MP Oliver Letwin’s long-awaited investigation into land-banking by big developers has failed to find proof of the alleged practice.
“The review found no evidence that speculative land-banking is part of the business model for major house builders, nor that this is a driver of slow build out rates,” Chancellor Phillip Hammond said during his budget speech yesterday.
But big builders are not off the hook. The report also takes a highly critical view of the homes they build and calls for large estates to be constructed more creatively and offer a wider range of home designs.
In recent years big developers have been accused by many experts and lobby groups of ‘land banking’ or ‘sitting’ on land for their own financial gain.
But Letwin’s review instead points a finger at the uninspiring and ‘homogenous’ nature of the homes they built as the main culprit.
His report concludes that too many developments and the properties within them look and feel the same and this makes them harder to sell – or ‘absorb into the market’, as he puts it.
To remedy the problem, Letwin recommends that new planning rules are introduced to force site developers containing more than 1,500 homes to offer a greater diversity and range of dwellings, and create more thoughtfully laid-out estate plans.
This would be achieved both through 106 planning agreements and threatening to withdraw government funding of the newbuild sector if developers don’t play ball.
He also suggests that a national committee be set up to advise local authorities when they are granting planning permissions for these ‘mini towns’, and that local authorities should be given more draconian powers to force developers to build more creatively.
But Letwin’s land-banking report rejects forcing developers to reduce their prices to speed up sales, saying that “it would not be sensible to attempt to solve the problem of market absorption rates by forcing the major house builders to reduce the prices at which they sell their current, relatively homogenous products,” it says.
“This would, in my view, create very serious problems not only for the major house builders but also, potentially, for prices and financing in the housing market.”