From City AM:
It may be more at home ferrying workers across the capital - but now Transport for London (TfL) has announced plans to build homes, as well. In fact, it reckons it can create 10,000 homes in London.
More than 300 acres of land owned by TfL across 75 sites has been put forward for development. The organisation suggests it will create 10m sq ft of development over the next 10 years. Even more encouraging for aspiring home owners: 67 per cent of the sites are in zones one and two.
TfL, one of the London's largest landowners, is currently narrowing down its shortlist of 16 developers for a framework of partners, which can then pitch to develop housing schemes on the sites…
The scheme is part of TfL's plan to generate £3.4bn in revenue over the next 10 years from advertising, sponsorship partnerships and property development, which it will reinvest into updating the transport network.
This is how a corrupt government works - from Venezuela to Thatcher's Right to Buy to today's London - sell off stuff cheap to your friends and family/voters who then sell them back to your best mates, the bankers and landlords/party donors.
If TfL, a government body, just built those 10,000 homes itself, with a clear profit (land/location rent) on each of £20,000 per home per year, it could bank £200 million a year. Over ten years, that's £2 billion. In the next ten years, another £2 bn or £3 bn. And so on.
Considerably more than what they hope to get under current plans, even assuming that most of the £3.4 billion from "advertising, sponsorship partnerships and property development" is the last bit.
Wednesday, 21 October 2015
Selling England by the pound (2)
Subscribe to:
Post Comments (Atom)
13 comments:
So do you know what the deal is?
G, how is that question meant?
Is that a "yes/no" question about by level of awareness, or would you like me to explain in more detail how and to whom the land will be sold, who is taking back handers etc?
@"If TfL, a government body, just built those 10,000 homes itself, with a clear profit (land/location rent) on each of £20,000 per home per year, it could bank £200 million a year. Over ten years, that's £2 billion. In the next ten years, another £2 bn or £3 bn. And so on. "
That is assuming it could so competently. The number of flats which have been knocked down in South London recently suggests that it is harder to do so than it seems.
I am not sure that this is corruption, the current fashion seems to be concentrating on your area of expertise. Is any private company doing what you are suggesting.
See the point about capturing the land value income stream long term, but excepting that I think TfL are right to ' partner' to build out the land. The real implied issue is the fact that TfL along with every other government department I suspect, have got all this land whose utility is not being maximised
I totally follow your logic, however if you gave Tfl £2Bn tomorrow , would they use it to buy a housing estate to rent out , or would they use it to update their network, that would be the counter business case I suspect.
LF, L, obviously. But TfL could hand the land over to a government department that does know about collecting rents for example Crown Estates or a Housing Association and split the proceeds.
Din, yes, but that is not the question.
TfL can choose between flogging off their land cheap or retaining it and getting a much larger stream of income in the future - which it can use for track upgrades year on year ad infinitum. That is the actual choice here.
The choice is not between "£2 bn or a housing estate costing £2 bn". The actual real life choice is between "E2 bn cash or a housing estate worth £4 bn".
"I think TfL are right to ' partner' to build out the land."
What is not clear from the article is whether TfL are going to sell the land or sell leases on the land.
Again, I am reminded that I once heard that BR were (and, by extension, TfL are) forbidden by law from "developing" land as residential landlords, something to do with the old Metropolitan Railway Company Estates Ltd. and their activities in this area.
They can just ask Hong Kong's TfL how they do it...
MW. They could indeed hand it over to another quango or bit of government. But I would suspect that the deal with the developers would be on the basis that TfL provides the land. The developer organises the build and all the ancillary stuff - marketing for example - and the sales revenues are split according to some pre agreed ratio which would ensure that the land price revenue comes back to TfL and the developer gets a profit from his building work. Actually, any 'builder' could do this - it does not need to be a property developer.
Overall I am encouraged by this action by TfL as it gets abandoned land back into circulation - with one major caveat, the opportunity for cronyism may be too tempting to be avoided (which would likely be the same issue if the land was headed to an HA).
L, there are sensible ways of doing it and openly corrupt ways. But not selling it in the first place is the best idea. So by all means give it to a property developer in exchange for 80% of future rental income.
MW. TfL are talking about 'partnering'. This does not imply 'selling'. It's more likely that TfL will provide the land and the builder the, er, buildings. That's how these deals usually work.
MW et al. Mind you if I was TfL I would retain a ground reversion of some kind on the land and enjoy an ongoing income stream...
In other words, we don't really know what is going on here.
Post a Comment