Government plan to build 100,000 homes ‘ambitious’
Greg Mitchell, head of residential development at Manchester-based planning and urban design consultancy Turley Associates, said the planning regime in England would delay plans for a swathe of homes to be built on public land by 2015.
Mitchell said the announcement by the Government will be welcomed by developers and those looking to purchase a home.
Government departments are being asked to identify surplus land around hospitals, schools, military bases and highways by autumn of this year.
Mitchell said: "Land supply is a real issue for developers and this move will be welcomed. However, the Government is rather ambitious in hoping that 100,000 new homes will be built by 2015.
"Whilst it is suggested that some sites will be sold with planning permissions attached, no doubt at a premium, developers will in the majority of cases need to apply for the relevant planning permissions, and on straightforward sites this can take up to 18 months.
"Many of the sites however will be in sensitive locations, close to military bases or on green belt sites for example, and this will undoubtedly slow the planning process down further. It is unrealistic to expect the current planning regime to approve 100,000 new homes within the 2015 timeframe.
"The Government has promised to streamline the planning system to promote growth and this is welcomed, although no detail has yet to be announced. A major shake-up of the planning regime is already underway through the Government's Localism Agenda and how this will sit with a regime streamlined for growth will be crucial. There is real potential for conflict."
Mitchell said that land will be sold at the market rate and is expected to raise up to £10bn.
Mitchell added: "The approach being suggested by the Government selling land at the full market value is also interesting. Developers are being asked to shoulder all risks, and they will want assurances that planning permissions will follow rapidly."
The Government hopes that the first homes will be built within two to three years.
Whilst the simplification of the planning regime is welcome, the bigger problem is the business model adopted by the UK’s house building industry who, despite already sitting on enormous land banks, are quite happy to build small numbers of units at high prices, enabling them to maintain profitability and shareholder value regardless of latent demand or the state of the wider economy. With respect to the issue of historic low productivity set against soaring demand it is the development and financial services industry that is disfunctional, not the planning system.
The price of land is a significant issue as is the availability of mortgages but relaxation of the planning regime and flogging a bit of public land will not on its own resolve the problem of low housing production and lack of affordability. The term “house builder” is a misnomer as they subcontract the vast majority of the construction part of the development process, instead profiting from the windfall gain on achieving planning permission and the subsequent quick turnover of sales rather than through delivering a quality, differentiated product in a competitive market. Our “house builders” are in fact little more than land speculators and are better understood as an extension of the financial services industry with all the inherent short-termism and exploitative practices that implies. What’s needed alongside the overhaul of the planning system is a root and branch review of development finance and land market with measures introduced that help de-risk development, encourage long term investment and new market entrants, innovation, and genuine competition. Measures that discourage speculation by better capturing and sharing the windfall gain, with proceeds put towards additional social or economic infrastructure, or remediating derelict land are essential. The government are flirting with tools such as TIF, CIL and ADZ but I fear that any further, more decisive moves in the direction of a land valuation tax would upset the powerful and vested interests that profit from the current status quo, that is, the financial services industry and the ‘old money’ landed establishment that still seem to hold sway in this country.
By A_Noun