Planners welcome OFT review of the house building industry

The Royal Town Planning Institute (RTPI) welcomes the Office of Fair Trading’s announcement today that they will be reviewing the house building industry. The review comes in the wake of the recent RTPI report, ‘Opening up the Debate: Exploring housing land supply myths’, launched at the RTPI’s Annual Planning Convention on the 14 June 2007.

Kelvin MacDonald, RTPI Director of Policy and Research and joint author of the RTPI report said: “We are very pleased to see the OFT looking into the role and structure of the house building industry, however we must be clear, like the planning system the industry is only one factor in tackling the housing crisis. It would just be plain wrong to blame any single issue.”

The RTPI report, tackles issues of affordability and supply head on. Key new figures in the report show that house builders have banks of land with planning permission close to 14,000 acres, enough for 225,000 new homes. The report goes on to provide evidence on the relationship between land supply and house prices and forms part of the RTPI’s evidence to the Callcutt Review of Housebuilding Delivery. Key evidence from the report includes the following chart recording the likely figures of land with planning permission related to the top ten house builders in England:

Rank | Company (by size) | UK Plots with Planning Permission | UK Completions | Year’s supply

1 | Taylor Wimpey | 57,063 | 22,000 | 2.6
2 | Barratt/Wilson Bowden | 37,229 | 19,808 | 1.9
3 | Persimmon | 41,711 | 16,701 | 2.5
4 | Bellway | 22,600 | 7,117 | 3.2
5 | Berkeley | 19,860 | 3,001 | 6.6
6 | Redrow | 16,850 | 4,735| 3.6
7 | Miller Group | 12,500 | 3,960 | 3.2
8 | Bovis Homes | 12,395 | 3,123 | 4.0
9 | Galliford Try | 4,115 | 3,000 | 1.4
10| Crest Nicholson | Unclear | 2,946 | ?

The RTPI report makes five recommendations:

House builders should declare the amount of land they currently control with planning permission in each local authority area in a transparent and consistent way so that this figure can be used in the Annual Monitoring Report that forms part of the local development framework system. These can then be aggregated to form a regional data bank. It becomes very difficult to plan for future allocations of land or to understand the dynamics of the housing market in relation to land availability without such information.

The new National Housing and Planning Advice unit should publish, on a regularly updated basis:

The amount of land held with planning permission broken down by local authority area and by developer

The amount of land held in strategic land banks broken down by local authority area and by developer

Number of houses completed in each year broken down by local authority area and by developer.

The RTPI will be looking to the Callcutt review to provide evidence to properly understand the blockages to housing delivery. In the interim, it is not helpful if any of the parties to this debate – whether they be house builders, the Government, business or environmental lobbies, issue partial and potentially misleading statements about the simple need for more land release. In doing so they can engender a culture of blame for the planning system and planners which merely stultifies wider debates about solutions.

Given that planning permission only lasts for three years, the Government should work closely with house builders and others to identify the blocks that exist within the industry and externally that could lead to those developers with a supply of land with permission much in excess of three years, not being able to achieve the potential of that land if permission lapses.

The Government, working with stakeholders, must review a range of different models to address the house building crisis, which will not improve under the status quo, including the need for a publicly funded house building programme to provide more and genuinely affordable homes.

Latest Government figures show over the past 12 months starts have declined by six per cent to 173,400 while completions have increased by just three per cent to 167,700. Updated Government predictions show 223,000 new households will be formed per year between 2004 – 2026.