KEY LEARNING POINTS
- Councils should seek to identify suitable parcels of land that can be reserved for group projects through their Local Plans and other programmes. If local people see there are real opportunities, on real sites, they will form viable groups, prepare creative proposals and deliver exemplar projects
- Consider creating a small in-house team or network of experts to help facilitate new projects
- Be clear about the process that will be followed when land is identified for group projects, particularly on council owned land. Learn from established practice and ensure your processes are simple and transparent
Over the last 20 years councils across continental Europe have gained extensive experience of supporting group or collective private homebuilding projects, and they have developed streamlined processes that now consistently deliver thousands of homes a year. This experience can inform the way councils in the UK may want to support similar projects here.
This Briefing Note highlights good practice from elsewhere in Europe and how this could be applied in the UK. It also briefly describes what other actions councils could take to help facilitate group projects.
This is one of many Briefing Notes that explain resourcing, planning, land, finance, demand, marketing, consumer support and various technical issues. To see the full range of guidance click here.
For the purposes of this Toolkit we have made the following definitions:
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This Briefing Note will be revised when the Regulations to support the commencement of the Self-build and Custom Housebuilding Act 2015 and the Government’s Right to Build policy are finalised.
CURRENT PRACTICE IN THE UK
The UK has a long history of group or collective private homebuilding projects – for example, the world’s first garden city at Letchworth (which began in 1903) involved setting up the equivalent of a large community land trust so the residents of Letchworth could have a real say in the management of the land and the type of homes that were built.
These days most projects are organised by collectives of like-minded individuals who want to create their own affordably priced homes to suit their family needs. In some cases a housing association, landowner or developer may also instigate the formation of a group and manage the process. There are a wide range of group models, from a number of private homeowners collectively commissioning a builder to construct their homes, to cohousing developments, sweat equity schemes and social rented projects. Some groups acquire land so they can directly self-build their homes; others set up a community land trust to help facilitate their project.
Groups often form because the members cannot afford to own a home locally; they are attracted by the potential cost savings that come with building collectively. Other groups come together because they are keen to create a new form of sustainable or ethical community.
Despite these benefits few group projects have, to date, been built in the UK compared to other countries. This is because it is extremely difficult for groups to find land, and secure planning permission and finance for what they want to build. They also don’t get much guidance or help, and councils have not developed a proven process for supporting them.
Surveys suggest that one in four potential UK private homebuilders like the idea of building as part of a group.
However, many potential projects don’t proceed because groups find it challenging to organise themselves, they lack knowledge, support and project management skills and they find the building process risky, complicated and frustrating. Many also find it hard to secure funding. As a result most projects don’t proceed past the initial concept stage.
This situation is unlikely to change unless effective support structures are developed for the UK market.
Germany is arguably the most advanced country when it comes to supporting group projects. It has a long tradition of housing co-operatives, and these have played an increasingly important role in supporting affordable, well-designed and sustainable housing delivery, especially in urban areas.
Cities like Berlin, Hamburg, Freiburg and Tübingen have led the way and others, such as Munich, Stuttgart and Cologne, are now also very active too. The successful approach developed in Germany has quickly spread to other countries such as the Netherlands, Austria, France, Belgium and Denmark.
Most European countries see the formation and support of building groups as the most practical way of successfully delivering affordable private homebuilding opportunities in urban areas. Many also believe group projects can act as catalysts to improve development quality. Groups can also facilitate greater housing diversity and foster stronger community cohesion.
When councils across Europe initially engaged with building groups they found it challenging – groups often came together to try to acquire land, they then struggled to establish the best way to legally constitute themselves, they found it difficult to get finance to fund their projects, and they often disbanded after months or years of frustration. In time councils addressed these challenges by adopting a fundamentally different approach to engaging with groups.
Councils in southern Germany were the first to pilot these new approaches. They decided to allocate parcels of land specifically for community-led housing initiatives (especially on larger council owned regeneration sites) and they established a clear and transparent process to enable groups to bid for the land.
The parcels of land are sold at a fixed price (usually the market value) via a clear tendering process. This is supported by a Brief that is prepared by the council or an associated agency. The Briefs are succinct documents and typically set out clear guidelines on how the site should be developed and the criteria for how bids will be assessed.
For example Freiburg City Council’s Brief (‘Konzeptvergabe’) for the Gutleutmatten site - see our detailed case study Gutleutmatten, Freiburg - includes the following sections: -
- Overview of site
- Development constraints
- Expected composition and form of development based on the planning policies and regulations, including expected treatment of public space, social mix, location and design of parking areas and the energy efficiency expectations of the building
- Criteria for assessment of bids and points awarded for meeting these
- Contractual requirements
- Simple Q&A
- Annexes showing extracts from the development plan, a site layout plan identifying the available parcels, application forms and detailed information about each parcel, including prices.
Groups then submit proposals in response to the Brief, and they are assessed accordingly. In almost all cases groups are selected on the concept of their proposal - not the price. For example, selection could be based on a mixture of the group’s financial viability, its social mix and how the project will build a sense of community or contributes to the wider area. Price is not a consideration as the land is usually sold at a fixed price, based on current land values.
One city where price has been a factor is Hamburg where, on the HafenCity development, selection is based on a 70:30 best consideration principle (70 per cent concept and 30 per cent price) and proposals below a set price per sq m gross floor area are not accepted.
Some councils interview applicants to fully understand their proposal and judge how the group is structured. This is similar to an architectural competition, except that selection is based on the overall concept of the project, rather than the quality of the proposed design. Indeed, many Briefs don't require designs to be submitted, as councils don't want to burden groups with architectural costs prior to selection.
Different councils set different selection criteria. For example Cologne requires groups to demonstrate how they will allocate at least 15 per cent of the proposed gross floorspace for communal, social and complementary cultural activities, and Hamburg now asks groups to include a three way mix of tenures: social housing, financed/rented, and owner occupied.
Fit out your Plot Shop so that it matches the quality and professionalism of the marketing suites used by large housebuilders or local property developers
FORMING A TEAM TO MANAGE GROUP PROJECTS
Councils in larger urban areas often set up a small team to manage the group facilitation process across a range of different sites. In many cases the team forms part of a council’s estates management department.
The team undertakes the following tasks: -
- Identifying land opportunities in the council’s portfolio of sites or by engaging with local landowners; and/or encouraging collective projects via development plan allocations
- Preparing Briefs and any associated tender documents to guide the disposal process when land is sold by the council
- Helping groups to form by providing information and sometimes keeping a register of groups that want to initiate a project
- Supporting groups as they prepare their proposals so that they can submit a sound bid. This may include advice on planning applications once a group’s bid has been selected
Good examples include: -
Hamburg – the city’s Agency for Building Groups (‘Agentur für Baugemeinschaften’) is the council’s central contact point for groups who want to progress a collective project. The Agency is based in the Department for Urban Development and Environment and has three staff. The council has supported building groups for more than 20 years and it created the Agency in 2003 to centralise the way it engages with collectives across the city. Groups registered with the council are listed on its website with a short description and details of their objectives; information is regularly updated by the team. Many of the 35 groups that are currently listed also use this platform to seek additional members.
The team has so far helped around 200 groups to form and around half of these have now built their projects (or are currently in the construction phase). On average the team has delivered around 150 new homes a year, though more recently the rate has gone up as several large regeneration opportunities have emerged, and nearly 700 homes are currently on site. The city’s target is to deliver 20 per cent of all new homes via group projects – which would be roughly 1,200 homes a year.
Berlin – the city council established the Network Agency for Generational Living (‘Netzwerkagentur GenerationenWohnen’) in 2008. The Agency has a team of five staff with an annual budget of around €200,000. During the first six years it helped deliver 107 housing projects (involving 213 different groups). Collectively more than 1,000 homes have been built to date. In 2014 the homes initiated by groups accounted for 11 per cent of all new housing in the city. In the last year the team’s focus has changed, as the city now wants to encourage more affordable rented accommodation. The team is therefore working with many of the main housing associations/co-operatives, linking them to groups whose members are eligible for more affordable properties. The first six projects, for around 80 affordable homes, are due to start on site in 2016.
Freiburg – the city sets up a dedicated project team for each major redevelopment site, drawn from the Department for Estate Management and Housing. Over the last 20 years it has delivered two significant redevelopment projects - Vauban (roughly 2,000 new group-built homes) and Rieselfeld (about 5,000 new homes). The city’s latest project at Gutleutmatten is currently on site. Thirteen parcels of land have been allocated for group projects and another 12 have been made available for open competition. Overall this should deliver up to 530 new homes for about 1200 local people (many of them on low incomes). Two full time staff are involved in the team. See Case Study Gutleutmatten for further information.
Amsterdam – in the past most of Amsterdam’s new private homebuilding opportunities have been provided on small, individual terraced plots. More recently a number of larger parcels of land have been reserved for group-built apartment blocks. The council has established a dedicated team (‘Team Zelfbouw’) that consists of five staff whose role is to identify suitable parcels of land (including regeneration opportunities), promote opportunities to the public, and engage across the council to enable more projects to come forward. Between 2011 and 2014 the team facilitated about 350 new homes a year.
Strasbourg – the approach developed in Germany and the Netherlands has now been adopted in France too, with Strasbourg leading the way. The council has launched an urban project facilitation initiative (‘Service Projets urbains’). The initiative is staffed by one senior officer, who has overseen the selection of groups for 17 infill sites across the city. Many of the plots are small (suitable for two to five households). Overall the initiative should deliver about 120 homes.
Set up an in-house team
Consider creating a small in-house team, or a network of experts, to facilitate group projects. In Europe these teams deliver significant group projects annually
A PROVEN STEP-BY-STEP PROCESS TO FACILITATE GROUP PROJECTS
While practices across Europe vary from council to council most follow a similar process when facilitating group projects. This approach would help more group projects succeed in the UK. The key steps are set out below:
Step 1 – Only deal with groups that have been properly constituted and are robust
Council teams in Europe have learnt that it is very difficult to meaningfully engage with individuals, or unconstituted groups that are still unclear about what they want to build. It can also be challenging if the group has no real understanding of how it might secure finance to fund its project. Consequently in Europe most councils will only sell land to groups that are of a suitable size and properly constituted. They also have to be financially viable and able to meet the expectations set out in the Brief.
The majority of successful groups have between five and 20 households. Where groups are larger decision-making can be challenging. Smaller groups are seen as being able to deliver a project more quickly, as they can organise themselves and secure the necessary finance faster (most councils say a minimum of three households are needed). Some local authorities identify smaller parcels of land to specifically attract smaller groups.
Councils do not usually require groups to be fully formed (ie. have all their members on board) before they are willing to engage, as it is quite common for groups to recruit new members during the process.
Some councils require groups to have an elected representative to engage with, or to be supported by a ‘process advisor’ (a professional consultant that helps co-ordinate and manage a group). This is sometimes a requirement before any contract of sale of land is agreed – see Briefing Note Support and training for individuals.
A few councils, such as Hamburg, encourage groups to register before they market land opportunities to them, as this can help them establish the level of demand. The majority of councils simply rely on strong marketing and a clear and streamlined process to attract the right submissions. Appendix 1 shows a typical registration form for groups.
Step 2 – Offer an introductory briefing to newly-formed groups
Typically a council will spend one to two hours with each new group, explaining what they can (and can’t) do to help them, the processes involved in bidding for land and how bids are evaluated. They may also be able to provide advice on other landowners to engage with. This induction session helps groups to quickly get up to speed and it manages expectations. It also helps the council get a feeling for how robust the group is and the strength of its membership. In some cases councils also host workshops or information days for groups, or they attend meetings with local community or neighbourhood groups.
Step 3 – Identify land that will be ‘reserved’ for groups
This can be challenging, as some councils may not have land in public ownership. Where there is scope to sell land, it is important to work closely with colleagues across the council to identify appropriate opportunities. This will need to involve careful consideration of the potential value of the receipt, and how this aligns with the council’s wider corporate objectives and its duties under legislation. Often this will be a balance between best consideration and best value.
Some local authorities reserve parcels of land exclusively for group projects, usually as part of a larger council-led site development or regeneration project. Others reserve it for a time-limited period, so if no viable group comes forward it can be sold to developers in the normal way. Almost all councils establish council resolutions that commit to reserve suitable land for group projects, so that officers have a clear mandate. See Briefing Note Political leadership, vision & culture.
Where councils don’t have any of their own land they can identify opportunities as part of their engagement with landowners (particularly housing associations); this is especially appropriate where there is an established demand. Landowners are often keen to work with a group as all its members can effectively become customers.
In some cases councils also encourage group projects by introducing local policies that promote housing mix.
Step 4 – Agree a fixed price for the land and prepare a Brief
Most councils sell land at a fixed price and at the market value (either for the site as a whole, or a value per sq m of proposed floorspace). In some cases (for example land that is aimed at providing homes for people on lower incomes) the price can be discounted, or cross-subsidised by market housing. In Europe all the councils believe groups need to know the price of the land in advance, so they can work out if they can afford it. Attempts to assess bids based on concept and highest price have not been successful.
Once the price has been agreed by council Members, officers prepare a development concept to meet local objectives and policies. This usually informs the preparation of a clear Brief and tender document. This typically covers: -
- Site location, area and boundaries
- Indicative layout plan – for larger sites this will usually be a masterplan
- Parcels of land that are reserved for groups and their sale price
- Expected form and mix of development – for example maximum building heights, densities, materials, parking provision, the approximate number of homes, their type/sizes, expected tenure (for example social rent, shared ownership or owner occupation). These specifications are normally high level to avoid discouraging groups
- Application forms with the criteria that will be used to evaluate bids
- Limited Q&A
Tender documents normally allow groups to submit proposals for more than one parcel of land, subject to the group meeting the selection criteria for that parcel.
All councils set out the selection criteria very clearly. Some ‘score’ or ‘weight’ the information provided in the bids, others prefer to have a more flexible approach and judge bids on their merits and the information provided.
Briefs are usually succinct and are 8-10 pages long (excluding annexes). See the examples in Appendix 2.
Step 5 – Publish and promote the Brief and give groups 3-6 months to prepare bids
Councils promote the Brief widely through the local media and their websites. They will also distribute the Briefs to the groups they may already have contact with.
Groups are not required to submit fully worked-up project proposals with detailed architectural drawings and cost estimates – most simply ask for a written description of the concept the group is seeking to deliver and its objectives, some preliminary drawings of the layout, early elevations and the proposed design of any amenity space. Submissions also usually include a schedule of the mix and size of homes, and a ‘development appraisal’ in Excel format that demonstrates the business case. Feedback from councils in Europe has concluded that previous requirements for bids to present fully developed designs and costings led to significant design fees, caused in part by the strong competition for land and the need for groups to present the best possible design concepts. Some applicants described the bidding process as a frustrating ‘beauty parade’.
About one month after the Brief has been published councils usually arrange an open meeting for interested groups to attend. This gives the council the opportunity to set out the bidding process, explain the Brief, manage expectations and respond to any questions.
Groups are usually asked to submit their bids using a standard format (see Appendix 3). This makes it easier to assess them. Most councils also require groups to commission an architect and to have an experienced project manager or process advisor on board when they bid.
As the price of the land has been fixed, bids are assessed on the quality of the concept, and the robustness of the group in terms of its composition, financial standing and the skills of its proposed project manager or process advisor. Due diligence and creditworthiness are robustly assessed and most councils require groups to submit details of their financial status, their proposed contractor and any guarantor.
Step 6 – Select the most appropriate group and ensure they get all their approvals in place within a specified time period
Most councils assemble a jury or selection panel (with building experts, representatives from the local community and local politicians) to decide who will secure each parcel of land. They will also seek a formal sign-off of any land disposals from the relevant council committee.
Once selected most councils offer the successful group an ‘exclusivity contract’ or option to purchase the land after a specified period of time when all the consents have been obtained and full finance is in place. Groups are sometimes given a short window of time to agree the option or contract (in Cologne for example, groups are given three weeks from notification that their bid has been successful). At this point groups are also typically required to pay a reservation fee - in some cases this can be a flat fee (for example €1,500 in Cologne) or, more commonly, 1 per cent of the land price. This acts as a non-returnable deposit, but is deducted from the land price provided the sale proceeds.
Once the site has been reserved and an option or exclusivity contract has been signed, groups have between six to 12 months to prepare a detailed design, get all their finances in place, and secure any planning or other approvals that are required. Some councils specify a date when detailed planning permission must be in place, and some also charge 2 per cent of the end value of the completed project to cover legal and administration costs (this covers in house costs and helps fund the project team).
During the detailed development period the group may also have to pay the fees of its project manager/process advisor, finance arrangement fees and other professional costs (for example architects, lawyers etc).
On conclusion of the selection process councils normally provide feedback to those groups that were unsuccessful, so they can submit a more viable proposal next time. Most council teams admit that this is one of the toughest elements of their work.
Step 7 – The group takes ownership of the land and starts construction
Land transfer only follows once all the approvals are in place, at which point full payment for the land is required. Construction can then begin. Councils typically set completion deadlines (commonly 24 -36 months).
Some groups do experience challenges along the way. For example members of groups can drop out, unforeseen technical issues can arise, and finance can be delayed. However the experience in Europe suggests that very few groups collapse once they have acquired a site. In Hamburg, for example, only one of 94 groups has been unable to build to date.
Don’t ask for full drawings
Don’t ask bids to include full architectural drawings and designs. This can drive up bidding costs and reduce the number of bids
Be transparent about the process
Be clear about the process used for offering land to groups. Don't re-invent the wheel - adapt the proven steps used elsewhere and ensure the process is simple and transparent
ADAPTING THE PROCESS TO LOCAL CIRCUMSTANCES
Practices continue to evolve and councils are learning from each other. Many councils in the Netherlands, for example, have broadly adopted the above model, though in some areas they have developed a slightly different view, especially on sites for terraced homes. Here they feel that it can delay the development process if you have to wait for groups to form up to prepare a submission.
In these situations councils believe it is simpler and quicker to just sell individual terraced plots to households, and then (after all the plots in a row have been bought) they encourage the purchasers to come together to form a group to jointly manage the build phase. They point out to the purchasers that it will save them money if – for example – they jointly commission a contractor to build a common foundation for all the homes. This approach has been used for some of the terraced homes in the Dutch city of Almere, and our case studies on Nieuwe Leyden, Leiden and Isabellaland, The Hague explain how it works in more detail.
Land for terraced homes
If the land you have is best suited to a terraced solution consider selling it as individual plots, and then getting the purchasers to from a group. This can simplify the process and speed up the rate of delivery
WHAT MORE CAN COUNCILS DO TO SUPPORT GROUPS?
Across Europe there is a culture of helping and supporting groups that are keen to build. UK councils could do any (or all) of the following: -
- Work collaboratively across the planning, housing, legal and estates teams to identify suitable parcels of land that could be sold to building groups at market value (before being sold on the open market)
- Where councils don’t have land they could reserve for group projects they can build links with developers and housing associations and encourage them to identify potential sites that could be offered to groups, before being sold on the open market
- Promote the concept of group-led development - ideally as part of your local demand Register or when launching other initiatives. If local people understand the concept, and can see there may be real land opportunities, they will respond
- Invite groups to enrol on the local demand Register, and create an accessible list of local groups on the council website. This should include details of the objectives and size of the group, whether it is fully formed or is seeking additional members, and contact details. Councils may want to prepare an application form to help gather the required information. Groups on the register could then be given first preference when land is being made available. It will also provide a platform for groups to promote themselves and, where required, collaborate to bid for opportunities
- Arrange introductions for groups to social housing providers so, when appropriate, they can partner with them to jointly bid for opportunities.
- Build up a network of good project managers and/or potential ‘process advisors’ that can work with or coach groups
- Host workshops with project managers, finance providers, architects and others who specialise in assisting groups, so people can share best practice
- Communicate regularly with the groups in your area and be available to respond to questions, perhaps at identified times each month or via a surgery where groups can discuss their early ideas
Build political support
Develop political backing and create a culture of supporting groups. Recognise that parcels of land are vital; groups will form up if you are able provide real land opportunities for them to pitch for
The following Case Studies offer useful insight into the issues discussed in this Briefing Note:
The NaCSBA Research & Development Programme is funded by the Nationwide Foundation and aims to promote the self-build and custom build sector as an affordable route into housing for a greater number of people in the UK.
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