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  • Dec 2017

The Source
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Landbanking – Housebuilder hits back.PlansBlocked

Britain’s largest housebuilder, Barratt Developments, has published a report to disprove accusations from Secretary of State, Sajid Javid that housebuilders are piling up so-called land banks. The criticism centres on housebuilders allegedly seeking to secure additional profit, by holding onto land with planning permission in order to speculate on land price increases.

The report finds that whilst housebuilders do hold a certain length of land in the pipeline, they do not ‘landbank’ in the pejorative sense of the word.

Due to delays in the planning process a typical housebuilder needs an operational land pipeline equivalent to nine years’ worth of current completions in order to grow its volume by 10%. With prices for consented greenfield housing land being broadly flat for the past 22 quarters, it makes no commercial sense to carry the costs of holding on to acquired land in the hope of a land value uplift, indeed the pressure is on to deliver a return on that capital outlay.

Philip Barnes, group Land and Planning Director of Barratt Developments explains that speeding up the processing of planning applications would allow more homes to be built. Applications are often held up by pre-commencement conditions, Section 106 agreements and a lack of planning department resources.

“Let’s get far more resources into cash-strapped local planning departments but ensure it’s tied to performance. A sensible first step could perhaps be to outsource the thousands of small schemes and reserved matters applications currently clogging up the system.”

Opinion is now shifting to a re-engagement of the public sector, bearing in mind that as late as the 70s local authorities were building 100,000 homes a year. Now, on average, around 160,000 homes are being built annually. A decade ago, the Labour government set a target of 240,000 for 2016; trumping that, Sajid Javid and now, Chancellor Philip Hammond would like to see 300,000 per year. In a market so short of supply, should the state would intervene to introduce new competition?

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