To listen to some, you would think that the only thing holding back a boom in house building is our planning laws. Reform those, we are told, and there will be millions of new houses built and tumbling prices.
A story on Professional Builder suggests things are not so simple:
The inaugural Planning Portal Market Index has found that more than a million homes granted planning permission since 2015 have not yet been built.
This equates to around a third of the total given the green light over the period. The figures cast doubt on the near-exclusive focus of the major parties on boosting housebuilding numbers by tweaking the planning system.
The Index suggests the causes of this lack of building include high interest rates, skills shortages in the construction industry and materials shortages.
Me? I remember what the late Ian Jack wrote in the London Review of Books five years ago:
A report in the Times last year showed that out of more than 1.7 million applications for residential planning permission granted between 2006 and 2014, fewer than half had been completed after three years. According to the Local Government Association in 2016, councils consistently approved more than 80 per cent of major residential planning applications; but the difference between the number of houses being approved and those actually being built was almost 500,000 – ‘and this gap is increasing.’
The hardly radical figure of Oliver Letwin identified the real brake on house-building when he published the interim conclusions to his inquiry into low completion rates last year. What governed the numbers, he decided, was the absorption rate – "the rate at which newly constructed homes can be sold into (or are believed by the house-builder to be able to be sold successfully into) the local market without materially disturbing the market price".
For ‘materially disturbing’ read ‘lowering’: to protect profits, developers are sitting on land that has been given planning permission. ‘Efficiency’ in this instance is a concept confined to the shareholder.
I would go further than Ian Jack and suggest that the big builders deliberately choke off supply of new homes to ensure prices continue to rise while they guarantee themselves super profits. So long as there is no cost associated with holding back land that has planning permission being developed (i.e. land value taxation) these super profits will continue and we will have a shortage of affordable housing.
ReplyDelete