Builders hold back enough land for 600,000 new homes

The Guardian Thu, 31 Dec 2015,  Graham Ruddick

• ‘Big four’ firms hold majority of vacant sites
• ‘Dysfunctional’ system worsens housing crisis
• Companies blame planning process for delays

Britain’s biggest housebuilders possess enough land to create more than 600,000 new homes, raising questions about whether they are doing enough to solve the housing crisis facing Britain, an analysis by the Guardian has found.

The nine housebuilders in the FTSE 100 and FTSE 250 hold 615,152 housing plots in their landbank, financial disclosures show. This is four times the total number of homes built in Britain in the last year.

The four biggest companies – Berkeley, Barratt, Persimmon and Taylor Wimpey – account for more than 450,000 of the plots. They also hold £947m of cash, and declared or issued more than £1.5bn in payouts to shareholders this year.

A spokesman for the housing charity Shelter said: “Developers do need a pipeline of future sites – but when housebuilding is still stubbornly low and landbanks are this large it is a signal of how dysfunctional our housebuilding system is.

“These are private companies so it’s reasonable for them to seek profits. But when their profits are so high we should be questioning why the government is directing subsidies towards developers to build barely affordable starter homes and away from providing the genuinely affordable housing we so desperately need.”

Under Ed Miliband, Labour floated the idea of a use-it-or-lose-it policy for companies sitting on undeveloped land.

George Osborne warned in the autumn statement that there was a “growing crisis of home ownership” and unveiled plans to boost housebuilding by offering £2bn of public funds a year to fund construction of 400,000 affordable homes by the end of the decade; releasing public land suitable for 160,000 homes; and introducing a new London help-to-buy scheme for firsttime buyers.The government wants to build 1m new homes in England by 2020, requiring a rate of 200,000 a year, well above the current level of just over 150,000. Despite the fact that the nine FTSE-listed housebuilders hold more than 600,000 housing plots, they sold just 66,881 homes between them in their last financial year.

However, their profits and share prices are booming as they enjoy the benefits of snapping up land cheaply and as the average property sale price rises. The housebuilders include the big four FTSE 100 companies as well as Bellway, Bovis, Crest Nicholson, Galliford Try and Redrow.

The government insisted it was not complacent about the housing shortage facing Britain and that housebuilders should be playing their part. A spokesman for the Department for Communities and Local Government said: “We want to ensure anyone who aspires to own their own home has the opportunity to do so. Our reforms have got Britain building again with the number of new homes up 25% in the last year.

“But we are far from complacent and have recently doubled the investment in housing to support the largest housing programme by any government since the 1970s. Housebuilders too should be playing their part to ensure we deliver the homes this country needs.”

The landbanks include sites that the housebuilders own and sites they have a contractual option to build on. Some do not publicly disclose all the land they control . Bellway does not report land without planning permission for housebuilding, while Persimmon has 18,000 acres of “strategic land” plus more than 90,000 plots with planning permission.

The Guardian’s findings are based on the companies’ most recent financial results. The housebuilders defended the size of their landbanks and the pace of construction. They claimed that problems in winning planning permission and limited demand in some areas of the country meant they could not build any faster.

John Stewart, director of economic affairs at the Home Builders Federation, said: “Over the past few years housebuilding has increased output at the steepest rate for decades with the latest figures showing a 25% year-on-year increase in housing supply. The industry is recruiting and training tens of thousands of people to ensure it can continue to deliver significant sustainable increases and provide the high quality homes the country needs.”

Berkeley, whose chairman, Tony Pidgley, netted a £ 23m payout in 2015, said it was building on all sites with an “implementable planning consent”. In a statement, the London-focused company said part of the reason it was not building faster was cuts to local planning departments: “The challenge is often around getting conditions cleared for development, particularly on major regeneration sites, and the capacity within local planning authorities to work alongside us. In London, planning departments have been cut by more than 50% over the last five years.”

Barratt said it was building 40% more homes than four years ago, when the industry was still recovering from the financial crisis, but had been hit by shortages of skilled tradesmen and materials. “This has been achieved whilst overcoming a number of well publicised housing market challenges, particularly brick and labour shortages,” a spokesman said.

“We have an extensive programme of recruitment and we now have more apprentices in training than at any time since 2007. We have virtually no sites that have an implementable planning consent that are not in production.”

Taylor Wimpey also cited planning process problems and said all sides of the housing debate need to be patient if more homes are to be built. A spokesman said: “Whilst it is improving, the planning process is slow and complex and a number of conditions need to be fulfilled before development can commence on our sites.

“A shortage of resources in planning departments also often means that delays occur in this process. We therefore need to be patient and constructive on all sides of the debate in order to sustainably build the homes that the country needs.

“We continue to work closely with local authorities and communities to secure planning approval and as soon as we have an implementable permission we begin development without delay.”

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