There is no Land Bank

We all know the mantra of some politicians up and down the country… It’s not that they stand in the way of housing delivery, it’s all those naughty developers who “land bank” their permissions… i.e. house builders who spend eye watering amounts of money on buying land and planning applications that they then “bank” by not building them out.

Now, many of us in the industry (and many outside the industry) will know, if you run a business you don’t buy stock and then stash it in a warehouse. For a start, your shareholders will fire you and if it is your own money you’ll be bankrupt very soon. The only time you don’t sell your stock is if there is a problem outside of your control.

So I was absolutely DELIGHTED last week when the Government’s Competition and Markets Authority (CMA) published a report that actually analysed this fallacy and came to some logical conclusions that “landbanking” practices are not unreasonable and the practice of “land banking” is perfectly rational given the length of time that it takes things to get through the planning system. Rather than suggesting the “land banking” is a deliberate tactic being used by housebuilders, the CMA’s report describes “land banking”as a symptom “of the time and uncertainty associated with obtaining planning permission”.

The report concluded that it had “fundamental concerns” over the housebuilding market, pointing to the complex planning system with many local planning departments under-resourced or did not have clear targets or incentives to deliver the number of homes needed in their area. This meant developers were having to deal with protracted and unpredictable planning processes before they could start construction, with small- and medium-sized companies disproportionately affected.

The problem comes in with the bit after the Planning Committee has granted permission and they delegated the final consent to the Head of Planning to complete is “subject to S106 and conditions”.

We have all been there… You end up waiting for the draft S106 and conditions for months or even years. It is a forward and backward with the planning department (who are understaffed and needs to get on with other applications) who needs to wait for the legal department (also understaffed and then needs to outsource it) and then consult on it all… and by the time the actual consent comes through and you can get spades in the ground, the housing market has changed and your scheme is no longer financially viable. Nightmare!

Thankfully, my team are all politicians who know how to get the wheels moving again when things get stuck. So call us! We are the planning equivalent of Dynorod – we can unblock anything! So get in touch!

Until next week,

Henry

henry@theccp.net or call 020 4538 7200