The new secretary of state for communities and local government, Sajid Javid, is the latest in a stream of politicians to accuse developers of building up landbanks while watching the price rise.
Speaking at the Conservative Party conference, Javid said: “The big developers must release their stranglehold on supply. It’s time to stop sitting on landbanks, delaying build-out.”
This ignores the fact that if anything is delaying the build-out of developments, it is the increasingly lengthy, expensive and often painful process of obtaining planning permission.
There may be some developers in the North that landbank, but it is very rare in the South, where the cost of the land is high and the lack of supply is most acute. In my experience, there are very few developers that deliberately build up landbanks in the hope of selling when capital values have risen. In the uncertain world of property, is very rare that a developer will sit with their fingers crossed gambling that the price will increase. Property developers develop property. That is why they are in business and the last thing that any sensible developer would want to do is sit on a site and wait.
To maximise their return on investment most developers will look to exit a scheme as quickly as possible. Time is money and any development surveyor worth their salt will, when undertaking a development appraisal, keep the length of a project to the absolute minimum.
While the timescales involved in construction are relatively straightforward to predict, what is becoming far more difficult to estimate with any accuracy is the time that a planning application might be stuck within the regulatory framework. It is the main cause of delays in new home delivery and one of the biggest challenges faced by developers.
Many years ago one allowed about six months to get planning. Now it is often two years.
To begin with, there is the “pre-app” stage where meetings take place, supposedly to expedite the process, but since the officers often change, as does policy, this actually adds to the time. Then there is the time between submission and grant, which can allow for an appeal to the minister, and can take two years. Then there is sign-off of conditions, with no right to appeal, which can take more than a year. Plus, there can be delays in granting section 106 conditions or community infrastructure levy.
It goes on.
Often delays are caused by lengthy negotiations – with little recourse to appeal – with quangos such as the Environment Agency and English Heritage, or other statutory undertakings.
In the south London market, where we operate, there are numerous examples of sites where delivery of new homes has been delayed unnecessarily because of inefficiencies in the planning system.
In one case, in Greenwich, a riverside site suitable for 100 flats has been in the planning system for four years. Planning was actually granted a year ago, but before work can commence sign-off and associated conditions are required, and as there is no right of appeal to the council on this, the applicants have now made a direct appeal to London mayor Sadiq Khan asking him to intervene and help clear the bottleneck.
Local authorities are obliged to determine a consent within 13 weeks, but with pre-apps – blackmail behind closed doors, where they tell the developers to withdraw or it will be refused and hints that it will get consent next time around and other underhand tactics – this often does not take place.
If the government and Javid are serious about speeding up the delivery of new homes, then the 13-week timescale needs to be enforced, penalties for delays implemented and the whole process speeded up.
Maybe I am being cynical, but blaming developers and those in the business of delivering new homes for delays in the system is perhaps easier for the minister to do than looking closer to home for the real cause of the problem.
Richard Kalmar is managing director of Kalmars
