“Developers deliberately restricting housing supply to keep prices high”

“Developers have been accused of deliberately restricting the supply of new houses to keep prices high after figures suggested that planning permission has been granted for 750,000 homes which have not been built.

A report by Civitas, a respected right of centre thinktank, found that overall more than two million planning permits were issued between 2006 and 2015, a rate which would be enough to build average of 204,000 new homes a year.

However, foundations were only been laid on 1.26 million of them, suggesting that developers and land owners are sitting on the permissions rather than building new homes. …

… campaigners said that they should have included a “sunset clause” which would have forced developers to build on land granted planning permission within a set time period. …

… The analysis shows that between 2011 – the last full year before the changes were introduced – and 2015, the number of unused planning permits jumped by 88 per cent, while new housing starts increased by just 26 per cent.

One third of “unbuilt planning permissions” were thought to be held by non-builders, Civitas said, which “points to land hoarding in the hope of further rises in land values”.

Civitas accused housebuilders of reducing sales to a “drip-feed” to maintain profit margins.

Daniel Bentley, editorial director at Civitas, said: “David Cameron’s relaxation of the planning rules has so far only been to the advantage of developers, who have banked the additional planning permissions and topped up their pipelines for future years without increasing output.

“The challenge for Theresa May’s government now is to break the stranglehold that the major housebuilders are exerting on the supply of new homes.”

He added: “It is increasingly evident that the brake on development is being applied by those who are sitting on land which is ripe for new homes and has been given the all-clear by planning authorities.

“This includes land speculators, who are content to sit tight while their holdings spiral in value, but is mostly housebuilders, who lack any incentive to get on and build the homes the country needs.

“Housebuilders are drip-feeding the market in order to push up prices and maximise their profits.”

Last night MPs said they would investigate the figures as part of a new cross-party Parliamentary inquiry into the UK’s sluggish house building rates.

Clive Betts MP, the chairman of the Communities and Local Government select committee, said: “Planning reforms will be a failure unless the Government can act and turn planning permissions into completions.

http://www.telegraph.co.uk/news/2016/08/28/developers-accused-of-deliberately-restricting-the-supply-of-new/

One thought on ““Developers deliberately restricting housing supply to keep prices high”

  1. I have just sent the following to the Telgraph: With reference to your article Developers Accused of Deliberately Restricting the Supply of New Housing, I would add that restricting supply not only maintains high house prices but also allows developers to acquire further permissions on the grounds that Local Authorities no longer satisfy the requirement for a 5-year land supply. Catch 22!

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