Landbanking – Industry Myth, or a Real Concern?

A study has revealed that there are still nearly 400,000 homes in England which have been given planning permission but haven’t yet been built. Property Solicitor Richard Collins explains.

Commissioned by the Local Government Association (LGA) alongside industry experts Glenigan, the immediate effect is that house prices are expected to continue to increase as the stock of existing properties remains tight.

The LGA, which speaks on behalf of more than 350 councils in England, has used the results of the study to reassert the need for the Government to remove restrictions on council investment in housing and concentrate efforts to rejuvenate house building by funding the construction of new homes, rather than further meddling with the planning system.

The LGA has pointed to worrying signs from the study that shows developers are now also putting in fewer planning applications and taking longer to complete work onsite. Councils are concerned that the fall in planning applications they are receiving may threaten the prospect of a long-term house building recovery as they attempt to provide new housing stock for local constituents who list the lack of affordable homes as a key concern.

Cllr Mike Jones, Chairman of the LGA’s Environment and Housing Board, said: “While there has been progress made, this risks being undermined if we do not find a way to ensure developers keep up with demand. These figures conclusively show that it is not the planning system holding back the building of much-needed new homes.”

Cllr Jones pointed to the results of the study that confirmed councils approve 9 of every 10 planning applications as evidence that the councils aren’t causing the delay in getting new homes built. He warned that Government schemes to help buyer’s access finance risk creating a bubble if there isn’t an increase house building to match it.

Cllr Jones concluded that “new homes are badly-needed and councils want to get on with building them. The common sense answer is for the Treasury to remove its house building block and let us get on with it.”

Previous studies have suggested that the high number of homes with planning permission that go unbuilt in Britain is down to developers and landowners engaging in “landbanking” (sitting on land and waiting for it to increase in value). During last year’s Budget, Chancellor Philip Hammond announced plans for a review into landbanking, the fifth review on the issue since 2004, all of which concluded that house builders did not engage in the practice.

Alan Brown, chief executive of housebuilder Cala, has previously rejected assertions that the housing crisis is a result of house builders holding back land from development, blaming planning issues from the Councils as holding the sector back. The homebuilding industry will be holding its breath for the results of the new study as each party begins pointing the finger at the other as the cause for the delay.

MORE INFORMATION 

For more information on landbanking, please contact a member of our Residential Property team for impartial legal advice. Call on 01708 229444 or email us using our contact form.This article was written by Richard Collins, Solicitor at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of March 2018.