Jan Crosby, head of residential property at KPMG comments on Ed Miliband’s speech at the Labour Party Conference:
“Fixing the structural imbalance between housing need and supply is a laudable aim – albeit one not even achieved at the height of the market.
“Currently supply is running about 100,000 units per annum short – almost half the generally accepted need and Government target of some 230,000 units per annum.
“There are many practicalities any Government must overcome to deliver it. Today’s speech by Labour tackles the real issue of planning permission but also tackles an issue that is only perceived – land banking by housebuilders.”
Centralising planning decisions
“Centralising planning may help to deliver larger scale schemes – particularly where they span or fulfil demand across local authority boundaries. We are increasingly hearing about problems in delivering planning for these types of scheme,” continues Crosby.
“However large sites have large infrastructure costs, more impact on existing social infrastructure and generate more opposition. They are also too large for immediate local demand and hence can only be built and sold over a long time period. The second hand market sets house prices and it is where most of voter wealth sits. Flooding a local market with massive schemes will distort the overall housing market.
“Centralising planning to politicians will also over-ride local democracy and risks a politicising of where new housing is built – a risky route to go down.
“I believe there should be more focus on direct alignment of spend on social infrastructure alongside housing. This will tackle local opposition better than centralising decisions. Materially more homes will be more likely to be welcomed if hospital, school and transport capacity is also improved.
“Releasing more smaller schemes (<200 units) rather than big large ones will have much more of a short term impact on volumes.”
Use or lose land
“Housebuilders do not hoard land – there is little incentive to do so. They sell if there is funded demand as evidenced by the volume increase now coming through with Help to Buy. Some land is not viable and is unlikely to be so for any developer subject to planning change.
“The use it or lose it approach to land is flawed and unworkable. Schemes take time to build (especially Garden Cities), local demand needs to absorb the new homes at current second hand market pricing. Developers have enough incentive themselves to sell as rapidly as able. Policing and dealing with land taken back through CPO would be costly and highly complex.”
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