‘Land banking’- anti-development lobby ‘myth’

8 May, 2014

‘Land banking’- anti-development lobby ‘myth’

Debate should be about how to speed up permissions in planning pipeline if more homes are to be built  

New research, published today, shows that just 4% of land owned by Britain’s larger home builders has an implementable planning permission but is still awaiting start on site.

The report shows that virtually all the remainder of the land in house builders’ land banks is ‘land in progress’ in the planning pipeline which does not yet have an implementable consent, or is on sites where construction has already started.

As the industry increases the rate of house building from the current historically low levels towards what the country needs, working out how to get land through the planning pipeline more quickly has to be a priority for Government.

House builders are selling many more new homes, especially since Help to Buy Equity Loan was launched last year, which means they are building more. But they can only sustain these new higher levels of home building, and boost them even more, if they can get more sites through the planning pipeline more quickly.

The HBF report ‘Permissions to land – debunking the land banking myth’ reveals that of the 220,000 ‘plots’ held in the land banks of the 23 major companies surveyed:

Just 4% of plots have an implementable planning permission and work hasn’t yet started on site; 63% are on sites where construction work is underway. Large sites with thousands of homes will obviously take years to build out and homes on such sites will be at various stages in the construction process. 68,500, or 31%, are on sites with only an outline permission – so builders legally cannot start building – or on sites where building is held up awaiting local authority discharge of planning conditions. Extrapolated out across the whole industry, this means around 185,000 plots are currently in the planning system but cannot yet come into production. 2% of plots are on sites not being developed because they are not economically viable 

Stewart Baseley, Executive Chairman of the Home Builders Federation said: 

“This report is just the latest of many to debunk the myth that home builders hoard land.  When you look beyond the rhetoric and the lazy accusations, the facts are quite clear: house builders do not hoard land or landbank unnecessarily. The debate really needs to be about how we get the land in the planning system through more quickly to build the homes we need and not about myths.

“The planning process is complex, bureaucratic, costly and time consuming.  As a result, house builders have to have a pipeline of land coming through the planning system to enable them to plan their businesses.

“The Help to Buy Equity Loan scheme is helping people buy more new build homes.

But if we are to see a sustained increase in housing supply we need to see more sites coming through the planning system. Unblocking the planning system and processing applications more quickly will be crucial. There are currently around 185,000 potential homes in the system. Finding a way to get these through the system more quickly must be a priority for Government if it wants to get the homes built the country needs.

“With demand for new homes increasing, home builders are building out existing sites more quickly and looking to get new sites under construction sooner. It makes no business sense whatsoever for builders to sit on land with an implementable planning permission.”

Claims about landbanking are frequently made the anti-development lobby to divert attention away from how slow and inefficient the planning system can be.

Last year only 110,000 new homes were built in England against a need for 240,000 per year to meet projected housing requirements. A report by HBF in March 2014 estimated that over the preceding decade there has been a shortfall of more than one million homes compared to the numbers required in 2004. Please click here to view.

Under the NPPF planning system every local authority is required to identify a 5 year supply of land for the homes needed in their area. On this measure alone, if we are to get to the 200,000 homes a year in England, a target set by the Labour Party for 2020, local authorities will need to be able to identify residential land for more than a million homes.

The report is the latest to debunk the myth. Kate Barker, in her seminal review of housing supply ten years ago, dismissed the view that home builders land bank; as did the Calcutt review in 2007.  Then in 2008, as part of its exhaustive study of home building in the UK, the OFT said ‘it could find no evidence that home builders hoard land’, a view supported in more recent reports by Savills and Molior. 

For media enquiries, or to arrange an interview, please contact Steve Turner, HBF, 020 7960 1606 / 07919 307 760 or steve.turner@hbf.co.uk

Notes to Editors:

 The Home Builders Federation (HBF) is the representative body of the home building industry in England and Wales. HBF’s members account for some 80% of all new homes built in England and Wales in any one year, and include companies of all sizes, ranging from multi-national, household names through regionally based businesses to small local companies: www.hbf.co.uk

HBF surveyed 23 companies who together are responsible for around 37% of the total homes built each year. The 220,000 plots are across Great Britain.

Click here to download the report.

HBF Report - Landbanking May