The developers tale

It was the end of the week, the Chief executive of Buildmorehouses was pondering the numerous news items arguing that developers should build more houses and use up their land banks. The problem was that although media pundits and politicians considered themselves experts on almost anything their actual knowledge was limited.

In common with other housebuilders, Buildmorehouses had built up a supply of land with planning permission. The had bought land wherever possible for development in the future. In essence the companies aim was simply to make as much profit as they could and in the process reward the CE with a large pay packet. It was far better for Buildmorehouses to buy the land than allow a rival to do so.

Now contrary to the simplistic approach adopted by many pundits, Buuildmorehouses was not a provider of housing to those in housing need. The company build houses to make a profit. Some types of housing were more profitable than others – luxury housing topped the list, you could make a good return if you could concentrate on these. You also knew that in certain areas demand from potential second home owners and holiday lets made development rather profitable. Thats why the company had bought several sites in desirable coastal locations.

Ok the CE accepted you needed to provide some housing for local residents. If you had to make this affordable by charging more for unaffordable houses or if you could get more permissions for luxury housing to offset these all the better.

All in all, Buildmorehouses had worked out how many houses they could build each year to meet local need (if residents could afford it)and to satisfy demand from those looking to relocate or buy a second home. There was no point in building any more.

So what to do if the Government pressed you to build more houses than were actually needed or demanded? Well it would not be very sensible just to build more if they could not be disposed of. It was of course always possible to stimulate demand to some extent – but even the markets for luxury homes and second homes had their limits. You could always advertise more of the houses in the affluent south east of England, there seemed to be an almost insatiable demand here, but pushed too far and supply might exceed demand even in this market.

And the Chief Executive knew that the current system did not actually provide many of those in real need with a home.

He was in a bit of a hole. How could he explain that there was really no need to build more houses without revealing that the current system was not working without making himself (and all those pundits) look incredibly stupid?


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