What Strategic Land Investors Need to Know About Water and House Building in the UK

By: Lucent Group   02/23/2015
Keywords: real asset funds

Stormwater and wastewater services are increasingly important for quality development in the British Isles. Climate change affects infrastructure decisions.
Rain is nothing new to England. But the rate at which it falls may be. To both homebuyers and homebuilders – which include urban planners and investors such as those working through – this is becoming an increasingly critical consideration.

Why? Climate change may well be a factor in the floods that inundated parts of the UK in the winter of 2013-2014. A study out of Oxford University reported in The Guardian (April 2014) indicates that “far more frequent severe floods for residents of the crowded region, with what were once extremely rare events [are] now happening much more often than the infrastructure of the region is equipped for.”

This comes at a time when building new homes is critical to the country. More homes mean more roads, more parking lots and more roofs, factors that prevent natural absorption of rainwater. But urban planners, landscape architects, municipalities and builders are responding appropriately. They are demonstrating that communities and homes can be designed to mitigate stormwater and the damage it can cause.

For example, on both a per-home and broader community basis, techniques to channel stormwater toward natural infiltration of water to the aquifer include rain gardens and bioswales. The UK engineering firm HR Wallingford, an environmental hydraulics organisation, has done extensive work with soakaways, trenches and basins that comprise infiltration design. The firm also performs runoff and stormwater storage analyses and builds rainwater-harvesting systems that clients can use to save water for landscaping and other non-potable uses in drier time periods.

These kinds of tools break the 20th century development paradigm that most typically channelled storm water through grey infrastructure, concrete and metal pipes that ushered water away from homes and businesses to natural streams and rivers or to municipal treatment facilities. Experience shows those systems are inadequate in heavy precipitation and with growing populations.

For the development investor, such as those working through real asset fund managers, this can sometimes translate into higher development costs. And sometimes not – every site is unique and occasionally a sustainable water-management system can be cheaper than “grey infrastructure” that is based on traditional pipes. But even when the costs are greater, it can translate into more valuable property and lower property insurance costs over the longer term. Calls to the National Flood Forum (NFF) charity tripled by early 2014, a result of the flooding events of the preceding winter. It was not unusual for a homeowner to see a doubling of his or her premiums (e.g., to £2,000/year) while one small business proprietor reported an annual premium rise from £4,000 to £25,000. A smarter design for new-build communities could help avoid that.

Investors who specifically look at opportunities for home building need to ask questions about how sustainable the development might be. They should also engage an independent financial advisor to get a better sense of where land development might fit their investment risk profile.

Keywords: real asset funds

Other news and updates from Lucent Group


Has Localism Failed? Osborne Gets Tough on Local Planning Authorities

The post-election proposals from the Conservative Government seem to buck the trend of the 2011 Localism Act. Local councils need


Does the UK Tax Regime Distort the Housing Market?

Part of how cities and towns accept new housing is through improvements in nearby infrastructure. But how that is assessed


Detached Home Building is Up in the UK: What are the Implications?

Detached homes are in high demand in Britain by “second stepper” buyers upgrading from their first homes. One step up


CBI on the UK Housing Shortage: It’s Bad for Business

The million-plus homes deficit in Britain is treated like a social issue. It is that but so much more; leading


Building Upward: How the British Feel About High Rise Living

The squeeze is on as the British population continues to increase. London is in a tall building boom, but not


Are Newly-Built Homes in the UK More Sustainable?

Indeed they are. But whether new builds or retrofits, increasing the energy efficiency of homes is beneficial to the UK


What Effect Has the Stamp Duty Overhaul Had on Homebuilding in the UK?

Lowering the “slab stamp tax” was readily welcomed in all quarters – especially young buyers, homebuilders and investors. New building


How Effective Might the Help-To-Buy ISA Be for First Time Buyers?

Younger working adults in the UK struggle to buy homes, largely because a deposit is hard to save. This programme


Does the Conservatives’ 2015 Victory Mean More Houses Will Be Built?

The fear of a mansion tax and general uncertainty preceding the May election stalled house sales and building. Prices have


Lucent Group Announces Planning Award Nominations for Lincolnshire Lakes Development in North Lincol

Lucent Group, a land site assembly specialist, has been shortlisted for two prestigious Planning Awards for their Lincolnshire Lakes development


Lucent Group Secures Planning Approval for Hundreds of New Homes in Workington, Allerdale

Plans for one of the largest housing developments to be built in Workington in recent years have been approved by


Could the Empty Homes in England Fix the Housing Shortage?

There are hundreds of thousands of houses and flats that sit empty in the UK for various reasons. Some might


What UK Land Investors Should Know About Strategic Land Investments

Strategic land stands alone among land investments. It answers the pressing need for home building by increasing land designated for


What are Joint Venture Partnerships?

The collaboration of talent and capital is, arguably, what makes the world go around. JVPs in strategic land development are


The Various Roles in UK Joint Venture Land Investments

The advantages of investing through a joint venture partnership include reducing risk and acquiring the knowledge and skills of other