Attacking developers won’t solve Britain’s housing crisis

Brick by brick, Theresa May is rebuilding the dream of a home-owning democracy. It is a Conservative ideal that symbolises freedom and the opportunity for people to make the most of their lives.

It was badly damaged under Labour, when house building starts fell by nearly 50 per cent. Thankfully, things are looking up, with an increase across the country of more than two thirds since 2010. Last year, just over 200,000 homes were completed.

More people are now buying their first home than at any time for more than a decade. That is largely because few of them now have to pay any stamp duty and many benefit from Help to Buy. The Conservatives can be proud of those reforms.

The Prime Minister’s pledge on Monday to rewrite the planning process is music to the ears of the councils and developers who will have to get the homes built. But there is still a long way to go to hit the goal of 300,000 a year – and the Government is putting its ambition at risk by targeting the wrong villains.

It’s not land banking by profiteering companies that is slowing down construction, but the failings of the public sector itself.

Experience shows that finding the right land is no good if bureaucracy gets in the way of doing anything with it. Planning applications need to be simplified up front. It normaly takes 20 to 30 types of consultant to secure planning, often needlessly wasting time and money, only for report after report to be left gathering dust.

Take the Prime Minister’s proposed “use or lose” scheme. She warned that the Government will crack down on house builders who “just sit on land and watch its value rise”.

I’m quick to criticise private developers when they deserve it. But those of us who work in the property business know that building and selling is far more profitable than holding onto vacant consented land.

Sajid Javid, the Housing Secretary, has threatened local authorities with takeover unless they maintain a minimum annual approval rate for new homes.

That will mean councils drastically improving their performance. At the moment, they can’t keep up. Inefficient, sometimes underfunded planning departments take far too long to resolve the technical conditions on initial applications. That means the main housebuilders, most of whom are publicly listed, must maintain a long land bank to keep enough sites in the pipeline. This is vital so they can build consistently in the future and deliver a reliable growing stream of profits to demanding investors on the stockmarket.

In reality, the worst land-banking happens in the public sector. There are huge swathes of spare land owned by official bodies where we could build the homes Britain needs.

Sir Oliver Letwin, whose forthcoming report on housing development was mentioned in the Prime Minister’s speech, recalls the problems he faced trying to liberate public-sector property in his book Hearts and Minds.

He says Network Rail in particular was “sublimely resistant” to giving up spare land for housing, coming up with a litany of excuses, claiming plots were too small to be of interest, too large to get planning permission or just too complicated.

All that blaming property developers will achieve is putting them off risking their money on housing and conveniently distract everyone else from the failure of successive governments to get a grip on the issue of our time.

Let’s hope the latest reforms are seen through. We have been here before. In 2012, the Coalition Government tinkered with the planning process to support local authorities and developers to speed up the building of high-quality new homes. But, while more permissions were granted, no more homes were built than before.

The Prime Minister’s plan to deliver more affordable and secure rental deals for families, tackle rogue landlords, and introduce a new housing delivery test were all policies announced in the Housing White Paper. That was more than a year ago.

The Housing Secretary’s plan to build more homes over railway lines is imaginative. Along with building on brownfield sites, it is the kind of idea that could drastically reduce the number of houses that have to be built on open countryside and protect the Green Belt.

But without deeper reform, this brick-by-brick approach to solutions mirrors the bit-by-bit process of planning.

Change is required at a scale that will allow us to build the homes people deserve. That means wholesale release of public land for housing. It also means councils improving their own speed of action. In return, they should be liberated to borrow the money that they need to build homes themselves, creating extra value on the balance sheet, secured against a ring-fenced source of rental income.

Approximately 20,000 new homes last year came from builders converting old offices into homes under the Permitted Development rules, without the need for full planning permission. This is one of the Government’s most successful deregulation policies, which has bought back into use normally redundant offices, on brownfield sites, restoring value and creating economic activity whilst generating many tens of thousands of new homes at no cost to the taxpayer. More of this enlightened thinking is essential in the public sector.

The Government must recognise that private developers alone cannot achieve everything: it needs to ensure the public sector puts its own house is in order at the same time.