By the time you read this blog, the outcome of the latest MPC meeting will have been announced, and the wider press will be engulfed in a flurry of speculation about how the markets will react. Even the most battle-hardened of economic pundits will tell you any major monetary policy announcement can be determined as good, bad or indifferent by the market. The contrasting perceptions of steadfastness and indecision make uneasy bedfellows, so we have decided to swerve all this popular narrative and cut straight to the Greybelt, a topic we can assure you is infinitely more interesting than its unfortunate name. Potentially being widely underreported, the debate over the "Greybelt" could ultimately be a key election battleground and play a vital role during the housing crisis and the performance of SME UK property developers over the next five years. We shall explain.
The concept of a "Greybelt" is a bit of a misnomer; it doesn't exist, albeit it references to areas of the Greenbelt that perhaps should be utilised potentially for housing due to elements of it previously having been developed, alongside the land banking of brownfield sites, there will be significant political pressure in the coming months and years to confront councils and change the way that decisions are made. Knight Frank has reportedly listed 11,000 previously developed sites within the Greenbelt that could be repurposed to produce 200,000 homes. The opening up of available land will have a quantifiable effect on land acquisition as it will flatten out price inflation and open opportunities for fledgling home builders, the types of enterprises heavily supported by the alternative lending market; so what's the other side of the argument with this?
The CPRE, or the Countryside Charity London, has recently spoken out to challenge the notion that any elements of the Greenbelt are worthless scrubland and state that the real issue in London has been town planning allowing for a considerable number of car parks and underused urban sites to be built. They can be seen from satellite imagery these are largely empty most of the time. They also touch on the interesting point that capitalism follows wherever there is change and opportunity. As the notion of Greenbelt development begins to solidify, speculators, if not already, may start to landbank potential areas currently prohibited for development, driving up prices before things even come to market. Twenty years ago, if people were discussing an opportunity to buy up protected countryside to build on, the idea wouldn't be taken seriously; now, suddenly, it looks like a very credible yet perhaps slightly cynical opportunity.
For those unaware, land banking refers to acquiring large plots of land without immediate construction plans, often with the intent to hold and sell at a profit in the future. This speculative strategy has drawn criticism as it can lead to underutilisation of valuable land, exacerbating housing shortages. Critics argue that it contributes to inflated property prices, hinders affordable housing initiatives, and limits community development. Additionally, it may foster speculative bubbles as investors prioritise land appreciation over addressing the pressing housing needs. This practice is detrimental to sustainable and equitable urban development.
So, how will this play out in the format of a debate? We looked at some findings published by Stack Data Strategy, which provides data-driven advice on public opinion on such matters, to unpack two critical debate points.
Regarding the biodiversity argument, a substantial portion of Green Belt land comprises agricultural areas inaccessible to the public and possessing limited biodiversity value, as the Green Belt is reserved to curtail urban sprawl. Strategic development within certain sections of the Green Belt has the potential to render more green spaces accessible to the public and augment biodiversity, so it could be counterproductive to ring-fence it forever. The second point is the economic growth argument.
Approximately 47% of the United Kingdom's wealth emanates from merely ten cities. Scholarly investigations indicate that the Green Belt surrounding these urban centres significantly constrains their growth prospects, consequently limiting their capacity to generate additional resources for investment in public services or tax reduction. These things would have a substantial positive social impact if managed correctly.
So, to summarise here, rather than come down on one side of the fence, we are content to lay out both arguments, in the understanding that this issue will have a significant impact on our client's businesses and the broader market and expect it to be debated heavily for a long time to come.
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