Another week, another Government announcement on housing which provides welcome respite against the Brexit tit-for-tat negotiations. It’s certainly encouraging that the PM has clearly made housing her top priority after Brexit, but we believe there are areas that she would do well to reconsider as she grapples with how best to solve the shortage of homes being built in the UK. Most of all, the Government must ensure any new measures align with the funding and resources of council planning departments to allow them to get building.
Singling out the remuneration structures of volume housebuilders may serve a political function, but how far can government interfere in any one particular sector? If the PM does want to curb alleged excesses and believes this will make a difference to market supply, it would be helpful to outline what other executive incentive models could be used or indeed enforced.
Likewise, the attack on the big ‘builders land banking is not entirely accurate. According to analysis from the Campaign to Protect Rural England the largest housebuilders held nearly 399,000 plots with some form of planning permission in 2016, compared with just over 330,000 in 2006 and 230,000 plots in 1998. So on the face of it, land banking is increasing. However according to Jefferies, there have been three main and three minor reviews into land banking since 2004, all concluding no need for government intervention. Furthermore Jefferies found mid-sized or larger groups have returned to building as many homes per year as they did in 2007, whereas companies building fewer than 2,000 homes a year are still only building half of that. While many planning consents may have been granted at an outline level, housebuilders cannot go ahead and construct houses for sale until detailed consent has been granted. It is the delay between these two stages that continues to create a logjam, but is not necessarily recognised in the narrative. Neither is the under resourcing of council planning departments as being a component in creating the logjam.
And as well as housebuilders allegedly land banking, companies who buy land, get planning and then sell on are also the likely losers in any policy changes. Whilst some may not like this aspect of the market they are valuable in the property development chain as they are willing to take risks on sites, go through a costly and time consuming process in order to obtain planning where others may not have means to, especially SME developers.
Overall, the Government’s direction of travel on housing policy continues to be welcome, but there remains plenty of room for industry consultation and discussion.