Housebuilders are being blamed for the lack of housing supply after it was suggested that they are intentionally ‘holding back’ the construction of new homes to keep property prices artificially high in order to boost profits.
The latest figures from Glenigan, which were compiled for the Local Government Association, show that 475,647 homes in England now have planning permission granted but have yet to be built. This figure is up 60 per cent since 2010, but the number of new homes being built has increased at a lower rate of 48 per cent, owed in part to the fact that the average length of time it takes for developers to complete a new home has jumped from 24 months to 32.
Labour MP Clive Betts, Chair of the Local Government Select Committee, has reignited a long-running row between policymakers and the housebuilding sector over who is to blame for the current housing shortage by accusing the big housebuilders of failure to speed up housebuilding “to maximise their profits rather than addressing the country’s housing need.”
“These are private companies who are very simply trying to make money for their shareholders. They are restricting supply and the government urgently needs to come forward with measures to address this,” he said.
Housebuilders deny that they are intentionally holding back the supply of new homes. Many blame the planning process for being too slow.
A lot of the homes with planning consent approved still have a significant part of the planning system to navigate before any construction work can start, a process that could still take two or three years, according to the HBF.
Stewart Baseley (left), Executive Chairman of the HBF, said, “The (housebuilding) industry’s ability to increase output still further will largely be dictated by the rate at which planning permissions are granted. Whilst the overall increase in outline permissions is welcome, most of these still have to navigate the complexities of the planning system before they can be built. It is imperative we speed up the time it takes for applications to be processed to the point that builders can actually build if we are to deliver further increases in housing supply.”
Housebuilding in February slowed to its weakest growth rate since June 2013, reflecting a wider slowdown in the construction industry, as corporate fears about a potential Brexit mounted.
The housebuilding data from Markit/CIPS construction purchasing managers’ index suggests that developers are less willing to commit to projects due to the uncertain economic issues on the horizon. This has led to construction chiefs hiring less bricklayers.
The figures come as a blow to the Government which has made addressing the UK’s acute housing shortage a priority.
David Noble (right), Chief Executive of the Chartered Institute of Procurement and Supply, said, “The sector felt the pressure of challenging global economic conditions and softer demand growth.
“The housing sector, which once led the way with a robust performance, offered a poor show.
“The next few months will be critical to understanding whether this dampened optimism was justified and whether there are still more serious issues to be unearthed.”