Democrats’ emphasis on funding local planning departments and promoting brownfield development is a step in the right direction, the manifesto lacks detailed strategies to overcome the structural challenges facing the housing sector. The manifesto pledges to build capacity within local authorities, encourage rural housing expansion, and trialling community land auctions are positive steps, but may not be sufficient to achieve the ambitious target of 380,000 homes per year.

‘While the Liberal Democrats’ manifesto highlights the urgency of addressing the housing crisis, the Party’s proposed policies lack sufficient detail at this time and face several obstacles that need to be overcome. Psychological resistance to new developments, local governance challenges, and constraints within the construction industry present significant barriers to achieving the target of 380,000 homes per year. While the Party’s proposals offer some solutions, a more comprehensive approach is needed to address the complex challenges of housing delivery in the UK.’

Aidan Van de Weyer, senior planner, Lanpro Services:

‘From a planning perspective, the top lines in the Lib Dem manifesto are really positive. The delivery target of 380,000 homes year is welcome – but ambitious. As we know from recent experience, meeting housing targets is always controversial. The greater the housing target, the greater the controversy.

‘The Lib Dem manifesto says that this can be achieved through community-led initiatives and the creation of ten new garden cities – as Labour has done. So it will be interesting to see in what respect the Lib Dems plan to achieve this differently to Labour.

‘The Lib Dems have come up with a concrete proposal for solving the resourcing problems of local authorities: allow councils to set their own fees for planning applications. The impact of this will vary depending on how much freedom is given to councils. But with substantial freedoms allowed, this risks creating a two-tier planning service: wealthy, attractive areas get well-resourced planning teams, while quality in less affluent areas drops as councils compete to bring in development – perpetuating the rich/poor divide which already impacts far too much in our planning system.

‘The Lib Dems, again like Labour, have stated their support for allowing councils to be given compulsory purchase powers at existing use values for housing, along the lines of the as-yet unimplemented measures in the Levelling Up and Regeneration Act (LURA).  Although each of the three main parties seems intent on pursuing this policy, without very clear rules and processes, this will introduce risks of challenge and delay that could make the powers difficult to use in practice.’

Images: Maximillian Conacher, Colin Brown, Lawrence Turner and Aidan Van de Weyer.

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New research from Deloitte highlights developers are pressing pause on new office schemes in the capital city after the volume of commercial space under construction skyrockets.

Deloitte, one of the largest accounting firms, has published findings from its recent survey which highlights that the number of project starts in London has dropped by almost a fifth in the last six months, with completions also in retreat.

According to experts, some 16.4 millions sq ft of office space across 127 schemes is now under construction in the capital city following a record number of project starts in 2023. In addition, an estimated 4.2 million sq ft of office space has broken ground across 42 schemes since last December – almost 18% lower than Deloitte’s last survey towards the end of 2023.

It is thought that the backlog has been caused by previous project delays that happened as a result of climbing interest rates, inflation and supply chain disruption in 2022.

Against this backdrop, office completions are expected to be down this year compared to 2023, which saw the second highest volume of completions in the history of the survey at 7.5 million sq ft.

Margaret Doyle, Deloitte partner and chief insights officer for financial services and real estate, said: ‘In response to these macro factors, we are seeing developers trying to de-risk schemes, for example, breaking up projects into discrete chunks, and delaying instructing contractors until a substantial portion of the scheme has been let.

‘These defensive actions by developers appear to be behind the declines in both new start and completion volumes seen in this survey and may presage a medium to long-term supply squeeze.’

Overall, the only area of London that recorded an increase in activity in the survey – with an uptick of 12% – was Midtown, the part of central London situated between the city and the West End, which includes Farringdon and Holborn.

In the report researchers found more than 2.5 million sq ft of the new starts over the last six months were office refurbishments, which have outperformed office newbuilds for the last eight consecutive surveys – a trend that has particularly been popular in the West End. Here, upgrades of listed buildings has seen the district edge above the City of London as the most active submarket for new construction activity due to three large new starts totalling 945,000 sq ft, although the Square Mile still had the largest long-term outlook for construction volumes.

Image: Danny Lau

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From shortages to poor quality, England’s housing sector needs more attention than ever. Adrian Plant, director of SOWN, explains party leaders should be considering the best long-term solution to help people onto the property ladder.  

Image: Adrian Plant

In 2022 the government ended the Help to Buy scheme. Admittedly it had attracted some controversy, but the schemes absence has caused widespread upset. The scheme, which enabled buyers to own a property with just 5% as a deposit (using an equity loan worth 20% of the price of a new build home; 40% in London), enabled the purchase of almost 390,000 new builds.

In July last year, figures from Barratt, one of the UK’s largest property development companies, showed that the number of first-time buyers looking to purchase their first home had fallen by 49% in the year following the cessation of Help to Buy. What’s more, the development company also predicted a drop of 23% in build volume from July 2023-24. This shortfall, coupled with a challenging market, has led many to ask the question, what can fill the void left by Help to Buy?

Shared ownership is part of the solution, but in our sector, demand continually exceeds supply. For example, last year figures found more than half a million new developments have been put on hold during the past five years and official data shows that only 19% of planning applications are processed within the recommended 13 weeks, compared with 57% a decade ago. Because around half of new affordable housing (which includes shared ownership) is delivered through conditions imposed on development through ‘planning gain’, the reduction in housebuilding results directly in a reduction in shared ownership properties.

And, as the already acute need for affordable housing increases, the planning system alone cannot keep up with the volume of new homes required. This may be exacerbated if the proposed Infrastructure Levy is introduced, because it would result in planning gain revenue becoming available for local authorities to spend on the many wide-ranging financial demands that they face in addition to housing.

Against the odds, the shared ownership sector has made considerable progress in meeting demand. In 2021-22, according to the English Housing Survey, 19,386 new shared ownership properties were delivered. This is the highest number since records began in 2014-15 and a 14% increase on the previous year. But there is an urgent need for more shared ownership properties, and one which is growing.

Traditionally shared ownership was most popular among those aged between 25-35 (32-37 in London) but the upper age is increasing. Today, first-time buyers are paying almost a third more to get on the property ladder than they were five years ago and in the last decade the number of private renters moving into home ownership fell by 23%.

Although shared ownership remains limited to those with a maximum household income of £80K (£90K in London), many people are finding that due to average house prices rising considerably more than average incomes, the impact of interest rate rises on mortgages, car and credit card loans together with the cost of food and utility bills, they can no longer afford to buy outright, and shared ownership is a good alternative.

The opportunity is clear, and not necessarily expensive. Help to Buy benefitted from a dedicated, widely recognised brand with an information campaign and website which pointed would-be purchasers in the direction of suitable products. With this in mind, there are many myths surrounding the programme that need to be debunked. These include the idea that shared ownership is only available to people with low incomes or those on social housing lists; that you can never fully own a property through shared ownership; that shared ownership properties are of inferior quality compared to properties sold on the open market; that It’s difficult to sell a shared ownership property, or that shared ownership is only available for flats. Squashing these kind if outlooked would only be successful through a government-led, national initiative.

Helping first time buyers and others to get on to the property ladder is vital not only for the individuals involved but for the country’s social and financial prospects. Shared ownership is a great product and there is great demand for it – but more needs to be done at a government level to fully realise this potential.

SOWN, which is part of the Leaders Roman Group, specialises in selling both new-build and re-sale shared ownership homes. 

Images: SOWN and Adrian Plant.

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A former gasworks site that has been derelict for 10 years is set to become home to over 300 build-to-rent flats.

On Tuesday 4th June 2024, Southampton City Council approved plans to deliver 384 build-to-rent flats on a former gasworks site which is located next to St Mary’s Stadium in Southampton, Hampshire.

Originally concerns were raised about the lack of family or affordable housing, particularly by Simon Reynier, of City of Southampton Society, but the plans were approved regardless.

Against this backdrop, councillors at the meeting on Tuesday agreed to the planning application on the basis developers will provide an updated viability assessment to confirm affordable housing wasn’t suitable for the project and the completion of the legal agreement between the applicant and the local authority.

The development is set to be comprised of residential blocks ranging from eight to 17 storeys high, with commercial units on the ground floor and communal facilities including a gym, bicycle workshop, co-working spaces and lounges. What’s more, there will be 186 one-bed and 198 two-bed flats, with 176 on-site car parking spaces.

Commenting on the news, Savills planning team director Bryony Stala, said: ‘The delivery of this scheme will be a catalyst for development in the area at a scale that will create a critical mass that allows a creation of a community, which will support the active frontages on the ground floor of the development.’

Likewise, Stala added the flats would contain subtle hints that will reflect the history of the site.

However, since the development has been confirmed, it has been notes that vehicular movement in and out of the housing site on matchdays at St Mary’s Stadium would not be possible.

Image: Corstorphine & Wright 

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Sir Keir Starmer has claimed he will make the mortgage guarantee scheme a permanent fixture to ensure low-deposit mortgages are available for first-time buyers.

Back in 2021 Rishi Sunak introduced the mortgage guarantee scheme as a bid to increase the supply of 5% deposit mortgages. Jeremy Hunt, the current Chancellor, has extended the scheme until July next year as the current cost-of-living crisis has made it increasingly difficult for first-time buyers to get on the property ladder.

The existing mortgage guarantee allows lenders to purchase a guarantee on part of mortgages, so if a bank decides to repossess a house, the government could compensate for some of its losses.

However, Sir Keir Starmer has announced that should be successful in the next General Election, he would implement the scheme permanently. The announcement has come just days after he went head-to-head with Rishi Sunak in the first televised debate, where he said the dream of owning a home for young people has gone.

In the debate, Starmer said: ‘After 14 years of Conservative government, the dream of homeownership is out of reach for too many hard-working people. Despite doing everything right, they can’t move on and up. A generation face becoming renters for life.

‘My parents’ home gave them security and was a foundation for our family. As prime minister, I will turn the dream of owning a home into a reality.

‘Our changed Labour Party will be on the side of the builders not the blockers, to get Britain building again. My Labour government will help first-time buyers onto the ladder with a new Freedom to Buy scheme for those without a large deposit, and by giving them first dibs on new developments. Labour backs hard work and ambition, and will clear the way for the opportunity to own a home. It’s time to stop the chaos, turn the page and rebuild Britain.’

Although, experts have expressed concerns that Labour’s housing plans are too good to be true. Figures from the Office for National Statistics show some 40% of the 16.5 million people aged 15 to 34 in the UK were living with their parents in 2022, which equates to around 6.7 million people. What’s more, David Sturrock, a senior research economist at the Institute for Fiscal Studies, said big falls in homeownership during the 2000s meant young adults are now a third less likely to own their own home than they were 25 years ago.

Brokers have claimed that the process of buying a house is more than just raising the money for a deposit. Borrows still have to pass checks to show they can afford mortgage repayments and people are only lent loans if they have a sufficient regular income, irrespective of any government guarantee.

Image: t0nia-b

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