The nation desperately needs more housing yet it's facing a shortage of building materials. Could landowners with untapped mineral reserves come to the rescue?
One of the most tangible signs that the economy is climbing out of recession is the increase in construction. Government schemes such as Help to Buy have encouraged new buyers, and the burgeoning rental sector is attracting buy-to-let investors once more.
However, after a five-year downturn and the consequent lack of investment in sourcing construction aggregates, housebuilders are facing the prospect of shortages of sand and gravel, crushed rock, brick and tile clays, and other essential quarried materials. And that could be good news for landowners with mineral deposits within their landholdings, as the scramble to register future sources of aggregate intensifies.
Statistics published by the Mineral Products Association show that by 2011 replenishment rates (i.e. the quantity of deposits with planning permission for extraction compared with the rate of production) were 50 per cent for sand and gravel and just under 70 per cent for crushed rock.
Meanwhile, according to the National Home Builders Federation, housebuilding is now at its highest level since 2007: last year 133,670 new homes were registered, a 28 per cent increase on 2012 (when 104,500 were registered) and the highest number since 2007 (200,700). This recovery is broad-based, with most regions in the UK showing increased housebuilding compared with 2012. However, these figures are far lower than they should be: according to the National Housing and Planning Advice Unit, up to 290,500 new homes need to be built each year from now until 2031.
“Although this is good news, it’s going to take a long time for reserves of construction aggregate to get back in sync with demand,” says Stuart Jeffries, director of Savills Minerals and Waste Management. A planning application can take years: environmental impact assessments might take 18 months to complete, while mineral planning authorities are taking on average two and a half years to determine an application. So the period from initial investigation to the start of extraction can be five years.
"It’s going to take a long time for reserves to get back in sync with demand"
In the meantime, supplies are largely reliant on reserves that built up during the recession and the plans aren’t in place to replenish these.
“In some areas there is now a pressing need for more sites to be included in local development plans,” says Stuart. “Advances in technology and changes in supply and demand mean that deposits which weren’t viable for extraction 20 years ago could now be practical, so it is worth landowners revisiting deposits that failed to obtain planning consent two or three decades ago.”
Construction companies usually like to source their aggregates as close as possible to the market because it minimises transport costs. Until recently operators were only submitting applications in areas where they were desperate for aggregate. But of course geology dictates local availability, and there will always be a need for some long-distance transportation of aggregates: for example, the South East relies on supplies of crushed rock brought by rail from the South West and the East Midlands, and by sea from Scotland.
Even in well-connected locations, decisions must be made about where the aggregate is sourced. If materials for Leeds are to come from North Yorkshire, what planning issues might arise in the Yorkshire Dales National Park, where the scale and impact of extraction must be restricted?
Seventy-five per cent of aggregate extraction in the UK is controlled by just four companies: Hanson, Lafarge Tarmac, Aggregate Industries and Cemex. “Such companies identify mineral deposits, look after the whole planning application process and implement extraction,” says Stuart. “There are therefore no upfront costs to the landowner, making it a very attractive option for any landowner with the right reserves to consider mineral extraction as a source of income.”
Stuart Jeffries MRICS, MIQ
Minerals & Waste Management
+44 (0) 1904 617826
+44 (0) 1904 617826
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