Cheshire East points finger at ‘land-banking’ housebuilders

Cheshire East Council plans to write to ministers and meet with local MPs in a bid to get the Government to apply pressure to developers to deliver houses on land where they have planning permission.

The council said that since 2012 it has approved 12,500 homes, but only 3,300 have been delivered.

Cllr Rachel Bailey, Cabinet member in charge of the local plan, Cllr Ainsley Arnold, Cabinet member in charge of housing and planning, and Mike Suarez, chief executive of the council, have released a joint statement in which they outline “frustration that some developers are land-banking large plots with planning approval for houses and seeking to snap up more greenfield sites, waiting until the market picks up”.

The authority wants to persuade the Government to create regulations which force developers to either achieve certain build rates or lose their planning permissions.

Cllr Bailey said: “I believe we need to turn the spotlight onto volume housebuilders and press them to deliver the homes that they have permission for. For too long now we’ve heard arguments from housebuilders about a shortage of land to develop on.

“Cheshire East has responded to that argument and granted permission for more than 12,500 homes since 2012, yet only 3,300 homes have been built over this period. It’s clear that housebuilders are not delivering the homes that they themselves say there is such demand for.

“The top eight housebuilders, who are responsible for 50% of new homes in the UK, need to be given incentives to build more as they are the companies with the capacity and capability to do so. If they can’t or won’t, the Government should put measures in place to encourage them or enable smaller housebuilders to fill the gap.”

Cllr Arnold, continued: “It should not be possible for developers to press for more countryside to be released for housing development when there is clearly a healthy supply of development land. We have to question and challenge the way we deliver homes in the Borough.

“We seem to be locked into a system where the delivery of new homes is largely dictated by a limited number of large housebuilders. The reality is that they largely control the supply of new housing and if they choose not to bring forward sites very quickly there seems to be very little that we can do.

“Government should consider introducing regulations that tie housebuilders to achieving acceptable build rates or, if they do not, lose their planning permissions.”

Mike Suarez, chief executive of the council, said: “The failure of developers to bring sites forward quickly where planning permission has been granted makes it more difficult for the council to achieve the required five-year deliverable housing land supply.

“This in turn results in further pressure to release additional unplanned development sites on the edges of our towns and villages, to the frustration of local residents. This cycle creates significant planning pressure without real housing growth which is the worst of all worlds.”

Commenting on the statement from Cheshire East, Gary Halman, managing partner of HOW Planning and advisor on several Cheshire housing projects, said: “There are a number of reasons why it is wrong to characterise developers as the villains of the piece. It is a common challenge by planners that housebuilders sit on land, but there is no benefit to that. Builders make a profit by developing out, it doesn’t get them anywhere to sit on a site that they may have paid millions of pounds for.

“Councils need to look at the timescales within which they are able to deliver detailed planning consent. There are currently lengthy delays over critical stages in the planning process, and this is not just true for Cheshire East. It is a problem endemic to the system, and it would benefit councils greatly if their chief executives were to commit ensuring that planning was seen as a frontline service, in order to prevent the ongoing resourcing problems.”

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Housebuilders have no interest in increasing supply when they can drip feed the market and keep prices high.

By Imperator

I don’t think anybody is willingly land banking in this market. There’s problems with materials and labour shortages but the demand is there to buy houses. It’s not a case of being granted consent and 100 houses magically pop up the day after, there can be months of lead in periods to prepare the site for build, and many of the sites in that statistic will have only been granted consent in the last 6-12 months so may only just be starting to get the first few houses ready for sale. Some of those consents may have also been granted to the landowner who is not a develop themselves so they have to sell it – again, a necessary delay to the process. I think Cheshire East are being hypocrites if they think developers are causing delays to delivering houses!

By Common Sense

Cheshire East should be ashamed of themselves coming out with statements that are tantamount to lies and libel. It stands to reason that if you give permission for thousands of homes around Crewe to avoid having them close to Manchester (where the demand is), add lots of conditions, 30% affordable obligations and millions of pounds of highways contributions etc, they cannot all be viable to deliver into the market immediately!

Apart from trying to attack them, is CEC actually doing anything to improve delivery? Reduce burdensome conditions that have to be amended and cause delay? Help fund and deliver infrastructure up front? Encourage an atmosphere of joint working and engage with developers and house builders?

Publicly attacking people who can’t bite back because they need the council makes their behaviour far worse than that they allege (but do not and cannot substantiate from the house builders).

Punch and Judy is for the pantomime – please can we have some serious debate and focus on actually achieving something?

By Where do they make this stuff up?

Well done Cheshire East Council for being one of the few brave enough to call out the behaviour of large house builders, land owners and strategic land companies who are at the root of the housing crisis the country faces.

Together they form a powerful lobby and are very effective through private lobbying, PR firms and parts of the media in getting government to bend policy to their needs, the most blatant example of which is the way in which they are able to game the system to have their sites declared ‘unviable’ and relieved of their obligations towards vital infrastructure and affordable housing and so make an even bigger margin on their substandard products.

No wonder supply is so constricted if housebuilders do not have the business model to take on sustainable but complex, long term, capital intensive sites and build out at a steady rate, yet refuse to pay for the infrastructure to make their preferred greenfield sites accessible. What housebuilders want is to have their cake and eat it.

Thank goodness light is finally being thrown on their practices because frankly with the amount of subsidies thrown at house builders they really have no excuse for their poor performance. Let’s hope government finally wakes up to the market failure and takes action.

By Corporate Welfare Watch

If there are skills shortages they are entirely of the industry’s making.

Why not train and retain a larger permanent workforce and deliver more through in-house teams, through the peaks and troughs of demand rather than sub contracting? The answer, of course, is that doing so would mean they are judged to be a riskier investment and returns to shareholders and their wealthy directors would be less. But it would also mean the currently huge incentive to trade or sit on land (rather than build on it) would be less and we’d have greater output. We’d also have fewer materials supply problems as suppliers could rely on steadier, less cyclical demand.

So implicit in their bleating about skills and materials shortages is a demand for yet more public subsidy to train up staff throughout the supply chain and pay for their welfare when they are laid off again when the current bubble bursts.

Socialise the risk, privatise the reward is the name of the game in 21st century Britain.

By Corporate Welfare Watch

Who is being dishonest? Land-banking is an acknowledged practice in the development industry. It appears in company accounts, as do the record profits that some development companies have posted this year. Developers are not philanthropic organisations and they build what they can sell, when they can sell it. The greater the housing shortage, the higher the prices. The less they build, the more permissions they can demand.
What absolute tosh to pretend that developers don’t land-bank or that they don’t manage their businesses to ensure the highest possible return on their capital. Humbug!

By Humbug hater

The comments from HOW are misleading. The opaque way in which land is marketed, bought and sold in this country incentivises house builders to over bid, with the most optimistic bid being the one that wins through. This encourages builders to drive down on build costs and planning obligations to achieve their inflated profit expectations and restrict build-out rates to the bare minimum to maintain sales prices and land values. Given these incentives, in a rising market it is often more profitable and less risky for house builders to simply trade land with planning permission rather than build on it; and in a falling market they simply sit on the land to avoid crystallising potential losses until the next bubble comes around.

The problem of lack of supply has got practically nothing to do with the planning system evidenced by the fact that there are hundreds of thousands of unbuilt homes with full planning permission right across the country. House builders are simply not interested in delivering sustainable, high quality places that the planning system demands as it entails investing their capital in essential infrastructure and reduces their inflated margins and executive performance bonuses. This is the real reason they – and their consultants – complain about the planning system.

By Corporate Welfare Watch

Anyone would think HOW had a vested interest!

Where do they make this stuff up must work for a housebuilder who wants to be able to take all the profit without paying anything to mitigate the impact of development. Joint working with housebuilders = let them build what they want where they want regardless of the consequences.

By Imperator