Developers who fail to build new homes face ‘use it or lose it’ tax

Developers will face new “use it or lose it” taxes for failing to build homes on land that already has planning permission amid concerns that more than 1.1 million have been left unbuilt in the past ten years.

[So who is going to be lobbying against this? – Please form an orderly queue. Owl]

George Grylls,

Robert Jenrick, the housing secretary, is considering the levy as the government oversees the biggest shake-up of the planning system for 70 years.

About 2.8 million homes have been given the green light for construction since 2010-11, but only 1.6 million have been built, according to analysis by the Local Government Association (LGA).

Critics have claimed that such “land banking” has artificially kept house prices high and deprived first-time buyers of the chance to get on the property ladder. Housebuilders have rejected this analysis, and dismissed land banking as a myth.

Ministers are privately considering different ways to encourage higher rates of building. Under one proposal housebuilders would pay full council tax on all the properties in a project from one to two years after securing planning permission, regardless of whether they have been built.

There has been a backlash from Tory MPs over Jenrick’s proposals to deregulate the planning system, with backbenchers in traditional Tory southern seats angered that existing homeowners will no longer be able to object to individual planning applications.

The Planning Bill, introduced in this week’s Queen’s Speech, will designate land for growth or protection. Applications for homes in growth areas will automatically get a green light, while developments in protection areas will face greater challenges. A third regeneration zone is still under consideration.

The new taxes will go some way to appeasing Tory backbenchers, some of whom have privately attacked the government’s Planning Bill as a “developers’ charter”.

This week Lady May, the former prime minister, defended the planning system in a speech to the Commons and urged reform of the housebuilding sector instead. “I fear that, unless the government look again at the white paper proposals, what we will see is not more homes but, potentially, the wrong homes being built in the wrong places,” she said.

“Underpinning the proposals seems to be the concept that the reason more homes are not being built is the planning system. In fact, the last figure I saw from the Local Government Association showed that one million homes have been given planning permission but have yet to be built, so the issue is not just about the planning system.”

About nine in ten applications are granted planning permission and local authorities approve double the number of homes as ten years ago, according to the LGA. David Renard, its housing spokesman, said: “By giving councils the right powers to incentivise developers to get building once planning permission has been granted, we can go further and faster. Councils are granting permission for hundreds of thousands of homes but families who desperately need housing cannot live in a planning permission.”

CPRE, the countryside charity formerly known as the Campaign for the Protection of Rural England, has previously demanded levies on developers who fail to build. Tom Fyans, campaigns and policy director, said: “In the eye of an affordable housing crisis we need a ‘use it or lose it’ approach. The countryside is central in our response to the climate and nature emergencies and we simply can’t afford to keep releasing more and more land unnecessarily for speculative development.”