“Property giants pay bosses £63m while ‘exacerbating housing crisis’ by sitting on enough land for 470,000 homes”

“Property giants have been accused of rewarding bosses for “exacerbating the housing crisis” after spending £63.6m on chief executive pay last year while sitting on more than 470,000 unused plots of land.

The chief executives of Britain’s 10 biggest housing developers raked in a combined £63.6m, earning a median sum of £2.1m, according to figures compiled by the High Pay Centre. Four FTSE 100 companies handed £53.2m to their top bosses in total, a median pay packet of £5.7m.

The 10 firms completed and sold 86,685 homes last year, but hold planning permission for 470,068 other plots of land on which homes have not been built. The UK needs an estimated 340,000 new homes a year to meet demand.

Councils have repeatedly complained of developers taking longer to build on sites which have been earmarked for housing, with the Local Government Association calling for powers that would allow local authorities to seize unused land.

The High Pay Centre said its findings raised questions about whether executives “should receive such vast sums of money, particularly given the many criticisms levelled at the big housing developers regarding the extent to which they are exacerbating the housing crisis”.

Luke Hildyard, the think tank’s director, told The Independent: “Homes are a public good and housing companies are charged with quite an important social responsibility. If the housing companies don’t play their part in delivering enough homes then we have real problems.

“There is something particularly unseemly about people who are supposed to be providing a public good raking in millions or even tens of millions.”

The 10 companies, which are all FTSE 350-listed, paid a combined £150m to chief executives and other directors last year. The four FTSE 100 house-builders – Barratt, Berkeley, Persimmon and Taylor Wimpey – accounted for £131.1m of that sum.

The average UK construction worker is paid £24,964 a year, 89 times less than the median pay packet of the 10 housebuilders’ chief executives, according to the union Unite.

The pay disparity was greatest at Persimmon, where chief executive Jeff Fairburn earned £39m – equivalent to the average pay of 1,561 construction workers – last year. He was forced out of the firm in late 2018 after a public outcry over his £75m bonus.

The pay ratio between Berkeley’s chief executive and the average construction worker was 331:1, at Taylor Wimpey it was 126:1, and at Barratt it was 113:1.

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Labour MP Siobhan McDonagh, who cited the figures during a debate in parliament on Thursday, said the “vast scale of inequality” showed “the British housebuilding industry is broken”.

She added: “In the midst of a national housing crisis, how can it be right, just or fair, for the top housebuilding CEOs to walk away with such astronomical sums while there are workers are seeing their salaries stagnate?

“These companies have a land bank of a simply staggering 470,068 plots but completed just 86,685 homes between them. Is that really a record worth rewarding?”

Barratt, Berkeley and Taylor Wimpey all declined to comment.

Persimmon did not respond to a request for comment.”

https://www.independent.co.uk/news/business/news/property-developers-housing-crisis-homebuilding-chief-executive-pay-ftse-100-a9093676.html

Is our Local Enterprise Partnership attempting to hi-jack housing and infrastructure funding and control?

Yet another attempt by this unelected bunch of conflicted business people to suck up funding meant for local councils:

“…
Recommendations
2.1. 1.
That the Joint Committee pursue an area-based package to accelerate housing delivery which, at headline level, should include:

a. Resourcing of a strategic delivery team (capacity funding)
b. A major infrastructure delivery fund to unlock growth
c. A small schemes liquidity fund to bring forward stalled sites

2. That the proposed package as set out in appendix 1 is agreed as an
appropriate package to accelerate housing delivery across the HotSW
geography.

3. That the proposed package as set out in appendix 1 is used by officers as
the basis for future engagement with central government and its agencies in seeking to secure a bespoke deal for the HotSW area to structurally embed collaboration with central government on housing delivery.

4. That the Task Force seeks to now engage with senior figures within both Homes England and the MHCLG Growth and Delivery Unit to understand their appetite for driving growth and willingness to work with the Joint Committee on some kind of housing deal.

5. That the Task Force brings back any updates or progress to the Joint Committee to consider in due course.”

https://democracy.devon.gov.uk/documents/s26163/HotSW%20JC%20-%20Housing%20Task%20Force%20report.pdf

The appendix on pages 5 and 6 is particularly worrying.

And where does this leave the (stalled due to political changes) Greater Exeter Strategic Plan?

Land: the new rhodium (the most expensive metal in the world)

“What is the most neglected issue in British politics? I would say land. Literally and metaphorically, land underlies our lives, but its ownership and control have been captured by a tiny number of people. The results include soaring inequality and exclusion; the massive cost of renting or buying a decent home; the collapse of wildlife and ecosystems; repeated financial crises; and the loss of public space. Yet for 70 years this crucial issue has scarcely featured in political discussions.

Today, I hope, this changes, with the publication of the report to the Labour party – Land for the Many – that I’ve written with six experts in the field. Our aim is to put this neglected issue where it belongs: at the heart of political debate and discussion.

Since 1995, land values in this country have risen by 412%. Land now accounts for an astonishing 51% of the UK’s net worth. Why? In large part because successive governments have used tax exemptions and other advantages to turn the ground beneath our feet into a speculative money machine. A report published this week by Tax Justice UK reveals that, through owning agricultural land, 261 rich families escaped £208m in inheritance tax in 2015-16. Because farmland is used as a tax shelter, farmers are being priced out. In 2011, farmers bought 60% of the land that was on the market; within six years this had fallen to 40%.

Homes are so expensive not because of the price of bricks and mortar, but because land now accounts for 70% of the price

Worse still, when planning permission is granted on agricultural land, its value can rise 250-fold. Though this jackpot was created by society, the owner gets to keep most of it. We pay for this vast inflation in land values through outrageous rents and mortgages. Capital gains tax is lower than income tax, and council tax is proportionately more expensive for the poor than for the rich. As a result of such giveaways, and the amazing opacity of the system, land in the UK has become a magnet for international criminals seeking to launder their money.

We pay for these distortions every day. Homes have become so expensive not because the price of bricks and mortar has risen, but because the land that underlies them now accounts for 70% of their price. Twenty years ago, the average working family needed to save for three years to afford a deposit. Today, it must save for 19 years. Life is even worse for renters. While housing costs swallow 12% of average household incomes for those with mortgages, renters pay 36%.

Because we hear so little about the underlying issues, we blame the wrong causes for the cost and scarcity of housing: immigration, population growth, the green belt, red tape. In reality, the power of landowners and building companies, their tax and financial advantages and the vast shift in bank lending towards the housing sector have inflated prices so much that even a massive housebuilding programme could not counteract them.

The same forces are responsible for the loss of public space in cities, a right to roam that covers only 10% of the land, the lack of provision for allotments and of opportunities for new farmers, and the wholesale destruction of the living world. Our report aims to confront these structural forces and take back control of the fabric of the nation. …”

https://www.theguardian.com/commentisfree/2019/jun/04/tackle-inequality-land-ownership-laws?

“Half of England is owned by less than 1% of the population”

“Half of England is owned by less than 1% of its population, according to new data shared with the Guardian which seeks to penetrate the secrecy that has traditionally surrounded land ownership.

The findings, described as “astonishingly unequal”, suggest that about 25,000 landowners – typically members of the aristocracy and corporations – have control of half of the country.

The figures show that if the land were distributed evenly across the entire population, each person would have almost an acre – an area roughly the size of Parliament Square in central London.

Major owners include the Duke of Buccleuch, the Queen, several large grouse moor estates, and the entrepreneur James Dyson.

While land has long been concentrated in the hands of a small number of owners, precise information about property ownership has been notoriously hard to access. But a combination of the development of digital maps and data as well as pressure from campaigners has made it possible to assemble the shocking statistics.

Jon Trickett, Labour MP and shadow minister for the Cabinet Office, hailed the significance of the findings and called for a full debate on the issue, adding: “The dramatic concentration of land ownership is an inescapable reminder that ours is a country for the few and not the many.”

“It’s simply not right that aristocrats, whose families have owned the same areas of land for centuries, and large corporations exercise more influence over local neighbourhoods – in both urban and rural areas – than the people who live there.”

“Land is a source of wealth, it impacts on house prices, it is a source of food and it can provide enjoyment for millions of people.”

Guy Shrubsole, author of the book in which the figures are revealed, Who Owns England?, argues that the findings show a picture that has not changed for centuries.

“Most people remain unaware of quite how much land is owned by so few,” he writes, adding: “A few thousand dukes, baronets and country squires own far more land than all of middle England put together.”

“Land ownership in England is astonishingly unequal, heavily concentrated in the hands of a tiny elite.” …”

https://www.theguardian.com/money/2019/apr/17/who-owns-england-thousand-secret-landowners-author

“The Mass Sell-Off Of Public Land Is Driving The Housing Crisis”

“A major new investigation by the Bureau Local and HuffPost UK revealed austerity’s dirty little secret: massive funding cuts have been, in part, offset by a mass sell-off of public land. But what’s not being examined is who is buying that land, and what they are building on it. If used appropriately, surplus public land could be an important first step towards solving the housing crisis, but the present fire sale is, if anything, making it worse.

The Bureau’s research uncovered 12,000 public spaces sold into private ownership since 2014/15, ranging from grand metropolitan libraries to small patches of scrub land. Guy Shrubsole and Anna Powell Smith, in mapping landownership in England, discovered that £100million worth of the land sold-off by councils between 2017 and 2018 went to offshore companies. Earlier this year, Brett Christophers revealed that 10% of the UK’s land has transferred from public to private hands since 1979. In 2016, our own work at NEF revealed an alarming spread of sales from central government departments in recent years. The government itself claims to have sold 25% of the ‘core’ property holdings government departments since 2010.

Why are we offloading land at all? Ostensibly it’s to meet the government’s target: 160,000 new homes on previously public land by 2020. But the murky reality is that local authorities, like other public bodies, are selling land to fill the vast funding gaps driven by austerity. And it’s because of this fact that selling public land won’t generate the affordable homes that we desperately need to solve the housing crisis.

Local government funding has been cut in half between 2010/11 and 2017/18, so when government policy dictates selling surplus land, it’s no wonder that councils are using their land assets to plug the holes in their budgets. Birmingham City Council has used £53million from asset sales to balance its books, more than any other local authority in England, with as much as £26million of that revenue used to fund redundancies (also a result of austerity) at the council.

As NEF have shown, a key driver of the housing crisis is the price of land. When the incentive in selling public land is to raise cash to keep vital services afloat, councils inevitably sell to the highest bidder, as quickly as possible. While local authorities are technically allowed to sell at slightly less than the highest value (although many don’t out of financial necessity), central government departments are actually prohibited from selling land at lower than the ‘best consideration reasonably obtainable’. Developers cannot both build affordable housing and make a profit, because the price of land is prohibitively high. Expensive land leads to expensive houses. In this upside-down system, the price paid for land ultimately dictates what gets built when it should be the other way round.

This theory is laid bare in the planning documents that sit behind the sites. In our research on the central government sell off, we’ve come across countless examples of developers securing planning permission with promises of affordable housing, only to wriggle out of their commitments a few months later by claiming they can’t afford to.

Take Runwell Hospital in Wickford. Chelmsford City Council’s affordable housing plan requires that 35% of homes on new developments are affordable. Yet the site’s initial planning permission required only 20% affordable housing provision. Even so, the developer later submitted an application to reduce this further to just 10% on the grounds of affordability – just 61 of 575 homes.

Our research in 2017 revealed that:

Only one is five of the new homes to be built on sold-off public land is likely to be classed as ‘affordable’ (which, at 80% of market rates, is still largely unaffordable to those who need it most).

As little as 6% of new homes are likely to be social housing, and in some cases developments comprise solely of luxury properties.

New homes on formerly public land are dramatically behind schedule. At the current rate, the government’s target of building 160,000 homes will take until 2032 to achieve, 12 years later than promised.

Releasing land into the private market is not delivering the quantity or quality of affordable homes we need. As more land is sold, there is less opportunity to reverse these trends.

The sell-off of public land for hole-plugging cash receipts is not only economically short-sighted and unsustainable, it’s also driving the housing crisis. There is a clear tension between disposing of land to plug funding gaps and developing high-quality, genuinely and permanently affordable housing and other infrastructure. This year we are continuing to get to grips with the effect of the public land sale on the housing crisis. First up is a close look at NHS sites sold in the last year, then in the coming months we will be bringing together central government and local authority land sales to get a truly national picture of the sell-off. Only then can we build a picture of an alternative to the fire sale of public land, that results in the supply of genuinely affordable homes.”

https://www.huffingtonpost.co.uk/entry/housing-crisis-public-land_uk_5c811055e4b0a135b5199d5d

Why falling house prices can be a bad thing

“… An analysis released this week by the property firm Savills spelled out just one of the reasons why [a downturn in property prices could be a bad thing].

A property downturn could, it estimated, reduce the number of affordable homes being built by a quarter. When prices fall, developers’ profits shrink and they retreat from the market. And when developers stop building, promises to stop future buyers being locked out of the market by building 300,000 new homes a year aren’t worth the manifestos they were written on.

What was striking about the former cabinet minister Oliver Letwin’s recent report on land banking – the much-hyped practice of developers buying up land and sitting on it while it rises in value – was that he found precious little evidence of it happening. What he did find was developers building on their sites painfully slowly, over the course of several years, because they won’t do anything that causes neighbourhood property prices to fall. A glut of for-sale boards going up all at once means buyers can take their pick and haggle hard over prices. This may be exactly what first-time buyers need but it’s what developers are primed to avoid.

The problem with relying on the market to provide is that the market works to ration the one thing voters hope mass housebuilding programmes will deliver. And that’s in good times; imagine what happens when everyone is scrabbling frantically to protect their investment in a downturn. …”

https://www.theguardian.com/commentisfree/2018/nov/30/if-house-price-crash-sounds-like-good-news-think-again

Housing minister threatens councils on housing numbers – NOT developers!

The Express headline is:

‘Make their EYES water!’ Housing minister WARNING to councils who FAIL to meet targets

and the article goes on to blame councils for low housing numbers rather than developers who are hoarding hundreds of thousands of planning permissions, trickling out completions to keep house prices artificially high.

Message to Minister: stop shooting own foot, stop shooting councils, start squeezing developers till THEIR pips squeak!

Oh, and that bit about “developers starting on site” within two years. Legally, all they have to do is put in minimal foundations then they can leave the site unbuilt for as long as they want.

“Kit Malthouse MP was speaking to Nick Ferrari on national radio this morning to explain how the Tories are intending to “up the ante” for both developers and council planning teams so as to roll out new housing.

Mr Malthouse cited the introduction of a new scheme, the ‘Housing Delivery Test’, as one way in which the government’s building objectives might be more effectively met.

He said councils “have to hit a certain percentage of the forecast housing in their plan, and if they don’t we essentially take it out of their hands.

“If they drop below 85 percent of delivery they have to use an action plan, but if they drop below 25 percent delivery the government takes it out of their hands and they lose the ability to control a certain amount of housing in their area.”

“We want them to issue two year planning permissions, not three or five years, and if the developer doesn’t start on site within the two years that they’re able to say ‘your site’s out now’.

“You only have to do it once or twice for the development community to realise that we’re serious about this.”

The Minister explained that the Tories would give developers “big tools” to compel them to develop.

He concluded: “We’re putting big pressure on local authorities, big pressure on developers to come together.

“I do feel sometimes a bit like a marriage guidance councillor between the two because they do all shout at each other and point across the table at events that I’m at.”

Ministers say they will build 300,000 new homes a year, considerably up on the current build rate and more than in any year since the 1960s.

But a survey for the Royal Institution of Chartered Surveyors (RICS) found that only 12 percent of members expressed any confidence in that number of new homes being delivered.”