Support grows for government intervention in land banking

A recent broker poll, carried out by United Trust Bank amongst over 120 property finance brokers, has found strong support for the government to step in and address land banking by developers.

New analysis by the charity Shelter suggests that developers are collectively sitting on land with permissions for almost 1 million new homes.

70% of those who expressed their opinion on the issue responded that it was a ‘problem which needs to be addressed’, whilst 30% believe that the government should stay out of the matter.

The survey findings are being revealed soon after Housing, Communities and Local Government Secretary Sajid Javid told property firms that they would face a more ‘muscular’ approach from government to kick start housebuilding and a review of land banking is expected to recommend the introduction of “use it or lose it” planning permissions.

The availability of development land is seen as one of the greatest barriers to really stepping up new home completions in the UK. Brokers polled were also asked how realistic it was for the Chancellor to set a target of building 300,000 new homes each year by the mid-2020s.

Just 4% believe that is possible if the status quo is maintained whilst 67% indicated it was achievable but only with substantial improvements to the planning process and land availability; 29% believe the target to be totally unrealistic.

Noel Meredith, Executive Director – United Trust Bank, said, “It’s easy to blame the housing shortage on developers hoarding land then sitting back and watching it increase in value whilst the country cries out for new homes. However, the reality is more complex.

“National housebuilders will have land stocks for a number of reasons. Naturally they want to maintain a future supply of developable sites and, given the time taken to take land from no planning, into a local plan and then to full planning, this could be a considerable amount of land.

“National housebuilders mainly develop large sites of several hundred units and these cannot be built out in one go for logistical reasons and because they need to try to match supply to demand. So, if it takes five years to build out a site, it is reasonable to have a land bank of at least five times as many plots as they are currently building. Large schemes of apartments also take a long time to deliver.

“SME housebuilders generally don’t have the resources to allow them to sit on land for prolonged periods. It’s not unusual however for a developer to acquire land with planning and then decide that the permission does not maximise the use of the site. They will then submit a planning application for more, different or larger units.

“Although it delays the commencement of new home building, in my view this isn’t land banking; it is ensuring that the land use is best employed and delivers most benefit to society.  Unfortunately, developers in this situation often find themselves battling planners with inconsistent responses and unreasonable demands both of which can increase development costs and further delay a build getting underway.

“Deflecting the blame for delays to new housing starts away from the underinvested planning system and on to developers is all too easy and it makes for a more convenient headline. In my view though, if the Government can solve the problems with the planning system and encourage local planning offices to support developers rather than put obstacles in their paths, the fact that development land may be owned for some time before building commences will be of much lesser consequence.”

PHOTO CREDIT: Kenneth Allen

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