Paul talks us through his early career in housebuilding, his plans for The Strategic Land Group this year and what prompted the land promoter’s new Proudly Independent campaign.
I really enjoyed my time in house building. Seeing the process of actually building new homes and being able to influence schemes from their inception gave me a great understanding of the industry. But I always liked the land and planning parts of the business best. Whilst house builders do a lot of that too, their focus – quite rightly – is on building and selling homes. That limits their appetite for risk, and their desire to work on more complicated projects. You’re also restricted to sites that work for the business model of the particular developer you happen to work for.
Moving into land promotion meant I could work on more challenging projects and deal with a wider range of developers – essentially focusing on my favourite parts of my job in house building and being able to do more of it! It has also enabled me to move into other sectors, like solar farm and battery storage projects.
We work with landowners to deliver planning permission on their sites at our cost and risk. Our fee is a share of the value of the site once it is sold, so if we don’t succeed, it doesn’t cost the landowner anything. That allows landowners to benefit from our expertise and capital to maximise the value of their site, but without having to worry about the costs if things go wrong.
Founded almost 15 years ago, we operate across England on sites ranging from just 4 or 5 acres up to several hundred acres – or even more. Most of our projects are housing sites, but we also work on renewable energy schemes – like solar farms and battery storage sites – and commercial development projects too.
I think there are two main differences.
First is the high quality, personal service that we offer. We only agree to work with landowners when we really believe in their site – we don’t just chase a large number of sites and hope that enough of them will come off to make it worthwhile. By limiting the number of projects we will take on in that way, we’re able to give each more care and attention, increasing the chance that it will succeed.
Second is the fact that we’re independent. We’re not owned by a house builder or a private equity backer – we’re owned by eight individuals who have no intention of selling the business. That’s really important for landowners – strategic land projects take a number of years to deliver, so it gives them the guarantee that the company they agree to work with on day one will be the same company at the end.
There is no doubt we’re likely to see some volatility in house prices in the near future. The longer-term prospects for the market, though, are still very good.
There is a chronic shortage of homes in England – if we had the same number of homes per capita as France, we would have 6 million more of them! The shortage of development land means house builders will always be interested in buying what is available.
The timescales involved in delivering strategic land projects – they take several years – means we don’t worry too much about what might be changing in the short-term.
2022 has seen a lot of change in the land promotion industry. A number of our competitors have been bought out – either by house builders keen to secure their pipeline of land, or private equity companies wanting to expand businesses before ultimately selling them to a house builder.
That activity has been driven by the shortage of sites with planning permission – the number of new homes granted planning consent fell by 12% over the last year. House builders need a constant supply of land for them to build on, and given that shortage it makes sense for them to buy land promoters and secure the land earlier.
The continuing confusion around the government’s proposed reforms to the planning system, combined with the “anti-development” nature of some of their more recent announcements, suggests the land supply isn’t going to improve any time soon. That all points to the possibility of more land promotion companies being sold in the coming months.
The idea sprung out of several conversations with agents and other professional advisors who act for landowners. They explained some of the problems their clients had experienced when they had agreed to work with a land promoter that had subsequently been sold to a developer.
Land promoters deliver shovel-ready sites to the market and then widely market them, encouraging developers to bid competitively against each other, before selling for the highest price. That means the interests of the landowner and their promotion partner are aligned – to secure the best value. However, if the land promoter also builds homes, there is an obvious conflict of interest – the cheaper the land, the better for the developer. How can the landowner be sure the site really is being properly marketed? And while a land promoter might be independent when you agree to work with them, how do you know they still will be when it comes to selling the site? Questions like these kept coming up in our conversations with landowners and their advisors.
We’re in a unique position though because we can categorically say we aren’t for sale and never will be. To prove it, we’ll put a clause in our promotion agreement with the landowner allowing them to walk away if the company ever was sold – it puts them in complete control.
I’m excited for what the New Year has in store for The Strategic Land Group. We’re in a really strong position as a business with room to grow further – and the funds available to do so. But, despite that, we need to keep our focus on doing what we’re good at too – which is delivering a high-quality, personal service to the landowners who put their trust in us.
