Captain’s Blog – Housing Crisis

We often hear about the housing crisis particularly from Government Ministers or those sitting on various Quangos. The usual refrain is that greedy developers are buying up land, not for house building but for “land-banking” presumably in the hope that it will magically increase in value over the years that it is “banked”. They go on to argue that if this practice were stopped then the housing crisis would be eased if not solved completely. But would it? Firstly let’s look at the suggestion that developers buy land and sit on it for no good reason. We don’t that’s for sure, in fact as soon as we buy land we go to work on putting together a planning submission. This can cost a huge amount of money (seven figure sums are not unusual for large schemes) and can take months and years before a planning application can be lodged. The process from then on can take many more months and the outcome is far from certain. Why then would a developer buy a piece of land either speculatively (where no permission exists) or otherwise (where an outline consent exists but a detailed consent is required) and then simply do nothing, or worse, spend hundreds of thousands (or millions) of pounds on planning and then do nothing. The answer of course is that he wouldn’t.

The real crisis, if there is one, is the planning system itself. As “old school” builders such as Tony Pidgeley of Berkeley Homes and Steve Morgan of Redrow will tell you the planning system is broken and if it had been that way when they first set up shop they would never have been able to create the companies that they did. Planning departments in most local authorities are under resourced and over worked. The rules by which they have to operate are cumbersome and strangled in red tape. They are often subject to unwanted political influence and in this age of social media to unwanted public pressure. They can be inundated with FOI (Freedom of Information) requests sometimes submitted vexatiously which take time and resource to answer. The timescale to get a planning application prepared, submitted and approved is now so long that often developers are put off before they start. Those brave or foolish enough to push on get frustrated for all of the above reasons. It’s not unheard of for developers to be asked to pay the local authority for additional staff to be employed by them to consider the application the developer has already paid to submit. All of this points to a system which needs change.

Leaving all of that aside is there a housing crisis which needs to be solved? Do we simply need more houses to sell? A homeowner with his or her house on the market struggling to find a buyer may suggest otherwise. A housebuilder forced to offer incentives such as paying for the first six months mortgage as Miller Homes will or take part exchange in the form of your “used” house as many others will may argue not. The real crisis then seems to be a lack of affordable homes available to first time buyers and the availability of ready mortgages to help pay for them. Given that British people by and large still want to own their home unlike many of their continental cousins we need to concentrate on how we can bring those affordable homes to good locations and be made available to new market entrants. That means fixing the planning system, looking at more efficient build methods and getting the banks to tailor their mortgage products to suit. We can help with the second point but we need some help with other two.