In this article, we look at the potential commercial value that brownfield sites offer for land investors and property developers.
What is a brownfield site?
Brownfield land is an area of land or premises that has been previously used either for residential use or commercial use and has subsequently become vacant, derelict, or contaminated - unlike its opposite, undeveloped or ‘greenfield’ land, which refers to any land that has not been previously developed.
Brownfield sites can often be found in abandoned areas in towns and cities that have been used previously for industrial purposes, and typically require regenerative or decontaminating processes before any new development goes ahead.
Advantages of brownfield sites
From a business perspective, if city or urban planning has been curbed, brownfield developments may be the best option as this stops the loss of local countryside. Developing a disused site repurposes it, bringing it back to life, and giving access to existing facilities such as transportation networks, shops, and lifestyle amenities. Other redundant sites that may be outside urban areas, such as land previously used for military use also benefit from a change of land status, such that it can be used to support the delivery of much needed new housing developments.
From an ecological perspective, many brownfield sites have shown to be more biodiverse than other ‘natural’ sites and can be valuable habitats for bees and other pollinators in urban areas.
What does the Government say?
In general, the Government is backing the use of brownfield investment for land regeneration purposes in a move to repopulate sites that were no longer usable in their current state, and to protect greenspaces.
In a Planning Policy Statement 3 (PPS3) published in November 2006, the Government stated its commitment to achieving a target of 60 % new homes built on brownfield sites, stressing that local authorities should continue to prioritise brownfield land in their plans.
In 2017, the Government further stated (in a Housing White Paper) that, “local authorities should give priority to suitable brownfield land well-served by public transport”, making it compulsory for local planning authorities to publish a list of suitable brownfield sites, and provide estimates of their capacity for housing. This information enabled house builders to establish the viability of each site.
In 2020 the Government introduced a fast-tracked planning process for owners of vacant and redundant freestanding buildings to apply for permission to demolish and rebuild as residential developments. The buildings must be of a footprint of up to 1,000 square metres, up to a maximum height of 18 metres, and include up to 2 storeys higher than the former building. The replacement buildings could be a single or multi-storey.
In 2020 the Government announced plans for a £100m “brownfield land release fund” as part of its affordable housing strategy, and in his October 2021 budget, Chancellor Rishi Sunak earmarked £11.5bn for the construction of up to 180,000 affordable homes, with brownfield sites targeted for development.
The National Brownfield Forum was established by DCLG (now DLUHC) and Defra in 2011 was established to oversee the implementation of the National Brownfield Strategy and report annually on its progress. On their website, they state: “the aim of the Forum is to promote the sustainable use of land. It brings together private and public sector organisations to take an open and forward-looking strategic overview of current and future land use issues including:
- taking into consideration the full range of social, economic and environmental factors in informing the development and implementation of Government policy
- supporting the development, dissemination and adoption of best practice by regulators, practitioners and problem-owners
- identifying key challenges as they arise and seeking appropriate resolutions
- openly reporting on progress and outcomes.
How much land is ‘brownfield’ in the UK?
The 2020 CPRE's Annual State of Brownfield Report says that “in England, there is suitable brownfield land available for 1.3 million homes across over 21,000 sites and around 25,000 hectares.” However, businesses and developers are often put off by the idea of developing on brownfield sites because of the expense of clearing a contaminated site and the limitations on building growth. But this should not be a major concern for UK land investors and developers as, with the right professional guidance and rejuvenation methods, their investment can be protected, and development can take place.
Tax relief help for land investors
Originally Land Remediation Relief (LRR) was designed to encourage investment in land that was previously derelict or contaminated so that it can be made purposeful again. It is a generous tax incentive intended to promote the remediation and development of land and buildings affected by Japanese knotweed or chemical contaminants (such as Asbestos). It covers expenditure on remediation services and can include some staffing expenditure, such as a dedicated Project Manager’s time on the remediation project.
LRR can be claimed by property owners, investors and developers dealing with Japanese knotweed or contaminated grounds. They must be the owner and must be a Limited company.
- Owner occupier or investor claim: 150%
- Developer claim: 50%
However, many property owners are either not aware of the scheme, or not clear on the qualifying criteria for making a claim, and could be missing out on this valuable cash-back incentive! Given that claims can be made that continue year on year for ongoing treatments, and can be claimed retrospectively for up to 3 years LRR is NOT to be ignored! We can provide you with the best and most up to date industry information and advice on whether you can claim, and if so how to kick-start the process. Get in touch via firstname.lastname@example.org