From the DCLG:
Grant Shapps welcomes overwhelming demand to Get Britain Building
A Government scheme to get builders back on stalled sites and work restarted on homes has had an overwhelming response and is three times oversubscribed, Housing Minister Grant Shapps has today revealed.
The £420 million Get Britain Building fund is a key tenet of the Housing Strategy. Launched just two months ago, the Get Britain Building fund has seen a total of 176 expressions of interest - meaning the programme is now three times oversubscribed.
Mr Shapps argued that the short, simple and straightforward application process has made it easier for smaller building companies, as well as larger developers, to bid for funding...
Just for a second, let's try and think up something a bit different, instead of following the mantra "they own land, give them money", shall we?
How about going to the people who put their projects on hold half way through (in order to speculate on rising land values), and telling them that if their projects aren't finished as agreed in the planning application/permission within X months, that the planning permission will simply be withdrawn and they will be ordered to demolish what they've started?
I mean, surely the planning permission says something like "You have permission to build 20 houses" and not "You have permission to dig twenty foundations and complete the ground floors on half of them and get up to the rood timbers on the others and then to leave them standing for months or years", and if people don't comply with planning, then the local council is entitled to revoke it or to demolish what has been built.
Wednesday, 15 February 2012
Grant Shapps feigns surprise when people accept offer of free money...
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23 comments:
Oh dear - I very much fear that your proposals are going to be met with "nay, nay, nay, we couldn't do that! Stifle enterprise? Time limit "planning permisssions" - where is the sense in that? Surely you can see that all that will achieve will be to take all the fun and easy profit out of "land banking" and thus surely hold back an expansion of the amounts of money falling effortlessly into 'developers' coffers? What are you, some sort of enviable of others hard worked for success driven devious pinkoe radical, the type that wants to see the introduction of a so called Land Value Tax and poor old widows being thrown out of their houses and onto the streets ?
Anon, that's the beauty of it - planning permission usually ARE time limited, from here:
OUTLINE APPLICATIONS
Normally an outline planning permission [domestic][commercial] has two timescales and the consent will require you to submit a further application for the approval of reserved matters within three years of the grant of outline permission.
Once the last of the reserved matters has been approved there is usually a two year period within which the development must commence.
These timescales may remain unchanged by Authorities do have a wider discretion to vary these periods if they wish to.
As to poor widows, let's just exempt them for the time being.
Wouldn't charging them LVT put a stop to this nonsense anyway? I mean, once planning is granted then the land value has changed so, whack!
L, yes of course, but I'm trying to think up less radical solutions that are within existing laws.
Slapping them with Business Rates on what is effectively a commercial site would also do the trick, or at least make full Council Tax payable once planning is granted (or after six months or whatever).
Sorry, bad use of english as she is writted down on my part, probably, I was simply trying to show agreement with your suggestion that "time limitations" as presently applied are a bit, um, soft, seeing as the "limit" between "grant of outline permission" and actually starting "development" is effectively 5 years!
As for the laxity applied to "what constitutes real evidence of starting significant development" and the reluctance of LAs to step in and say "stop taking the .... or lose the permisssion"
I agree with your last - a, policy of exempting poor widows from, well most things, is a damn fine PR tactic and help keeps the "green crayoned diatribes down" if nothing else. Come to think of it we have Red Nose Day, Sports Relief, etc. - a whole raft of these "do some good" days ... never noticed a "Poor Widows who can't afford the upkeep of their mansions Day" though ...
Anon, your irony shone through, don't worry about that. As to time limits, the key is: "Authorities do have a wider discretion to vary these periods if they wish to".
And as to Poor Widows, we can borrow from existing practice. On your income tax return, there is a box to tick if you want your refund to be paid directly to a charity.
So we can do the same with LVT. On everybody's LVT assessment, there is an extra box, "Are you prepared to pay a voluntary surcharge on your LVT to fund exemptions for Poor Widows In Mansions?"
I suspect that all of a sudden, most people would find it quite reasonable for them to pay their own way...
I do not credit you with being a person who comes up with daft ideas. However on this occasion you have managed to do exactly that. Many years ago I was in this exact situation and building had to stop because of a recession. Once things improved work was restarted the houses were built and sold. To do otherwise would have been financial ruinous for my company. I accept that hoarding land is not something to be encouraged for purely speculative reasons. There are however other totally legitimate reasons for doing so, so blanket rules would punish the few speculators at the expense of the many honest developers.
Anti: "building had to stop because of a recession"
How so? Did labour and materials become more expensive? Why would it have been financially ruinous to finish them off and sell them, or indeed finish them off and rent them out? (ignoring VAT aspects)
"Once the last of the reserved matters has been approved there is usually a two year period within which the development must commence."
Nothing about completing it.
MW: To complete the build at that time would have involved selling at a price that would not have covered the cost. To complete the build without selling would have tied up a considerable amount of capital with all the inherent costs involved in that. Renting on large scale developments is not a practical option. A little vague I know but it is a complicated area and there are many factors to be taken into account. However normally the cheapest option is to mothball.
Rob, neither of us are experts in these matters, but take it from me, if you are granted permission to build "a house" and you just do the foundations and walls and leave it like that for a year or three, you have clearly not built "a house" you have built "a wreck and an eyesore", which is different to "a house" therefore the council is perfectly within reason to ask you to finish if off or tear it down.
Anti, in other words, you were speculating on land prices going up again. So you failed to factor in possible land price falls when you bought the site, exactly whose fault is that?
MW: The fault lies with my morning cup of tea. The tea leaves did not tell me that when I bought the land that before I completed the development there would be a recession. For a developer the ideal condition is neither rising or falling land values. If land values were continuously stable making money out of property development would be a doddle.
Anti, just as a post script, in the full-on LVT only world which we envisage, it'd be difficult to lose money on construction, because the purchase price of the site would be next to nothing, and instead of paying interest to the bank and tax to the taxman during construction, you just pay the LVT until the development is finished and the houses sold. It would of course also be impossible to make massive windfall gains, but there you go.
MW.Antisthenes:
My old dad was a spec house builder. He always calculated the viability on todays land price/selling price. Then when house prices rose (or fell) by the time he came to sell he knew that the differences broadly speaking were down to land price variations and he could restock land.
It may be possible within existing law to serve a completion notice so that the property will be subject to full Council Tax. If it is not, then the law needs to be changed. Of course we need proper LVT. Fat chance of getting it. Have a look and see who are Knights of the Garter and wonder why some of the names are on the list.
It would be nice to think that the necessary changes would come through evolution but now I am not so sure.
Talking of poor widows, there is a woman whose husband bought a 2-up, 2-down with his demob gratuity in 1946. He went back to fight in the Korean war and unfortunately got killed out there.
Now aged 92, she has lived there ever since on her widow's pension but has never had any money to do it up so there is still an outside toilet, no hot water and no electrics apart from the lights, so she has to boil kettles for hot water. The house still has the same brown lino on the floor in all the rooms.
All the houses around have been turned into luxury bijou residences and are going for over a million quid.
How is she going to pay her LVT?
Apropos her rich neighbours, they would avoid LVT by living in shop doorways.
L, exactly. Being honest about the topic is always a huge leap forwards.
Phys: "It would be nice to think that the necessary changes would come through evolution but now I am not so sure."
You know as well as i do that the whole history of the past few centuries has been a shift away from taxing land values (apart from Business Rates) and towards taxing incomes and subsidising land ownership.
People sometimes ask me "If LVT is such a good idea, why have we never tried it?" and the answer is, we did, and it worked fine, but the rent seekers are gradually winning out.
As to your little old lady, what's the problem? Even if we didn't just exempt her as a matter of political expedience, if she's happy to live in a primitive 2 up 2 down, there will be hundreds of thousands of 2 up 2 downs on which the LVT will be well within her budget (i.e. a few hundred quid a year out of her Citizen's Pension), plus she'll still be able to bank some gains by selling up.
The problem with the little old lady is that there is just one, somewhere, and the Daily Bigot will find her even if it means putting all their reporters on the case to dig her out, and if they cannot dig her out they will invent her, like I have. You can imagine the headlines, with the picture of the old dear filling up the front page.
Then our brave politicians will be running scared. Actually so many of them are on the game themselves that they would need no encouragement. Huhne and Lucas reputedly has about five houses each.
What about the millionaires into shop dorways with the homeless so as to avoid paying their LVT on their fortunes?
Phys, as I said, let's just exempt them for now, or, as I have said before...
"And as to Poor Widows, we can borrow from existing practice. On your income tax return, there is a box to tick if you want your refund to be paid directly to a charity.
So we can do the same with LVT. On everybody's LVT assessment, there is an extra box, "Are you prepared to pay a voluntary surcharge on your LVT to fund exemptions for Poor Widows In Mansions?"
I suspect that all of a sudden, most people would find it quite reasonable for them to pay their own way..."
Mark, AFAIK, the only time limit on planning permission is from grant of permission to start of development. If you get permission to build four houses, build two and then stop, you have clearly started and the permission on the other two is then everlasting.
MW - My old man was a bit ahead of his time and a very wise housebuilder. The company he initally helped build up was bigger than Barratts when he left it in about 1970. he then went on to be a small developer building a reasonable number of units per year and he had the gift of a good eye for a site. Crucially he never went away from the understanding of land price inflation and survived all sorts of building recessions when others did not. If there is one thing I am grateful that I learned from him was that understanding of the illusory profits that accrue to developers from land price inflation. Most developers don't get this, and I did a year for Barratts (awful company, don't work for them) and their local directors didn't have a bloody clue about this. Well the MD did, but the others didn't really.
B, that may be so, I'm no expert, but the whole planning thing is "man made law", largely artificial and arbitrary and there's nothing to stop a council changing its own rules.
L, when I'm writing about anything to do with construction, the acid test for whether I'm being too harsh on them is to ask the question "Would Lola's Dad have managed with these rules in place?" and if the answer is "Yes", then I'm not being too harsh.
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