Councils should be given powers to charge council tax or other fees on unnecessarily delayed building of permissions. So says South East England Councils (SEEC) in its new report Unlock the Housing Blockers.
You have to admire the front of authorities at times. There are astonishingly few councils in the south east who can genuinely claim that they are fit for purpose when it comes to housing delivery. This is a result of political obfuscation and indecision, lack of officer resource and core skills, and niggles in the planning system.
So what better way to divert attention than to blame the housing industry for blocking housing delivery? Let’s assume for a moment that the SEEC are right; that one or two developers throttle delivery rates to maximise the return on their investment. Consider the justification for such an outcome. The principal issue is certainty of land supply, and certainty of income. Housebuilders of all scales rely on their workforce, and in particular their construction supply teams. Maintaining a consistent team of skilled labour requires a steady supply of projects. The issue here is that no company would employ people without an ability to utilise them, to deliver sufficient returns to generate greater profits than costs. Working a team to their maximum utilisation only works if the employer can guarantee that another project will be waiting for them once the current instruction comes to a close. Otherwise, they will all be looking for other jobs.
Feeding that conundrum into the world of land and planning highlights an obvious tension. Local authorities continue to fail to deliver robust development plans with sound housing allocations. As of January 2017, a full 70 per cent of local authorities in the South East remain without an up-to-date development plan. That is bad news for homeowners and home renters, but it’s also bad news for developers. They are being starved of oxygen to keep their businesses in rude health, to enable them to plan for growth, to employ additional people, and to increase the volume of housing development – all of which support the UK’s economic growth. Developers are often obliged to track the pace of developments, and the number of teams working on them. This isn’t because they don’t want to build more quickly – and thereby improve the potential of maximising returns – but through a limited supply of future sites.
I have said on more than one occasion that strategic land promoters and the housebuilding industry suffer from appalling PR (ultimately their own fault), and that we should more readily equate housing supply to an infrastructure pipeline in just the same way as we view gas or oil. A landbank in that context is a good thing. It provides greater certainty of delivery, and will actually increase the flow rate of growth, and all parties in the supply chain gain greater confidence from its existence.
Let me put this into context. Iceni undertook some research into South Essex recently (not strictly covered by SEEC, but you’ll get the point), which sought to match how many of the circa 50,000 homes projected to be required in the sub-region could be referenced in any form of development plan – be that draft allocation or adopted plan. We were unable to point to more than circa 3,000 plots. Recognising that the majority of land required to deliver growth is presently zoned Green Belt, can anyone blame the respective land promoters and house builders for being cautious about bringing forward planning applications? The minute they do, they are subject to claims of being opportunist, parasitic developers.
SEEC’s report is a great diversionary tool, but does little to address the underlying problems in housing delivery. Development in the South East – particularly of the strategic land promotion flavour – is a long, hard slog. It’s expensive, uncertain, and bedevilled by political opportunism.
Developers are not altruistic, and we do not have a benevolent public sector that is about to return us to the housebuilding rates last seen in the 1970s. Developers have shareholders that expect returns (it is no great leap of imagination to understand the pressures that this brings to bear – we all have shareholders too, by way of our pensions).
The system we have has been fine-tuned by political short-termism, local authority budget cuts, and 20-plus years of NIMBYism. Adopt some development plans, and housing delivery will materially rise. The pendulum swings back– the real onus is on local authorities to unlock the housing blockage, not developers.