Cleaning up

Developers will happily take the former hospital sites, car parks and redundant office blocks that make up much of the brownfield land pipeline. But alongside those are the extreme brownfield sites, the land that few will take on in their raw state. They are the chemical plants, textile works and sites with seemingly intractable land and planning issues that often remain undeveloped unless or until the public sector intervenes.

But an awkward squad of specialists are making a virtue of taking on the risks, overcoming the problems, and then selling on the land for development. Some of the names operating in this sector are known for the development and investment businesses that they run in tandem with their land activities, while others are pure land specialists. Names in this rapidly growing sector of the development industry include: Cofton, Cadenza, Harrow Estates, Goldcrest Homes, Durkan, and others. Former Linden Homes chief executive Philip Davies is considering land as one of his future business options.

If Davies decides to go into the business, he will be following the example set by one of housebuilding’s best known names. Former Redrow chairman and founder Steve Morgan is chairman of Harrow Estates. Harrow is a long-standing player in the market, and operates in the roles of master developer and investor. Among the company’s activities it is applying its understanding of brownfield risks to provide funding for developers working on contaminated sites in the USA where conventional funders fear to tread.

Chief executive Mike Riding says government policy has driven the brownfield market: “I started looking at this land prior to PPG3, but now everybody is clamouring for brownfield sites. But at the same time, the sites are getting technically more challenging because of the constraints.”

One concern within this sector is environmental liability. No chemical works owner wants one of its former sites to be found to be an environmental hazard a decade after it has been redeveloped as a housing estate. Traditionally, a safeguard has been provided through an insurance policy. That may not be enough in the future, cautions Riding. “Insurance policies have a shelf life and a cost. They have not been tested in or out of court, so companies are saying why bother with them.” Instead, Harrow is now sometimes being asked to provide a bond that pays to rectify any problem that could arise. Riding adds: “The key issue is to demonstrate that the former landowner has been a good housekeeper and protect them from adverse publicity in the future. A bond allows them to prove there is a pot of money to deal with a problem. They want a cast iron guarantee that nothing will come back to haunt them.”