Developers aim to use 1,200 acres of green belt

Investment property news: FINANCIAL TIMES

Developers want the government to release 1,200 acres of green belt land so that they can fund and build a town of 14,000 new homes in the heart of the Thames Gateway growth area.

Thamesgate, the consortium that includes the housebuilder Bellway Homes, the developer Colonnade and architects Allies and Morrison, has secured an option to buy 2,000 acres from 68 landowners in East Tilbury and Linford in south Essex, 60 per cent of which is in the green belt. It is offering to spend up to Pounds 1bn on the scheme, depending on the amount of affordable housing provided.

The scheme would be the biggest of its kind on Thames Gateway, the 40-mile corridor east of London designated by the government as a growth area to help ease a chronic housing shortage in London and the south-east. John Prescott, deputy prime minister, wants 120,000 homes built along the Thames Gateway by 2016, 80 per cent of them on brownfield land.

Unveiling its plans this week to a largely hostile reaction from residents, the consortium said the scheme fitted the government's criteria for sustainable development, and would represent "an easy win" in the task of regenerating Thames Gateway. However, residents are concerned it will destroy the local character of East Tilbury and Linford.

Housebuilders have frequently expressed frustration at the slow pace of progress in the Thames Gateway, blaming a drawn-out planning system and the reluctance of ministers to commit to the necessary infrastructure costs to support new communities.

John Slaughter of the Housebuilders Federation said: "These brownfield costs are extra issues from the developer's point of view. If we haven't got the infrastructure funding in place to go with that, we may have trouble generating value for the development."

The Office of the Deputy Prime Minister denied that plans for development in the Thames Gateway were moving slowly.

But it conceded that a lack of infrastructure had been a problem with its flagship Barking Reach project, a separate development of 11,000 homes. "We will see that more infrastructure investment is going to be required over time," said the ODPM.

Because of those pressures, an offer such as Thamesgate's to pay for and build the schools, hospitals, link roads, crossings, train station upgrades, utility supplies and sub-surface power lines may prove tempting.

"We don't need any form of government funding. We can privately fund it from the rollback of the green belt," said Alistair Watson, managing director of Thamesgate.

Thamesgate's Spurchase options would enable them to buy the land at the going price for agricultural land, about Pounds 2,500 an acre. Once planning permission was secured, the vastly increased value of the land - up to Pounds 1.25m an acre - would enable Thamesgate to invest hundreds of millions in infrastructure, and provide a return for landowners and consortium members.

The Campaign to Protect Rural England believes there has been a surge of speculative sales of green belt land since Mr Prescott's housing growth strategy took shape in his Sustainable Communities Plan at the beginning of 2003.

The 50-year-old green belt comprises 1.7m hectares in England, or 13 per cent of the land area, including 600,000 hectares in London and the south-east. But the CPRE said the demand for more housing was leading to green belt areas being reviewed in the east and the south-east.

"There is a great fear that we are seeing a weakening of the green belt policy and a loss of important green belt land in an unco-ordinated way in order to accommodate growth aspirations," said Neil Sinden of the CPRE.

Mr Slaughter said the Thamesgate proposal threw down a gauntlet to the government. But it is not the threat to the green belt that might halt the development. ODPM officials are protective of their Thames Gateway sustainability policy.

"We don't just grab early wins," said one. "It's about maximising the use of brownfield land and making towns and centres grow gradually."

- 26 June 2005