House building is more complicated than “Use it or Lose it”

Ed Miliband’s Party Conference key note speech, in which he challenged developers to ‘use or lose’ their land holdings, only serves to demonstrate that the complexities of house building continue to be misunderstood.

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There are two types of site; those with planning permission, and those without.  In respect of the latter, if a site doesn’t have planning permission it is plainly misleading to regard it as forming part of a ‘land bank’.  Sites without planning permission can take years to promote, at considerable cost, and always against an uncertain backdrop that planning and politics can seemingly scupper it at any moment.  If a site does have planning permission, it will invariably be developed – provided it is financially viable.  That places a duty on the planning system not to tie sites up in knots of planning conditions and legal agreements, and a responsibility on developers to purchase sites at a realistic price.  However, and as an example, the ‘best value’ approach to the sale of public owned land places an unhealthy bias on securing the highest price above other objectives, such as developing a greater level of affordable housing.  Equally, some of the most puzzling land acquisitions leading up to the economic downturn were undertaken by quangos acting in the public interest.  Most developers are canny enough to know what the correct price point is, and don’t pay above it.  They then seek to secure a return on their investment as soon as possible – which means getting on with building sites that have planning permission.  Is it really credible to believe that the public sector can do a better job, when cashed-strapped local authorities have been cut to the bone, and already rely on external consultants for more specialist services?

The development industry probably poked a collective finger at the TV screen when Ed Miliband was in full flow, but it remains the case that the industry has got to get better at explaining the complexities of its business so that off-key political pledges have less chance to manifest.  Its misleading to the public, and ultimately detrimental to addressing the housing crisis.