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On track
Housebuilder – October 2007

Inspirational development plans held back by a lack of transport infrastructure? Mark Smulian discovers Kilbride Community Rail's solution: it plans to bring disused railway lines back into use and option the surrounding land for housing

When a problem looks insoluble, could turning it on its head solve it? Infrastructure is certainly a problem - an 8 billion - sized one in the south east alone if the region's councils are to be believed - and disputes over how much is needed and who should pay have bedevilled relations between housebuilders, councils and the government for many years.

Traditionally, public bodies have provided infrastructure for new developments and have expected builders to contribute through section 106 agreements on planning gain.

The mooted replacement for this process, the planning gain supplement (PGS) - a nationally collected tax on land value increases, has proved even less popular in the industry. No-one has yet devised an equitable process under which developers contribute towards infrastructure to serve their project according to the increase in land values resulting from planning permission.

But suppose the infrastructure was there in the first place? It sounds too good to be true - development sites ready provided with a train line nearby and road access. There would be no need for protracted negotiations with councils since the infrastructure would be there before anything was built, and it would be easy to demonstrate transport sustainability.

One company has decided to try this approach. It is unlikely that, if it is successful, it can make more than a modest contribution to the nation's thirst for new infrastructure. But with the current pressure from the government for homes on sustainable sites it could make a useful contribution.

Kilbride Community Rail is part of the Kilmartin Group, which includes a mid-sized housebuilder in Scotland called Sovereign House Developments. Its idea is simple. Kilbride will build, or reinstate, railway lines. It will at the same time take options on adjacent land that could be developed and use it for housebuilding, either through Sovereign, or a joint venture with a housebuilder or by selling the land to a developer.

This concept will no doubt delight those who always resented the cuts made to the rail network in the 1960s by the reviled British Transport Commission chair, Dr Beeching. But Kilbride is not involved because it is run by rail enthusiasts; It thinks it will make money.

Managing director Peter Frost explains: "Our principle is to put in the infrastructure first and we will fund it through taking options on land next to the railway. We generate value in the land by putting the infrastructure in. It is a very different approach to normal developments with planning gain.

"We could develop the land ourselves, but we also look at joint ventures with residential developers where we would provide the infrastructure and then they build the homes." Frost adds: "This approach requires big investment upfront, but it is the best way to achieve longer term success, which is dependent on transport."

This is not of course an entirely new idea; the outer north London suburbs were built like this in the 1930s as the underground railway was extended first and development followed. Where old rail lines are capable of reinstatement - those that have had nothing built over them - the line has usually been protected even if the rails has long been removed, so acquiring the track bed is relatively easy.

"There is a process of negotiation with landowners of adjacent sites, and it does require a lot of talking, but they can see that this is an opportunity to develop their land," says Frost.

"You have got to negotiate options with sufficient space for building of course, and we look to involve the local authority at an early stage to make sure they are comfortable with it.

"There is a much better reception from planners than normal, because we are offering to put infrastructure in and the development would come ready-served by public transport."

Kilbride plans later in the year to announce its first passenger rail project backed by adjacent development. It will not say where this will be, but the company has been involved in two projects for several years, both of which have received encouraging responses from local councils and interest groups.

One is to reinstate the Lewes to Uckfield line in East Sussex, which would not only create a local line but also offer an alternative route to the crowded main line from London to Brighton. The other is to reinstate the link to Tavistock from the Plymouth-Gunnislake line, which runs on the Devon/Cornwall border.

Kilbride's idea has been tested in the freight industry. One example is its reinstatement of a rail link into Jaguar's car plant at Castle Bromwich, which allows the company to export cars by rail. This was paid for by its commercial development of the nearby former sidings. A similar project at Inverurie with International Paper, has seen Kilbride provide a rail freight terminal paid for by the provision of 28 hectares of developable land alongside.

Anything to do with rail is notoriously complex, not least because there is little point in having a rail line unless it is connected to Network Rail's system. Frost explains: "There is a good relationship with Network Rail, which sees us as providing projects that will give it new customers who will pay them track access fees."

Complex negotiations are needed over both physically connecting Kilbride's branch lines to the national network and over the position of rail franchise operators where the new lines would be additional to their contracts.

Kilbride has a partnership to oversee rail operations with ECT, a social enterprise that originally ran minibuses in west London but now also runs small scale railways at Weardale and Dartmoor.

"Passenger services are much more complex than freight, but we have ECT to manage lines for us and they have a really good track record," says Frost.

His concept is never going to unlock land for entire growth areas, or suddenly change the economics of transport, and he admits "this is not huge growth, it is small incremental change in the rail system with projects in the 10 million to 50 million range, which in rail terms is quite small." It might be small, but it might also prove beautiful for a few housebuilders.