Interview: Peter Bill and Jackie Sadek on housing and the price of London land

Interview: Peter Bill and Jackie Sadek on housing and the price of London land

In Silvertown, there stands a very large, very handsome and very derelict building called Millennium Mills amid 65 acres of land that’s been in need of redevelopment for decades. Lying to the south side of the Royal Victoria Dock, it wasn’t lifted by the 1980s Docklands regeneration wave, or by a later plan involving a huge aquarium, or by a scheme backed by Boris Johnson in his second term as London Mayor.

In 2019, Newham Council gave planning consent for a whole new masterplan for what is now called Silvertown Quays, a project that promises to refurbish the listed Millennium Mills, once the base of flour-manufacturers Spillers, and build a whole new London destination, complete with offices, restaurants and over 6,000 homes to include, in the plan’s very latest iteration, close to 50 per cent below market prices.

But according to Peter Bill, one of the country’s most experienced property journalists and co-author with regeneration practitioner and former government adviser Jackie Sadek of a new book called Broken Homes, a quite different vision for the area could and should have been realised years ago. “You could have built a whole new community with affordable there by now,” he says. In contrast to the latest scheme, he’s thinking low-rise homes – “two-storeys, maybe three at a push” – with gardens and close to shops. “It’s just the right size for a village.”

To have been delivered, the scenario described by Bill would have needed a few big things in the world of London planning and development to have been very, very different. For one, the Greater London Authority would have needed to have been set up with a team of architects and sufficient funds at its disposal to purchase the Silvertown site and take full control of it. For another, there would have had to have been a big change in the law, enabling the Silvertown land to have been bought by the GLA at a price reflecting its existing value at the time of purchase, rather than a projection of what its future worth might be – a very big difference indeed.

The law in question is the Land Compensation Act of 1961, and Bill and Sadek are not alone in wanting it changed. Three years ago, Neil O’Brien MP, now a government minister concerned with “levelling up”, asked for the Act to be reformed “to clarify that local and central government can purchase land at current market values, not inflated or speculative ‘hope’ values” (page eight). And shadow housing secretary Lucy Powell referred to it in her Labour Party conference speech on Sunday, promising a Labour government would “give local authorities new powers to buy and develop land for housing, and revitalise town centres, by reforming arcane compensation rules.”

The argument is that the “hope value” model “forces developers competing for land to guess how many homes the planners will allow,” Bill says. “Then they guess how much the homes will sell for – usually a 10-20 per cent premium to second hand homes in the area. Then they deduct the estimated costs and hoped for profit, leaving a sum they can bid for the land.”

This goes for commercial developers, housing associations and public bodies alike. The latter have powers of compulsory purchase, but these are fraught and complex to apply and the compensation that must be paid to the owner of the land is calculated according to the land’s potential future value – its “hope” value – if developed, rather than what it is worth at the time.

Sadek, concurring with Bill, cites land values as “the big issue” in the capital. Her own company, UK Regeneration, operates outside London because of them – “we couldn’t afford it”. She says “land speculators in London are working on hope value the whole time. And that means piling them high – that’s why you end up with places like Vauxhall-Nine Elms”.

The latter site, which contained no public land, was a speculators’ paradise. “The hope value down there was sky high,” says Bill. Had he been in charge – and he wasn’t, because Boris Johnson was Mayor – he would have insisted on an eight-floor maximum, far more open space and a three-way tenure split as a planning requirement. “Once you say that, the hope value of that land comes down with a crash.”

Mutually reinforcing changes to CPO powers and land loss compensation would, the author duo believe, make a huge difference to the ability of a London Mayor and, for that matter, London local authorities to not only built more homes that are affordable for what Bill calls “ordinary working-class Londoners” but also more to their taste and, for that matter, to that of people generally. In that respect, Bill and Sadek are aligned with Create Streets, the campaign group which argues that high housing densities can be achieved with low-to-medium rise terraces far more pleasingly than by means of tower blocks.

They are also distressed by the small size of so many of the flats built in recent times. “What the pandemic’s shown,” says Sadek, “particularly if you’ve got children, is you don’t want to be living in a flat doing home schooling. What people need – what families need – are homes with gardens. They need big rooms. This is something we do bring out in the book.”

Broken Homes is about the whole country, with London rightly recognised as a special case throughout. That said, many of the book’s arguments – and they are as eloquently made as they are insightful – still apply to the capital.

Bill and Sadek can’t get excited about changes to the planning system, useful though they think some would be. “There is a steadfast belief among all parties that clearing the planning system will unblock a geyser of new homes,” they write, referring to past Labour ministers as well as Tory ones. The current government’s planning reform row-back in the face of a potential voter backlash has them metaphorically rolling their eyes (“repairing the pipework will not produce more water”).

They are cynical about new homes target-setting, not only because the routine failure to meet them – certainly in the capital – renders the entire exercise pointless, but also because they question both the overall (national) number set and its slightest relevance to those in temporary accommodation, on social housing waiting lists, or who aren’t suffering enough to qualify for social housing yet are too poor to buy – the groups for whom the words “housing crisis” have some meaning. And they don’t believe, in any case, that it follows that upping overall housing supply would automatically bring prices down, because price primarily follows demand, which “dances to the tune of the economy”.

They don’t pitch in to volume housebuilders: “They do what they do,” says Sadek “and they’re pretty straightforward about it.” They lay off housing associations too, with their cladding crisis troubles now add to, as Bill notes, “being weighed down with billions in debts since 2010” when the coalition government slashed their grants.

They don’t get worked up about the loosening the Green Belt either, reasoning that, as Sadek puts it, “If you get into a row about the Green Belt you end up just having a row about the Green Belt – it’s a bit like planning reform.” Bill says there’s plenty of room within the M25 as it is, for lots of homes that obey “the old Moroccan rule – no higher than the nearest tree”.

So, does it all boil down to to massive state intervention? “Yes,” says Bill, not missing a beat. “That’s the only solution. For poorer people, nothing else works.”

Buy Peter Bill and Jackie Sadek’s book Broken Homes by way of here.

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Categories: Analysis

1 Comment

  1. Mdc says:

    I feel like the others need to brush up on their economics. First of all, the current value of something (including land) is determined by discounting its future value to today. It’s impossible to decouple them. Not doing that is simply saying to people ‘We are buying your land for half of what you would get for it on the open market. Deal with it.’ Hardly sounds fair to me if your happen to live near the Millennium Mills.

    Secondly, economics 101 says that price is determined by supply and demand. What do the authors base their claim on to completely throw out one side of the equation? It’s a big claim, that goes against all economic theory, so I think it needs a bit more evidence than just a hollow quote.

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