Developers could face losing their right to build if they don’t hit construction targets, in an effort to boost UK housebuilding. ‘Land banking’, in which developers buy large blocks of undeveloped land to sell at a profit in the future’, has come under fire in recent months in light of the UK’s increasing housing crisis.
A new review into process of housing development and land banking will assess the situation moving forward. There has been increasing pressure on the government over the last year to resolve the issue, which they have responded to in part in the Autumn budget—but many are calling for more to be done.
Housing secretary Sajid Javid said developers and landowners will face a ‘more active, more muscular’ input from the government. Some in the Conservative party have even suggested a ‘use it or lose it’ clause, in which developers will be charged or lose their land if housebuilding progress has not begun with a certain period of time.
So how big is the land banking issue?
Larger developers have understandably denied claims that they are land banking for profit. Analysis from Shelter, the housing charity alleges that developers are sitting on nearly one million plots of land. Planning permission was granted on 1,725,382 housing units between 2006 and 2014, but after three years, only 47% of these had been completed.
The Housing Minister is keen to increase supply of new homes, instead of providing more stamp duty cuts. In an interview with The Times, Javid said ‘You need action on many fronts… We’ve got to make sure when land is released for development, and gets planning permission, that those houses are built more quickly.’
He also highlighted the need for the planning system to accommodation SME developers, helping them to contribute to homebuilding targets instead of relying on the larger developers. SME developers struggled in the wake of the financial crisis a decade ago, finding it harder to secure development finance.