黑洞社区

The moon landing was faked, Bill Gates used Covid vaccines to inject us all with microchips and home builders don鈥檛 build homes they have permission for. Some conspiracy theories just won鈥檛 go away.

The latest incarnation of the 鈥渓and banking鈥� conspiracy - the deliberate withholding of consented homes from the market - comes courtesy of the The Institute For Public Policy Research (IPPR) and the Local Government Association, claims that 1.4 million homes have been granted planning permission but not built since 2007. Planning, you see, just isn鈥檛 a problem.

The figure is taken from the recent . In compiling their report, the CMA was allowed access to any internal documents they wanted from developers - from accounts to emails and meeting minutes - with the threat of jail time for those who didn鈥檛 cooperate. Despite that unprecedented level of access, they found no evidence of land-banking. They did, however, conclude that the planning system was acting as a brake on housing delivery.

It鈥檚 not uncommon for the same home to be granted planning permission more than once - on the original permission and again as part of a scheme redesign

None of this should be a surprise because the 1.4 million unbuilt homes figure isn鈥檛 actually real. Our data on housebuilding is dreadful. We don鈥檛 really know how many homes we build each year. It鈥檚 even harder to measure the number of homes granted planning permission.

Such is the complexity of our planning system, it鈥檚 not uncommon for the same home to be granted planning permission more than once - on the original permission and again as part of a scheme redesign.

There are dozens of reasons why a developer might want to re-plan a site that already has planning permission. Changed market conditions can mean they want to amend the mix of house sizes they build, while new building regulations might require redesigned house types.

Each of those consents shows up in the approval statistics but doesn鈥檛 actually increase the number of homes that can be built.

Glenigan - who on which the CMA report drew - try to weed out duplicate consents from their figures by only counting one permission where two have been granted on the same site within 12 months, but that is still imperfect. Many 鈥� perhaps most - re-plan applications are submitted more than 12 months after the original approval.

It is hard to identify if two different applications relate to the same site. Location plans are submitted in PDF format, making comparisons difficult. Development addresses change. What started out as an application for 200 homes to the rear of London Road becomes an application for 116 homes at The Orchard and uses the brand-new postcode assigned to the development, when it is re-planned part way through construction.

Glenigan recognises the shortcoming, clearly stating that its data should not be used for the purposes of calculating how many permissions haven鈥檛 been built. In Glenigan鈥檚 words: 鈥淚t is not possible to use these annual figures to estimate the total stock of units on uncompleted sites with permission.鈥�

So we know the number is nonsense.

But we also know that there will absolutely be some homes that genuinely do have planning permission and haven鈥檛 yet been occupied.

There鈥檚 a good reason it doesn鈥檛 happen - it would be commercially illogical. Home builders make money by selling homes. The quicker they do so, the quicker they can recycle the cash into new development sites 

The list of reasons why that happens is long, and benign. Large sites take time to build. Tower blocks need to be structurally complete before the first apartments can be occupied. When it takes around two years to get from first identifying a potential development site to the first home buyer moving in, developers need to hold a stock of planning permissions to last at least that long (and which would equate to more than 600,000 unbuilt, consented homes to hit the government鈥檚 housing target). SME developers typically need to secure planning permission before they can get development finance. There will even be some sites where build cost inflation and rising interest rates means development is no longer viable.

But none of this is evidence of some conspiracy not to build, nor of private developers鈥� inability to do so.

This won鈥檛 be a surprise to anyone who has been paying attention; the CMA aren鈥檛 the first people to have investigated land banking. It鈥檚 also been looked into by the Barker Review (2004), the Callcutt Review (2007), the Office of Fair Trading (2008), Nick Boles as Planning Minister (2013) and the Lyons Review (2014). None of them found any evidence of the practice.

There鈥檚 a good reason it doesn鈥檛 happen - it would be commercially illogical. Home builders make money by selling homes. The quicker they do so, the quicker they can recycle the cash into new development sites - at land prices that reflect prevailing house prices - and the more money they will make. This is balanced against the need to maintain a supply of developable land that is adequate to keep their business running in the near future, and the harder it is to secure permission the larger that supply needs to be.

As the CMA put it, 鈥淥ur analysis suggests that observed levels of land banking activity represent a rational approach to maintaining a sufficient stream of developable land to meet housing need, given the time and uncertainty involved in negotiating the planning system.鈥�

But then again, maybe the CMA are members of the Illuminati.

Paul Smith, managing director, The Strategic Land Group