The Home Builders Federation (HBF) and Taylor Wimpey, one of the UK’s most prominent housebuilders, have denied widespread accusations that the industry is deliberately hoarding suitable land to profit from increasing house prices.
Recent figures from the Local Government Association indicate that nearly half a million new properties in England and Wales have planning permission in place but construction has yet to begin. Analysis has confirmed that the country’s biggest housebuilders own enough land to build over 600,000 new homes, causing many to wonder why Britain’s housing shortage remains so critical.
An inquiry into the UK housing market economics has been launched by the Lords economic affairs committee. At a recent hearing, committee chairman Lord Hollick asked if an economic incentive existed for a builders to hoard land. He commented that in 2015 Taylor Wimpey built nearly 12,500 homes but owned 75,000 plots that have received planning permission.
Jennie Daly, UK land director for Taylor Wimpey, countered that only 40,000 of these plots were ready to be built on. The company has 415 locations with planning permission, and is already on site at 371 of them while it is preparing to begin construction on an additional 34. Eight sites have planning conditions that need to be resolved, while two others have issues that are being discussed with the relevant local authority.
Ms Daly explained that by the time detailed planning permission is received, the land has already been paid for, giving the company an incentive to start building because that is the only way to get a return on its investment.
She pointed out that housebuilders needed to avoid saturating any area with new homes, as such oversupply can have what she called a “distorting effect” on local property values.
John Stewart, director of economic affairs at the HBF, told the committee that nearly all the sites in London where construction work had yet to commence were owned by speculators, not property developers, and promised that the HBF would research the situation.
Asked if growing property prices inspired builders to hoard their land and obtain increased margins, Ms Daley replied in the negative. She explained that house price inflation is currently in effect, but it’s not a secure situation and not something that any competent developer would be willing to bank on.