One last chance for ‘landbanking’ developers?

Daniel Bentley, 12 October 2016

A striking passage in Communities Secretary Sajid Javid’s speech to the Conservative Party conference last week was his quite forthright message to the major housing developers:

‘It’s time to get building. The big developers must release their stranglehold on supply. It’s time to stop sitting on landbanks, delaying build-out: the homebuyers must come first. Almost 280,000 planning permissions were issued over the last twelve months. I want to see each and every one of those homes built as soon as possible.’

His criticism echoed what we at Civitas have been raising for a while about the growing gap between the number of homes that are being approved for development and the number of homes that are actually being built. This trend suggests that increasing housing supply will require more than simply streamlining the planning process – developers are going to have to build much faster than they currently do.

The problem is that the major developers control the rate of supply and will not allow it to reduce prices. The answer to that must lie in taking away from developers the ability to dictate the pace of housebuilding. One way of doing this would be to impose tougher conditions on planning permissions – something to which developers are fiercely opposed.

Interestingly, the issue of landbanking by developers (and non-building landowners, to be fair) was raised repeatedly during this week’s Commons debate on the Second Reading of the Neighbourhood Planning Bill, mainly by Conservative MPs – Sir Edward Garnier, Theresa Villiers, Richard Bacon, Oliver Colville and William Wragg all raised the subject, though none more powerfully than Mark Menzies, who said:

‘The government are being robbed of their whole aim of building more houses and making them affordable, because we are dependent on a large number of developers who have got us by the throat. They decide how many houses enter the local supply chain, and nobody else. That is not right. I urge the minister to get tough with the developers. We want to build houses that are affordable and available to buy, and it should not be down to developers to dictate planning policy and tell us what ultimately is going to happen. We are the government. We decide.’

It is not clear so far, however, that ministers have the stomach for taking on the major developers in such a way. Mr Javid promised that it would be ‘something on which we will be taking further action’. But the government appears content for now to use carrots rather than sticks, focusing on tackling developers’ grievances, such as pre-commencement conditions on planning applications, which are being addressed in the Neighbourhood Planning Bill.

Nevertheless, housing minister Gavin Barwell, wrapping up Monday night’s debate, indicated that if developers did not increase output in response to such measures, then ministers would be asking why not:

‘We want to listen to developers and to address evidenced concerns about things that are slowing up development, be it pre-commencement conditions, the time it takes to agree section 106 agreements or concerns about utilities. However, if we do all those things, I think we have a right to turn to the development industry and ask what it is going to do to raise its game in terms of the speed with which it builds out.’

The last-chance saloon then, perhaps?

Daniel Bentley is editorial director at Civitas and author of ‘The Housing Question: Overcoming the shortage of homes’. He tweets @danielbentley