Monday, 30 July 2012

How much of a premium should developers contribute in Wokingham

You all know am a bit obsessed with corruption.

It may seem like I accusing people at every turn. In fact I am simply making it clear that I feel all honest representatives must accept that they should be open enough so that the corruptable stand out as different. Claiming insult if your integrity is questioned proves nothing.

Fact. Property in Wokingham is high value and in demand. Planning permission on a plot suitable for 20 two bedroom flats is literally worth millions.

But who should those millions go to? A developer or the community?

There are two main ways that the developer is made to give some of those millions back.

1. Section 106 contributions where they fund other works.

2. Affordable housing. Where a proportion of the property is intended to be be sold to the districts registered provider of affordable housing.

It would seem a lot of people are under the impressions that the 'affordable housing' is simply handed over by the developer for free.

With some developers expected to provide 40% affordable housing this would take the lion share of the profit out of a typical development.

But I have yet to find information where the example above is the way things are and have found plenty of examples where the 'affordable homes' are just purchased at something near cost. e.g. 60%.

So if they are paid 60% of the value of the property or rather it's 'cost' then what has the developer contributed to the economy? There was a time when the government had it's own house building teams and the person in charge of the project earning perhaps 10x that of the lowest worker.

I believe planning permission should be sold for it's value and that it is currently sold so cheaply that the profit from just getting planning permission is a vast incentive for lobbying. And when an official has the ability to award vast amounts of money for doing little then the corruptible are drawn to politics and we must differentiate them.

To avoid this a system should be in place that leaves the profit to the developer managing the development well.

The sums are simple.

What the value of the land would be to someone wishing to self build... minus

what the land cost the developer = value of planning permission. (to go to the community)

This should be the figure that the section 106 plus the affordable housing 'cost to the developer' should add up to.

To do this we must know what the affordable housing cost to the developer is. And it is not the end value of the properties sold at 60% which is the kind of impression even decisions makers have at the moment.

It is the 'build cost' minus what we pay them and also minus the proportional original cost of the land.

The next thing to look at is who is the 'Registered Provider' of social housing in Wokingham?

They are able to purchase property at perhaps 60% of the value, sell a percentage of that to a young buyer (perhaps 50%) then rent the rest to them at a competitive rate. 1 and 2%.

I am all for this by the way. I see few other solutions while we work to get salaries up to where property values are and keep property values static though stricter lending and making being a landlord less profitable.

But these Registered providers are sometimes private businesses with chief executives who pay themselves  in excess of 200k

This needs looking into. I would have thought the borough owning the affordable housing stakes would be a fairer system. Yes get a private company to manage the portfolio. But selling properties at 60% of value to a private company with an insensitive of personal wealth will again result in a large incentive for 'lobbying'.

Remember. Before you vote for someone tell them what you want them to do. And make them commit to standing down if they don't follow through.

I've had enough of Tory campaign leaflets saying they will be 'Careful about new developments'. We have been shown it's more marketing than an ideology.

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