Take the politics out of planning

Can anyone explain politicians’ paranoia over landbanking? Ours is already the most highly regulated and rigidly controlled industry in the UK. How many more reports and investigations into housebuilders do we need?

Both Kate Barker and John Callcutt have focused on housing and land supply and both found landbanking was a feature of the industry but no evidence of abuse or any unreasonable effect on supply. We should find out this summer whether the Office of Fair Trading with its nose for anti-competitive practices, has sniffed out previously undiscovered mischief. I very much doubt they will.

Any manufacturing business (which in essence is what housebuilding is) needs to have a stock of raw materials. Unless those raw materials (in this case land) are readily available and supplies are predictable, then it is essential to keep “stocks” to enable proper production to be guaranteed for the building programme.

The planning system is unpredictable and bordering on chaos and near collapse; planning officers are underpaid and under-resourced and the system is subject to continual political interference at both local and national level. Small wonder therefore that housebuilders try and keep some land in reserve to plan their future in an orderly manner.

The planning system is bordering on chaos. It is subject to continual interference at both local and national level

Anyone who understands the property industry will be surprised at the idea of developers hoarding consented land in the face of local demand. Viable planning permissions are too rare to ignore. Interest payments make land expensive to hold. On top of that, depreciation threatens. During the last recession, landbanks became millstones around the necks of so many developers.

Another recession would not see an end to landbanking. With our planning system, a developer will still want to secure a two to three-year supply, but less land will be needed over that period to meet demand. Developers will be more selective. A positive cash flow means a move away from high-density urban sites and a focus instead on land suitable for houses, where the development tap can be turned on and off.

Further planning reform offers a means of freeing up land. People only hoard food or petrol when their confidence in supply evaporates. I reckon that a typical developer would want less than 18 months’ supply of land if the planning system was faster and more predictable. That would halve many landbanks.

Planning officers are not the problem; it’s the system that is wrong. Policies are political, but decisions should not be. Privatise development control, give it commercial motivation, make it less prone to political pressure and you will see a huge leap forward.