Learning difficult stuff: obstacle to a  good degree? (HE not RE)

Although I must admit to be highly interested in it, I try not to think too hard about the purpose of universities and the whole debate about education as a public good, an engine for economic performance etc.  Buts it’s difficult to get away from the growth of marketization and consumerism in higher education.  Kenan Malik provided a really good summary of the issues in the Observer yesterday.  He captured really well how increasing consumerism in education changes the student-academic dynamic.

What a student-as-a-consumer will not want are all the things that truly define a good education – difficult questions, deep reflection or challenging lecturers. These will be seen not as means to greater understanding but as obstacles to attaining a good degree.

It hit a nerve with me.  I’ve been on the end of a few complaints from students recently –basically along the lines of “This material/assignment is hard.  We might get poor grades.  We are not satisfied.  What are you going to do about it and when are you going to do it?”.

In essence it boils down to responsibility.  What is the balance between students’ responsibility to learn, show initiative and independence and our responsibility to provide the structure and direction to their learning (or lack of it).  Everyone says that they want critical thinkers and independent learners, self starters etc. but my sense is that the climate is increasingly hostile to these aspirations in higher education.

At the same time, there’s been a lot of improvement.  Academics are more accountable.  Feedback is far better.  Learning materials are much better.  There’s a lot more transparency.  Compared to my students days, we had to find things out for ourselves much more – but we should have had more direction.  On balance, I think that things have improved.


Buyer funded non-development.

There’s a good story by David Pegg and Oliver Wainwright in the Guardian on the collapse of ‘buyer funded’ development in the North West.  It seems that mainly foreign investors (there were actually demonstrations in Hong Kong about it!) have pre-paid for apartments where the development project has gone bust before construction was complete.  I actually read the administrator’s report for the Pinnacle project in Manchester.  It was very scathing about some of the fees charged especially for marketing and sales.  If you give your money upfront to a developer without strong restrictions, there’s plenty of scope for poor and/or malpractice.  The police are investigating and the lawyers are involved.  I suspect that there’s a lot to come out.  The contrast with the controls that a lender would put on the release of funds are stark.  Well-run banks/lenders will want to inspect every single detail of expenditure before releasing funds for them.

I told some of my students who were doing a development project that payment in advance of completion would not happen in practice.  Apparently it does – albeit it is understandably quite rare.  I’m told that there were similar cases in Manchester involving local investors following the GFC.  I’ve paraphrased slightly – but here’s the take on it of a contact with experience of the Manchester development market.

This is déjà vu to 2008/2010! Several developers in regional cities were promoting resi developments specifically for investor syndicates. They used the “reservation fees” (non-refundable deposits) to service development finance. In some instances, the buyers were obliged to pay the purchase price in several instalments during construction with the final payment upon Practical Completion.  In the worst case scenario, developer goes bust before Practical Completion.  Individual investors are secondary to construction creditors in hierarchy of who gets paid and therefore don’t get their money back. 

Debenhams Downsize?

There’s a piece on the Guardian about the response of Debenhams to poor trading conditions.  It seems to basically involve subletting surplus space.    The positive interpretation is that this is entrepreneurial asset management by the Debenhams real estate team.  The negative interpretation is that it is desperate measures in a weak sector.  Both interpretations probably have some validity.  Apparently Debenhams have very long leases – averaging 20 years.  They seem to have a lot more space than they need.

The latest IPF Consensus Forecasts remain surprisingly positive with retail rental growth at between 0% and 1% per annum for the next five years.  So – there isn’t a market wide expectation of a sector-wide structural decline.   It could be a particular department store problem.  In the US, the future of the department store seems to be smaller.

NPPF: Promoters Relegated, House Builders Promoted?

The FT Lex Column is fairly complacent about the government’s rhetoric on land banking and its implications for the volume house builders.

New charges or lost planning permissions on land owned and not yet built on would, unquestionably, be bad news for listed companies such as Berkeley, Barratt, Persimmon and Taylor Wimpey. Most businesses have an interest in selling more of the things they make. Not so housebuilders. Increasing sales under pressure means selling at a lower price than planned. For all the pent-up demand, property is an illiquid, localised market.

There follows a nice analysis of the land-banking issue.  However, in the end, they note that

Since 2004 there have been six big reports into land banking. Little has come of any of them. It is a time lag that would put any housebuilder to shame

The wider stock market is relaxed too since the house builders share prices have barely budged since the draft NPPF was published.

There’s definitely more emphasis on deliverability in the NPPF.

Strategic plans should include a trajectory illustrating the expected rate of housing delivery over the plan period, and all plans should consider whether it is appropriate to set out the anticipated rate of development for specific sites.

To help ensure that proposals for housing development are implemented in a timely manner, local planning authorities should consider imposing a planning condition providing that development must begin within a timescale shorter than the relevant default period, where this would expedite the development without threatening its deliverability or viability. For major housing development, local planning authorities should also assess why any earlier grant of planning permission for a similar development on the same site did not start.  

I suspect that this shift is a greater worry for promoters rather than house builders.

Recently Jenny Daly from Taylor Wimpey was at Reading outlining some of her thoughts on the residential development process.  When discussing the relative advantages of promotion agreements (with, er, promoters) v options from house builders for land owners, she commented that one advantage  to the land owner of going with a house builder rather than a promoter was that local authorities would be more inclined to support a scheme from a house builder since it was more likely to be delivered (or would be delivered more quickly).  Basically, the message was “Promoters don’t build homes”.  After getting a permission, they need to sell the land.  However, the scheme that the promoter has obtained planning permission for may not be attractive to a house builder with major amendments needed (with associated costs) to the permitted scheme.  As the main actual deliverers of new housing, an unintended consequence of the NPPF could be that it strengthens the position of the volume house builders in the land market.

NPPF Viability: 2.5 Cheers

The much anticipated National Planning Policy Framework has just been published.  It has a separate paper on viability with lots of meaty material and plenty to analyse.

The initial headlines are…


To define land value for any viability assessment, a benchmark land value should be calculated on the basis of the existing use value (EUV) of the land, plus a premium for the landowner.

(Strictly, all alternatives definitions of BLV are arguably EUV+ – but that’s nitpicking.)  This is a blow to the RICS who seem to have been holding back on their guidance update to see what way the wind is blowing.


The need to test land value to the market is retained in a sensible way but, crucially, BLV should

…be informed by comparable market evidence of current uses, costs and values wherever possible. Where recent market transactions are used to inform assessment of benchmark land value there should be evidence that these transactions were based on policy compliant development. This is so that previous prices based on non-policy compliant developments are not used to inflate values over time.

This neatly addresses the difficulties of estimating the size of the premium on EUV where the difference between EUV and proposed use is huge.  This is especially a problem in greenfield sites where the existing use is agriculture (say, worth £20,000 per hectare) and residential use is worth a LOT more (commonly £2,000,000 – £4,000,000 per hectare in the rich South East).

It’s also good to see that


Any viability assessment should be prepared on the basis that it will be made publicly available other than in exceptional circumstances. Circumstances where it is deemed that specific details of an assessment should be redacted or withheld should be clearly set out to the satisfaction of the decision maker. Information used in viability assessment is not usually specific to that developer and thereby need not contain commercially sensitive data.

It’s god to see it recognised that a viability assessment does not need to contain any commercially sensitive data.

There’s also some odd things.  The document is weirdly specific on the return to the developer – 20% of GDV.  This will lead to problems for larger, long-term schemes where getting the same profit margin in 10 years is incomparable to getting it in one or two years.  The (internal rates of) return – a more financially robust measure – are going to be completely different for schemes with identical profits but different timescales.   This really needs to be changed.

There’s also no explicit mention of alternative use value.  I suspect that this may be a specific central London issue where development may be commercially feasible for offices or housing and acceptable in planning terms.  It’s possible that at the margin some developers will opt for office rather than residential development if policy compliance on affordable housing is required.

As ever, the devil will be in the detail.  I suspect that a key issue will be the definition of policy compliant with developers attempting to undermine a “common-sense” interpretation.