Editor of Housebuilder & Developer, James Parker looks at whether government needs to do more to get housebuilding moving.
Depending on who you listen to, the number of unbuilt housing sites with planning permission is either shamefully high or scandalously so.
However is this really down to housebuilders not wanting to build more for their own ends, and deliberately ‘landbanking’, or is there more to it?
The Local Government Association has released figures for 2015/16 which show that the number of homes given planning permission but not being built had risen by 16 per cent year on year to over 420,000.
Developers were also taking eight months longer to build homes. This was despite councils approving nine in every 10 applications, so planning was less of an issue than perhaps may have been thought.
Are housing developers sitting on land with permission to build which amounts to a staggering 1 million homes?
Lukewarm response so far
If you ask the homelessness charity Shelter however, they recently put the figure much higher.
As we experience extended winter misery which is life-threatening if you are homeless, according to the charity housing developers are sitting on land with permission to build which amounts to a staggering 1 million homes.
The Government has promised to take action on landbanking if it is occurring, but has only so far launched Oliver Letwin’s review into the issue, with a threat to housebuilders of ‘use it or lose it.’
What this will mean in practice is, as so often, up in the air currently. Frankly, the response is lukewarm given the scale of the problem.
Left to their own devices
Chief executive of Taylor Wimpey Pete Redfern admitted the other day on Radio 4 that planning permission is not the obstacle it once was, but there is “no silver bullet” for getting sites built on.
“It’s a number of issues,” he said, alluding to absorption (rate of sale), but also more tellingly, availability of skills.
That is forecast to only get worse in the coming years after Brexit, despite the apprenticeship economy being slowly rehabilitated.
So there appears to be little hope of builders, left to their own devices, building to someone else’s timescale.
Intervening on landbanking
Mortgage lender the United Trust Bank has found “strong support” among mortgage brokers for Government intervening on landbanking.
Whether that would extend to ‘real’ interventions such as compulsory purchase of sites is unknown, however the bank’s executive director Noel Meredith said the problem was too complex to be blamed solely on developers, and said that delays caused by planners remained a factor;
“National housebuilders will have stocks of land for a number of reasons, naturally they want to maintain future supply, and given the time to take land to full planning, this could be a considerable amount of land.”
He said that developers acquiring land with planning then “maximising a site” by re-applying to build more houses on it was “ensuring that the land delivers most benefits to society.”
However, this often leads to battles with planners with “inconsistent responses and unreasonable demands.”
5 to 1 ratio?
Meredith believed that a ratio of 5:1 in terms of amount of land ‘banked’ to land being built was not unreasonable, if a site took five years to build out.
However he admitted that SMEs were unlikely to have the resources to support such a degree of shoring up against risk.
Rather than focusing on whether we can build on the Green Belt, smart and urgent interventions have to be made to ensure, by compulsion if necessary, that sites with planning permission are built on.
Not very fashionable, but perhaps it’s now time for the Government to move beyond risking offending peoples’ sensibilities, and take some action.