Taylor Wimpey, one of Britain’s biggest housebuilders, and the Home Builders Federation have rejected accusations that the industry is hoarding land to cash in on rising property prices.
Nearly half a million new homes in England and Wales have planning permission but are yet to be built, according to recent figures from the Local Government Association. Analysis by the Guardian found that Britain’s biggest housebuilders own enough land to create more than 600,000 new homes, raising questions about whether they are doing enough to tackle the country’s housing shortage.
The Lords economic affairs committee has launched an inquiry into the economics of the UK housing market. At a hearing on Tuesday afternoon, Lord Hollick, the chairman of the committee, asked whether there was an “economic incentive among builders to hoard land”. He noted that Taylor Wimpey built 12,454 houses last year, but owned 75,000 plots with planning permission.
Jennie Daly, Taylor Wimpey’s UK land director, said only 40,000 plots were “shovel ready”. She explained that the firm had a short-term pipeline of 415 sites with detailed planning permission, was already on site at 371 (89%), and gearing up to start building on a further 34 sites. On eight sites, planning conditions still had to be resolved, and two others involved “viability issues where we are actively engaged with the local authority”.
“By the time we have detailed planning permission, we’ve already paid for the land – our most expensive commodity is already on our balance sheet. We are incentivised to get building because only through building will we get a return,” she said.
“The housebuilding model does not sit well with land hoarding … It would not be an appropriate business response to sit on such a large and expensive commodity.”
Daly said housebuilders had to be careful not to flood an area with new housing, pointing to the “distorting effect” that oversupply could have on the local property market.
John Stewart, the director of economic affairs of the Home Builders Federation, the industry body, quoted evidence that nearly all the sites in London where building work had not started were owned by speculators – non-developers – and said the federation would commission research into this.
When asked whether rising property prices provided an incentive for builders to hold on to land and get increased margins, Daly replied: “If one has a very clear crystal ball then that might be a business model ... House price inflation is with us currently, but it’s not secure and it’s not something we can bank on.”
Stewart said the cost of holding land meant that “you’d have to assume astronomical rates of house price inflation for that to work”.
Daly and Stewart pointed to delays in the planning system, caused by local authorities’ understaffed planning departments, along with a shortage of smaller housebuilders and skill shortages in the industry.
Stewart said 1991 legislation had put local authorities in the driving seat, rather than the private sector, which he described as the “root cause of the problems”. He called on local authorities to allocate a greater variety of sites that smaller companies could build on.
