All posts tagged: housebuilding
So the planning system for new homes is in crisis? I’m not so sure.
Figures released by the Home Builders Federation (HBF) this morning may suggest there is. According to its Housing Pipeline report, planning applications for new homes in the second quarter of the year were down 24% on the first quarter and 23% on a year ago.
The HBF has garnered some great publicity for its argument against what it sees as ‘irresponsible scaremongering’ by the environmental lobby over the government’s proposed National Planning Policy Framework (NPFF). As I’ve blogged before, ministers appear to believe that some sort of left-wing enemy within is at work at the National Trust and CPRE.
The HBF is right to be worried about nimbyism among the Barbour brigade, as Colin Wiles argues on his blog. But housebuilding is not at a record low because of the planning system.
There’s definitely a housing crisis. There is planning uncertainty caused by the way the government has replaced regional spatial strategies with a new system that has developers complaining it’s too pro-nimby and environmentalists complaining it’s too pro-development.
But a planning system in crisis? A dire shortage of land? Really? If that’s the case:
- Why do major housebuilders have an average of six years’ worth of land with planning permission at current production levels? That’s up from an average of four years before the credit crunch.
- Why is the proportion of planning applications approved at the highest level for 10 years? As Brian Green blogs at Brickonomics, DCLG stats show that in March 2011 81% of major applications (for 10 or more homes) were approved. That’s up from a low point of 63% in June 2008 and hardly seems to indicate a system in crisis.
The credit crunch left many housebuilders in serious trouble, with homes that would not sell and landbanks that became a liability because land values had to be written down in their accounts. They responded by reducing their landbanks, disposing of unwanted land and selectively buying new sites, and by cutting production to concentrate on fewer, larger, more profitable homes.
So it’s not a big surprise that the number of planning applications is down. The major builders have enough land to last six years at current production levels and it would be stupid to spend more money on planning when permissions only last for three.
They have been forced to cut production to cope with lower demand caused by the shortage of mortgage finance since the credit crunch and by the way that record low interest rates have propped up house prices.
Do something about that and you might help the millions of young people priced out of home ownership and trapped paying higher and higher rents.
The NPPF may help in the longer term by making it easier to build in the South East – hence the housebuilders’ interest.
In the short to medium term though, it’s no use blaming the planners for the miserable output of new homes. It’s not much use blaming housebuilders either for cutting production to ensure their survival.
Instead blame the banks, with more than 80% of the mortgage market now controlled by just six big firms, and the government, for pulling the plug on housing investment at a time when it should be doing the opposite.