Our twisted planning system holds up house building, not greedy landbanking developers

 
Suzi Gatward
Exhibition Of Planned Skyscrapers For London
Source: Getty

The Letwin Review announced by the chancellor during the Budget last week is to be welcomed. The fact that housing is at the top of the government’s agenda is also very positive.

But blaming developers for supposedly hoarding land in order to push up house prices is not.

The average price of a house in Britain has doubled since 2000, as supply has lagged behind demand. But developers are not landbanking – that is, sitting on potentially developable land purely for the sake of increasing profit.

Yes, they hold strategic land. They are businesses and need to demonstrate a supply of future land to their shareholders. Yes, there are some stock plots on larger sites. What viable business would compete against itself? But there is no deliberate landbanking. Once a plot has an implementable planning permission, a spade goes in the ground.

And it is in the definition of “implementable” where the problem lies.

These much-needed housing plots are stuck in the quagmire of the planning system. Many sites have upwards of 20 pre-commencement conditions to be discharged before work can begin. These range from approval of flood defences to approval of external finishes.

Planning departments simply do not have the resources to deal with these, yet their members keep imposing them to keep their constituents happy.

Developers are left to make a decision whether to commence without such approvals, and face enforcement action, or wait their turn, and face unjustified attacks of landbanking.

Then there are other obligations often imposed, such a section 278 agreement (allowing works to an existing highway) to be completed pre-commencement, with yet another under-resourced local authority thrown into the mix.

The demand for housing is there, and nowhere more so than in London. Simply, developers want to build their plots so they can sell their plots and take their profit.

Indeed, Alan Brown, chief executive of CALA Group, has already commented: “we get on and build as quickly as we can, as tying up lots of capital in large swathes of land with no houses on them simply isn’t in our financial interests”. No doubt many others will follow suit.

We need reform of the National Planning Policy Framework to enable quicker starts on site. Deemed approval of pre-commencement conditions after a set period of time would be a helpful start.

The 2014 Home Builders Federation “Permissions to land” report found, after surveying 23 developers, that 31 per cent of plots “held” are on sites with only an outline planning permission, or on sites where building is held up awaiting local authority discharge of such pre-commencement planning conditions.

What the Letwin Review should therefore seek to achieve is the debunking of the landbanking myth once and for all. Indeed, let us hope it does, and that Philip Hammond applies his “direct intervention” compulsory purchase powers as necessary to land held by the government itself.

Ideally, the outcome of this review will lead to less blame for developers, and a more worthwhile investment of time and resource to a much-needed reform of the planning system instead.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

Related articles