What Is a Brownfield Site? And Is Redeveloping a More Sustainable Option?
Written on 15 December 2021 by
What Is a Brownfield Site?
A brownfield site or brownfield land means an area of land that was previously developed and is no longer in use. They’re often derelict and can sometimes be contaminated.
Building on Brownfield Sites – Pros and Cons
Below are some of the pros and cons of brownfield redevelopment.
- They’re cheaper as there’s often existing infrastructure in place - i.e. roads and drainage
- You’re more likely to get planning permission
- It’s arguably a more sustainable way to develop than building on undeveloped land
- Most brownfield sites are already often in a city so you will be helping to limit city expansion into green areas
- They can be expensive to redevelop
- You’ll need expertise on how to develop them
- Getting a mortgage can be complicated
- There are restrictions on what to build – it's often limited by the land
- There may be a space restriction – you may not be able to add gardens, etc. As this won’t be considered in the land’s original usage
Could Redeveloping Brownfield Sites Be a More Sustainable Option?
For many developers, brownfield sites could be the answer to the UK’s housing crisis. Developers have wanted the Government to acknowledge the potential benefits from developing these areas in order to meet new build housing targets.
The Government have current plans to invest £1.8bn to 160,000 new homes on 15 hectares of currently dormant land. This has been acknowledged as a start but more can be done.
Estimates from the Ministry of Housing, Communities and Local Government suggest there is 36,700 hectares of brownfield land across England, which is equivalent to over 51 million square metres. Sirius calculated this is enough for 1.3 million homes, assuming the average home requires a plot of about 275 square metres, which means building on this brownfield land could create £487bn worth of property across England and more than 8 times the volume promised by the Government.
Can You Get a Mortgage on a Brownfield Site?
It is possible to get a mortgage on a brownfield site but many lenders are still hesitant when assessing this kind of development. The condition of the environment could have an adverse impact on the value of the property – i.e. the lender’s security. There’s also the liability that would fall on the lender and the borrower’s ability to repay the loan if any environmental issues were to arise. Issues such as contaminated land or the cost to clean up a property or update it. Lenders may consider this to be too risky as they would potentially have to take out insurance with higher excesses. How lenders assess applications for brownfield sites varies and the likelihood for a successful application often depends on the individual, their creditworthiness and experience as well as the security itself.
Lenders’ risks are down to the borrower’s ability to repay the loan if other aspects were to arise; would they be able to afford/cover the costs or would they have walk away from the project, which would leave the lender with land that they will have trouble finding another prospective buyer to take it off their hands. Adding to this would reduce the value of the land/property - and a reduction in value could increase the risk to the lender, also legal aspects can arise. You often find that there might be other aspects that can’t be avoided and it comes down to responsibility- e.g. if there is a sewage problem - who is liable for the costs?
Lenders are reluctant to loan until remedial work at the site has been certified as complete – as per the issues mentioned earlier. Most funding will be done with commercial and specialised lenders, who will consider lending on contaminated property, but this is down to the borrower’s experience in this area and development proposal.
Can a Broker Help Me Get a Brownfield Site Mortgage?
You’ll certainly want a broker’s help if you want to get a mortgage on a brownfield site. A specialist broker like John Charcol that has experience in these areas but also the right contacts, access and resources to the lenders and is able to draw on their experience to help put this type of deal together is what you’ll require. The broker and the lender can then work in conjunction to make sure the deal is viable and that the client is in the best possible position to succeed. There are lenders that are aware of the risks, are able to support the broker and the client with regards to these sites. A broker that is able to look at complex developments will be able to put options together and work with the client until completion.
So, Are Brownfields the Greenest Option?
With the growing demand for housing that is accessible, there needs to be focus on the existing areas that offer potential solutions. With the ever-green focus, environmental impact and lack of available free spaces, brownfield sites could be the ideal way to allow development whilst preserving the undeveloped land.
The Government’s acknowledgment of the benefits of brownfield site towards the housing target is a start, but it is not enough. With the potential to develop brownfield sites to exceed current planned targets more needs to be done to raise awareness of the pitfalls for developers and there needs to be better support from the Government and local councils for things like planning permission, grants, etc. to help developers and lenders take advantage of the opportunities lying dormant in front of us.
Category: Nick Mendes