Between 2010 and 2015, an earlier planning shake-up saw the number of permissions granted each year increase by 75pc. But the number of homes completed annually was just 33pc up. Similarly, between 2015 and 2017, as permissions granted per annum increased 36pc, homes built rose just 15pc. The growing delay in build-out rates is significant and undeniable.
Evidence I submitted to a recent Parliamentary inquiry demonstrated that between 2010 and 2017, of 1,943,125 new permissions granted in England, some 932,335 – almost half – remained unbuilt. Over a seven-year period, then, during which the UK’s housing shortage became chronic and unaffordability spiralled, our housebuilders applied for and were granted clearance to construct almost one million new homes they chose not to build.
Back in 2008, countless small and medium-sized firms which convert permissions into marketable homes relatively quickly, to aid cash flow – built over two-thirds of all new homes. Many were then wiped out by the financial crisis and lots more have since been stymied by an inability to raise finance to access building land.
That’s why the housebuilding industry is now far more concentrated, with the top ten developers accounting for around 70pc of new supply. These over-dominant players use their well-resourced legal departments to obtain planning permissions, some of which provide a legitimate “building pipeline”, but many of which they won’t use. Such permissions still bolster their balance sheet, boosting share prices and related executive bonuses. And once “captured”, they aren’t available for smaller firms.
So the big boys control the rate at which homes come to market in certain localities, boosting profit margins way higher than they should be, while keeping smaller rivals at bay. And that’s why our housing market is “broken” – because the industry is largely controlled by a few large players deliberately restricting supply.
A 2016 House of Lords investigation concluded the UK housebuilding industry “has all the characteristics of an oligopoly”. A full Competition and Markets Authority inquiry into an industry imposing “contrived scarcity” on homebuyers, limiting the number of new homes to artificially boost profits, is long overdue.
But even bolder measures are needed. In my book Home Truths, I propose that if a home isn’t completed, ready for sale, within two years of permission granted, developers should pay full council tax on unfinished properties, rising to double then triple council tax in subsequent years.
Planning permission should be a contract to build, between developers and the community, not an option to build if developers feel like it. Altering financial incentives would address the worst excesses of deliberately slow build-out.
We need to free-up parts of the greenbelt – much of which is urban scrub. Far from being “concreted over”, it has doubled in size since the Seventies – and now covers 13pc of England’s land mass while housing, including gardens, accounts for little more than 1pc. This white paper flunks that challenge too, preserving all greenbelt land.
We must recognise, also, that “zonal” planning in some areas won’t much help smaller builders, or tackle unaffordability, when land prices, driven by speculation, remain sky high. When agricultural land is granted planning permission, its value can jump an astonishing 200-fold or more.