Labour vows to take developers to task on affordable homes 

Doomed to failure (in terms of the headline aspiration) unless the public sector can intervene in the residential land market and control the release of land to individual developers within their own planning framework.

Leaving land assembly and masterplanning to the private sector has failed. All it does is incentivise overpaying for land and imports risk into the development / construction side resulting in the usual drip-feed overpriced poorly built homes on the market.

Well it’s been a roaring success under Labour led MCC (sarcasm)

Legitimate question, why is it developers’ responsibility to provide social housing? Soundbites like ‘Labour will stop developers’ wriggling out of their social housing responsibilities’ makes my skin crawl! Is it M&S’s responsibility to clothe people who can’t afford clothes, or Tesco’s responsibility to feed people who can’t afford food? This kind of rhetoric paints developers in a bad light! It is the government’s responsibility to look after those who need help, paid for in taxes from companies and people. This is just the government scapegoating years of underproviding social housing!

Developers will only invest in a scheme if they get a return that’s more attractive than investing elsewhere. A 15-20% return over a 2-4 year timescale equates to 10% per annum at best and 5%per annum at the bottom end…and that’s if nothing goes wrong. At 5% with risk investors may choose to invest elsewhere. Foreign investments may also taper off as it may be more attractive to develop elsewhere. Development is not easy or risk free…just ask John Lewis. Planning needs to be a level playing field which it currently is not…large developers get an easier ride than most as they have more resources to challenge local authorities but then the cost of that gets added onto the sales prices. What the country needs as a whole is a massive council building program so that supply increases. Land banking also needs to be prevented by the larger corporations. Supply side and labour issues need easing to bring down the psf cost of new builds. Planning reform is needed to get applications through quicker.

Labour promising to introduce something that already exists.

It’s as irrelevant as the Governments promise to extend Metrolink to the Airport!

Another speech that shows that Politicians don’t know how housing development actually works. Viability comes down to a residual valuation – money coming in against money you have to spend up front. Brownfield development, refurbishment of vacant mills, Listed Buildings, environmental risk and land contamination it’s maths, and Politicians are pushing developers into more marginal schemes where costs are often unknown as are end values. As a Surveyor in Local Government we were at the sharp end of the process, Planners based their recommendations on our valuation and the iterative process that entailed developers. Planning Agreements are legally binding with the Planning Authorities and action against breaches are often funded by the Council Tax payer. That’s a judgement call by LA’s and Governments are sadly deaf to appeals for proper funding. A renewal of the Housing Grant system slashed by austerity would be a good place to start if we want to boost affordable homes on a mass scale.

This would be a big help. But it doesn’t address the root cause of land values being too often overly inflated in expectation of a greater return. Nor does it recognise that a market-led response to meeting affordable need – i.e. the concept that if you build enough homes then prices will come down, making more homes affordable – doesn’t work because developers will never build enough homes (even if you’ve identified enough land) when it is in their interests for prices to go up rather than down. The only way we will ever have enough affordable homes – the only way we have ever had enough homes to meet needs fully – is for the state to build them.

Yet another statement that demonstrates Labour’s utter lack of understanding of not just the housing market, but more widely of risk, reward and incentive. In a free society, where private resources can be allocated at will, the market trumps perverse ideological interventions every time. Can’t make money out of housing? Then it will simply be allocated elsewhere. Hardly rocket science.

There are some great comments on this thread and we have a broken system. Taking developers to task is a good soundbite. The comment about why are developers responsible by anonymous 12.34 is valid as the developer is no different to the retailer in trying to sell a product and make a reasonable return for the risk involved, time taken and it’s cost. Developers do assemble land and identify masterplans but they don’t have control and there is a constant and growing number of hoops to jump which now take longer increasing risk and return. The comments by Anon on return are correct, if the return isnt good enough for the risk the money will go elsewhere. The issue lies in the land availability, expectations on value by landowners, planning process, time and competitiveness of the market i.e. there isnt enough so demand and risks taken get higher. Local Authorities and the general public also don’t trust developers so the viability becomes an iterative process and generally the Authorities have to rely on third parties to review who have a vested interest in creating delays and challenge. Ergo its broken. The public sector and politicians relies on the private sector to supply whilst kicking it all the time. I don’t think there is a wriggle of responsibility from the developer just a frustration with a broken system.