Land banking is the problem – is it?


The Institute of Public Policy Research has congratulated Ed Miliband the leader of the Labour Party for suggesting that developers who ‘hoard’ land should be penalised.

Labour leader Ed Miliband is to accuse some property developers of hoarding land and failing to build the homes that the country needs.   In a speech on Saturday, he will say too many firms with planning permission for projects are “sitting on land” as it gains value, instead of using it.    Labour is considering giving councils more powers to penalise firms which do not proceed with building projects.

The IPPR argues:

  • We don’t release enough land for development.
  • By the time this land is given planning permission it is prohibitively expensive.
  • Our planning system gifts very large windfalls to those able to get planning permission for their land.
  • In order to both profit from and get around the uncertainties and costs of our residential land market, our major developers have therefore become specialists in land-trading first and home-building second.
  • Landbanks have evolved to secure builders’ crucial raw material. The result has been that any land likely to get planning permission is owned or controlled far upstream by developers with the necessary resources and business strategies.
  • As a result, very few other people get a look in to the residential land market. Very few foreign firms enter the UK housebuilding market, the number of small and medium-sized British building firms has shrunk tremendously over the past five decades, and self-build – so prevalent in Europe and the US – is virtually non-existent.

Comment   A couple of basic points here – 1) as we have said before the housing market is more complex than many people realise; 2) different areas are affected by different factors – you cannot assume that because x is a major factor in one area that it is the same everywhere.

If we look at the statement by IPPR and examine it from a Cornish perspective what do we find?

We don’t release land for development

  • We actually release lots of land for development – large sites like those at Threemilestone; and a plethora of smaller sites.
  • Land is expensive due to demand.
  •  The planning system is supposed to restrict the amount of development for environmental purposes – if demand is excessive then prices rise. 
  • Presumably the IPPR want more land developed – not very sustainable!

We don’t build enough houses

  • We build lots of houses in Cornwall.  Lots more than we actually need!

Do developers hoard land in Cornwall?  

  • Well developers certainly buy land for development – why?  With excessive housing targets and allocations developers move to buy and get permission. They also look for sites where they think they can get permission even if the land is not allocated.  But that’s a consequence of a ‘build more, build anywhere’ approach adopted by the Government and other main political parties. 
  • We have lots of permissions accumulated – why because too many have been granted!

What would happen if permissions were translated into houses?

  • Well there would be lots of houses for sale which would be in excess of local needs so they would be marketed and sold to people wishing to move to Cornwall and those looking for second homes and holiday lets!  
  • We would have lots of houses, but for the wrong reasons and for the wrong people.

To reiterate, it is not credible to look at one aspect of an issue and then produce a policy which purports to be a universal cure.  Policy makers and commentators need to get real, to look at all the factors and not produce simplistic ‘solutions.’

http://www.ippr.org/?p=1080&option=com_wordpress&Itemid=17http://www.ippr.org/?p=1080&option=com_wordpress&Itemid=17

 

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One comment on “Land banking is the problem – is it?

  1. Peter Wyper says:

    Take a look at the work of Cornwall Community Land Trust. This is the way to build affordable houses for local need.

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