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Study suggests housebuilders are not land banking

Words: Laura Edgar
Housebuilding / Shutterstock

Of the units granted planning permission, either full or outline, between 3 per cent and 5 per cent might be expected to stall or lapse after five years, according to research.

Tracking Progress also finds that after five years it might be expected that:

  • 10 per cent to 15 per cent of homes granted permission will be superseded at a later date by a fresh permission (which does not mean it will necessarily harm the pace of delivery).
  • 35 per cent to 50 per cent of homes granted permission will have been delivered.
  • 35 per cent to 50 per cent of homes granted permission will remain extant but on sites delivering on a phased basis beyond five years.

The Land Promoters and Developers Federation (LPDF) and the Home Builders Federation (HBF) commissioned the research from planning consultancy Lichfields. The firm considered how the pipeline of sites for housing development compares with what is needed to meet the government’s target to deliver 300,000 homes a year in England by the mid-2020s.

The report challenges Local Government Association (LGA) research published in May that said there are at least 1.1 million homes in England with planning permission that have yet to be built.

Tracking Progress analyses data from Central Bedfordshire, London Borough of Wandsworth, Cheshire East, Colchester and Stratford-on-Avon local planning authorities to find out what happens to the planning permissions granted in a single base year over a five-year period.

The report finds that, other than in Wandsworth, outline permissions are a “significant” share of the homes granted permission in the base year, many of which comprise more than 500 homes. They account for more than half of homes permitted in three of the five local planning authorities.

It is expected that with some outline permissions, in particular larger schemes, not all of the homes could be completed within five years because with outline permissions work is still needed on detailed design and implementation matters, followed by a phased build-out.

Additionally, land assembly might be required, technical issues need to be resolved on upfront works and legal matters need to be agreed.

“When local residents and councillors refer to permissions that have not yet been delivered, they are, in many cases, simply observing a lag period for delivery on outline schemes that is entirely to be expected,” the report states. “Even with that, most such schemes deliver early, with the majority of outline permissions in the research either completed or delivering – and a third of the homes on those outline planning permissions completed – within five years.”

Lichfields concludes that none of its analysis outside London indicates “any systemic failure in converting planning permissions to development by the industry”.

“The mismatch between planning permissions granted and housing output on a yearly basis is readily explained by the simple matter of the time it takes to progress development through the regulatory stages, the risks associated with small site delivery (and by smaller builders), the overall phasing of build-out on larger sites, and the role of the planning system (via new planning permissions) in facilitating changes to planned development schemes to reflect practical requirements.”

Paul Brocklehurst, chairman of the LPDF, said: “This research highlights the gross oversimplification in the analysis by the Local Government Association frequently quoted in the national press and by many politicians regarding the ‘stock’ of unimplemented consents.”

Brocklehurst believes that the research highlights the “desperate need” for an increase in planning consents in the short term if the government’s target of building 300,000 new homes a year is to be achieved.   

However, the government’s planning white paper process has “exacerbated the impact of the pandemic on the operation of the planning system causing many LPAs to pause, delay and abandon their local plan process”.

“This, combined with the pressures on LPA planning resources, has led to signs that planning consents for new sites suitable for all housebuilders to build on may be declining. Urgent action is needed to ensure that the housebuilding industry, on top of the labour and supply chain challenges that they face, is not confronted in the near term with an inability to restock its land.” 

He called on the government to clarify the changes it proposes to make to the current planning system quickly so that local authorities can return to producing their local plans and the development industry can continue to work towards delivering the government’s housing target.

Andrew Whitaker, planning director at the HBF, said: “This myth that housebuilders land bank has been dismissed by a growing number of independent reviews. As this latest research demonstrates, aggregating numbers of outstanding planning permissions misses the ‘story’ behind each and every site that comes forward for development.

“Planning system issues remain the biggest barrier to the industry delivering desperately needed homes and the government’s housing ambitions. Instead of hiding behind the misleading figures produced by the LGA every year, local planning authorities need to abide by the responsibilities placed on them by the planning system. If we are to meet housing targets, local authorities must ensure that they prepare up to date local plans, allocate a choice of sites in terms of size and location and grant all types of applications for development, including revisions and amendments, quickly and efficiently.”

Image credit | Shutterstock