Somebody at Shelter has trawled through the accounts of all the large land bankers home builders and confirmed what we had already guesstimated.
From The Guardian:
The government wants to build 1m new homes in England by 2020. This would mean building 200,000 a year, but the existing construction levels of just over 150,000 are well behind that.
Despite the fact the nine listed housebuilders hold more than 600,000 housing plots, they sold just 66,881 homes between them in their last financial year.
The annual figure of 150,000 is not unduly low by historic standards, the average since 1945 is about 160,000 private sector completions. The years when annual completions were nearer 300,000 was because of council house building.
What is interesting is comparing what their PR people say to the media with what they say to shareholders in their annual reports:
Taylor Wimpey also pinpointed the “slow and complex” planning process and said all sides of the housing debate needed to be patient if more homes were to be built. A spokesman said… "Whilst it is improving, the planning process is slow and complex and a number of conditions need to be fulfilled before development can commence on our sites. A shortage of resources in planning departments also often means that delays occur in this process."
Ho hum. From their 2015 interim report (download from here):
Land bank - movements in period
Brought forward +75,136
Plots acquired +3,620
Strategic land conversions* +5,666
Completions -5,898
Land sales -297
Scope changes -655
Balance at end of period =77,372
Planning status
Detailed planning +45,787
Outline planning +22,508
Resolution to grant +9,077
Total =77,372
So in their accounts they boast that they have enough land with planning for about six years' construction.
* The land bank figures only include land with planning. It does not include 'strategic land' which they bought on spec; in this period they managed to obtain planning for 5,666 plots of 'strategic land' which is transferred to their official land bank.
To cut a long story short, TW have no interest in getting planning any faster, their profit maximising output level is whatever it is (taking all house builders together, they restrict their output to one tenth of total sales in any year) and there is no incentive to build more; in turn, there is no point in getting planning permission for land which they have no intention of using for the next seven or eight years.
Thursday, 31 December 2015
Good work by Shelter on land banking.
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11 comments:
Happy new year Mr W.
Interpreting the implications of the piece, apart from LVT the surest way to bring down rents and house prices is for a lot more council house building?
Much as I don't, in general, agree with your land taxes ideas I do agree there is a problem here (and elswhere in the system). Maybe applying council tax to all land with outline or full building consent - at the rate it would be when developed - (rather like appling council tax to empty properties) might get these people off their arses.
Happy new year too.
Jim Claydon of the Royal Town Planning Institute used the same method of calculation to come up with figures which were just as bad in 2007.He also summarised the problem with quotable directness: "All landowners including housebuilders maintain land values by managing supply. It is not in their interests to release large quantities of land because this deflates its value". Couldn't put it better could you? Claydon caused quite a stir but it was soon back to business as usual. As Liam Halligan said with epic cynicism in the Telegraph 7 Nov 15 "Given that homeowners vote in larger numbers and still just about represent a majority ,its almost as if successive governments have been happy to see prices spiral knowing that the resulting "feel good factor" will garner votes in sufficient numbers regardless of the broader impact."
DBCR - ""Given that homeowners vote in larger numbers and still just about represent a majority ,its almost as if successive governments have been happy to see prices spiral knowing that the resulting "feel good factor" will garner votes in sufficient numbers regardless of the broader impact." Yes. And that lesson was well learned by New Labour (well Blair Brown Balls really) and formed the key component of their electoral success built on the companion to land rationing - epic and unwarranted expansion of money and credit.
We are caught between two failed party philosophies both now built on rent seeking.
TFB, thanks and nice to hear from you again.
L, yes. It's second best to LVT but it will help (and not cost the taxpayer anything at least).
W42, thanks and agreed.
DBC, spot on.
L, both parties have the same economic philosophy, it is called Home-Owner-Ism.
Given that anything about property in the Telegraph is going to be heavily encoded,and disguised with irony, faux naivete etc, this Halligan quote is the closest anybody in the mainstream has come to adopting the Homownerist critique worked out by us in 2009.
MW. Yes. Now. (Or rather since the onset of New Labour). It's appalling.
@L Its no use blaming New Labour. As Halligan says its "successive governments". Or as we have been saying in 2009, and ever since, its Homeownerism.
Something very peculiar has been going on, because Gordon Brown said bright-eyed and bushy tailed in his first Budget speech of 1997 " I will not let house prices get out of control and put at risk the sustainability of the recovery" in a very clear statement of intent backed by cuts to MIRAS and increases to property taxes. There were descriptions in the press of Brown and Prescott conferring up north about Land Taxes ; Brown had previously shared a Land Tax platform with LVT toughie Dave Wetzel of Labour Land Campaign. Then some kind of fix went in .
L, DBC, it is clear that Thatcher stumbled across Home-Owner-Ism in many ways like council house sell offs and getting rid of Domestic Rates, but it wasn't an overarching philosophy yet. Thatcher created a bubble in the late 1980s but Major allowed house prices to fall again and a bank to collapse.
It was Blair-Brown who actually turned it into priority number 1.
The Tories even had an earlier attempt under Heath-Barber in the early 1970 with "dash for house price growth" but they either didn't understand what they were doing or have the nerve to make it stick (this was the direct cause of high inflation - they had to do something to mask the real house price falls).
Wilson-Callaghan didn't go for Home-Owner-Ism at all AFAIAA.
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