It’s now an accepted fact that our housebuilding market is broken. It quite simply isn’t working for ordinary people, and this is clearest in it’s failure to build homes to the scale that we currently need.
Often we hear major developers saying that a key reason behind this is that the planning system is too complicated, too convoluted, and just not fit for purpose. This also offers a simple answer – if the planning system is broken then we need to reform it to make getting planning easier. More planning consents = more houses after all. However, what we know, and what is becoming itself more accepted, is that this simply isn’t true. The planning system isn’t broken; in fact it’s delivering!
Today we’ve published some new research that really underlines this. Our findings show that over the course of the last five years only 68% of planning permissions have actually turned into homes. This means that across England there are 324,000 homes that could have been built but haven’t.
Of course in some cases there will be valid reasons why these homes haven’t been built, and we can’t expect every single planning permission to turn into a new home. However, communities can expect better than this.
This type of stark statistics also begs the question why developers aren’t building more homes? Surely as a housebuilder building more homes is exactly what you want?
Perhaps the answer lies in the second part of our research, which looks at how the profits of the biggest five developers have fared over the past five years. What we find is that their profits have increased by 388%.
This means that if you are a major developer the system is working perfectly, why would you want to change anything? However, for ordinary families what we see is rising rents, rising house prices, not enough homes and an ever decreasing chance of buying your own home.
Of course we can’t blame the developers for making money. As a business it is exactly what they are supposed to do – and clearly they are doing it well. In fact what this really shows is that the market is fundamentally broken.
So, what do we have to do? At Shelter we are clear on what we need: a housebuilding market based on New Civic Housebuilding.
New Civic Housebuilding would let us rediscover our tradition of building beautiful and affordable places to live. And through New Civic Housebuilding we can also make sure that more planning consents actually turn into homes.
This might mean introducing planning contracts, rather than planning permissions, so having gone through planning you would have an obligation to actually start building unless circumstances are exceptional. And it also means making sure we are getting land into the hands of those who actually want to build on it.
Planning permissions can’t simply be seen as a commodity – as a way to increase the value of a parcel of land before selling it to someone else who doesn’t want to build on it but is speculating on a rise in value. This isn’t fair to communities, it isn’t fair to those in desperate need of a home and it isn’t fair to council’s who have expended time, effort and political capital to get a permission granted.
Part of this is thinking about compulsory purchase orders as well, as promised in the Conservative manifesto. If we revised the way that compensation for landowners worked when compiling sites then we could start bringing down the cost of land across the market. This would mean that SME builders, those who generally can’t hold onto land and have to build out the permissions they get, would have greater access to land.
Fundamentally what our research today underlines is what we already know. The housebuilding market currently works as a way for big developers to make money, unfortunately it Isn’t working as a way to build the homes we need. It’s time to fix this.