Last week, the Competition and Markets Authority (CMA) launched a market study into the housebuilding sector – how it functions, how well it performs for consumers and other stakeholders, and how it might work better. This includes concerns that housebuilders are not delivering homes at sufficient speed.
It is fashionable to suggest that developers are land banking – using their power to intentionally delay or slow development. While there will, of course, be exceptions to the rule, our experience is that housebuilders are desperate to get on site quickly and get building.
The biggest issue preventing this is the planning system. There are various hoops to jump through on any planning application, generally focused on balancing the impact of development with the wider concerns of the community.
Ultimately, planning departments are underfunded, over stretched and unequal to the demands placed on them. With housing targets being watered down, the political will to approve housing development inevitably wanes and the appeals system is also mired in delays.
Even after planning permission is granted, the critical path to development is likely to belittered with other obstacles: environmental and habitat regulation; intransigent highway authorities and water companies; and enormous Land Registry backlogs. It is hard to see how housing supply will be improved by a lengthy CMA study, when more obvious and pressing issues could be resolved by government focus and funding.
It is true that larger sites will be phased to avoid flooding a local market. But modern housebuilders provide a varied and balanced product designed to capture different markets simultaneously.
This, combined with the commercial incentive of making a return on the capital employed in obtaining planning permission and acquiring land, unleashes housing delivery wherever viable permissions can be obtained.
Overall, the better area to focus on is improvements to the planning system – even if it remains a political minefield.
Patrick Adie is national head of housebuilding and strategic land at law firm Freeths
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