Land Banking

Jim Shannon Excerpts

Thursday 10th June 2021 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

First, I congratulate the hon. Gentleman on his first Adjournment debate. I have no doubt that it will be the first of many. Does he not agree that, while we are sympathetic to those genuine developers who are outpriced in building on their site due to the rising price of steel, wood, plastic and other materials at this time, there are also those—and they are the ones that he is referring to—who deliberately hold land with planning permission to enhance the cost? Steps need to be taken to address those whose business is simply land banking, which can lead to price gouging. The Government, and the Minister in particular, must consider imposing penalties against these people, and one of those penalties should be taxing them heavily.

[Christian Wakeford]

I thank the hon. Member—indeed, he is my hon. Friend in this instance—for that helpful intervention. I will certainly get on to that point later in my argument. I have a particular concern when developer A holds field X, gets planning permission and then does not build, but they also happen to hold fields Y and Z, and it is just to create a greater need to get planning permission on those. The only real benefit is to the developer and their balance sheet. As my hon. Friend said, it is very much these developers who take advantage of the planning system; it allows them to profit without the homes being built—homes that we desperately need—in the locations that we need them.

As I was saying, land banking is a pitfall in a very complex planning system where developers buy and store a pipeline of land and obtain planning permission for that land, with no immediate intention to build the homes that have been approved. Being granted planning permission can increase the value of the land by more than 100 times in some instances, but instead of building homes, the developer sells the land off for profit. This practice is purely an investment for big property developers, and it inflates land prices, making it even more difficult for people to buy the homes they desperately need. It prevents young people and families from getting on the property ladder, and it also prevents the elderly from being able to downsize and move into bungalows, because we are not building the homes that we need.

In Britain, the timescales involved in land banking are particularly long, with people seeming to land bank in some instances for between five and 10 years of their building supply, compared with other countries such as Germany, Japan, the USA and even France, which have much shorter timescales. Indeed, in some of those countries, the phenomenon barely exists, so why is the UK different? Unfortunately, it is because of our planning system.

Land banking is also posing a serious threat to our green belt as the Greater Manchester Mayor, Andy Burnham, has sought to look for extra space to build several thousand new homes by encroaching on green-belt areas such as Elton reservoir and Simister village in my constituency. I made a pledge during the election campaign to oppose those green-belt developers and find a meaningful solution so that we do not need to build on that land, and I make that commitment again to the electorate and the good people of Bury South.

I carried out a survey of my constituents recently. It found that roughly 56% of residents in Bury South felt that the green belt should never be built on, and that 95% took the view that Elton reservoir needed to be taken out of Mayor Andy Burnham’s house building plan, so if there is anything the Minister can do to assist in helping with that, it would be greatly appreciated. To add to the pushback against green-belt development, my local green-belt protection group in Bury South, Bury Folk Keep It Green, is roughly 10,000 members strong across a borough of 180,000 people, so it is a very large group. I hugely respect and admire the work it has been doing not only to bring the consensus on protecting our green belt to the fore, but to ensure that everyone in the constituency is aware of what is at risk and what could be destroyed.

The results speak for themselves. Let us listen to the people, and let us not destroy these precious areas of green space that we have pledged to protect. The planning White Paper talks about democratising a planning system that unfortunately fails far too many people. These are areas that have helped so many people mentally and physically during the pandemic, when we were all being told to go out and take advantage of our green fields and open green spaces. Indeed, I myself have taken my daughter for walks around Elton reservoir. We need to ensure that those areas are there for many years to come, so that many families can carry on enjoying them.

We need to look at changing the rules around the English planning system, ensure that legislation reflects ways to tackle the housing crisis and stop egregious cases of land banking, ensuring that land is built on and not stored. The 2017 Local Government Association report suggested introducing a council tax charge 12 months after planning permission had been granted, which would act as a disincentive for large property developers to land bank. It could also incentivise those developers to start building in the first place, further negating the need to build on our green spaces. If developers were forced to pay all that money every month, they would start building pretty quickly.

The Government should also work to bring thousands of empty homes and other types of property back into use, to ease the housing shortage and maximise the use of existing stock. The latest report suggested that there were roughly 665,000 vacant dwellings in the UK, and we need to make use of them. We are saying that we need to build 2 million homes, and those empty homes and those that are land banked represent a huge proportion of what we need to build.

I welcome the Government’s dedication and success in addressing the housing crisis and the protection of the environment. However, I urge them to reconsider the system we are currently operating in. We need a planning system that can bring about a better quality of life for all and a more sustainable future. We need a system that can bring down the price of land, capture land values for the public benefit and make housing truly affordable so that every family can ultimately benefit from the right to buy, get on the property ladder and take advantage of what we all should have as a fundamental right. I shall close by thanking the Minister for his kind words in our many conversations. I hope he will agree not only that we need to change, which is why we are bringing forward these changes now, but that we need to ensure that democracy and ultimately the people have a final say in this.

[The Minister for Housing (Christopher Pincher)]

May I begin by congratulating my hon. Friend the Member for Bury South (Christian Wakeford) on securing this, his first Adjournment debate? I am particularly grateful that he has chosen a topic that is so important to his constituents and to all our constituents.

Let me begin by saying that the Government are committed to providing the homes that this country needs. The debate provides an excellent opportunity, as expressed by my hon. Friend, to discuss the Government’s position on build-out rates, which, we recognise, are an issue that many communities feel strongly about.

My hon. Friend spoke eloquently about the challenges his constituents face. It is important to recognise at the outset that Sir Oliver Letwin’s independent review of build out, which builds on that of Dame Kate Barker and many others before them, highlighted that the repeated arguments of house builders sitting on land is overstated. Sir Oliver’s work found no evidence that speculative land banking is part of the business model for major house developers or that it is a driver of build-out rates. Of course, not everybody agrees with the conclusions reached by Sir Oliver and his report. The Local Government Association, as referenced by my hon. Friend, has recently stated that in some cases there are legitimate reasons why development stalls. It could be, for example, that the land owner cannot get the price for the site they want, that the development approved is not viable or that there are supply chain or other economic hindrances to starting. However—

[Jim Shannon]

Will the Minister give way?

[Christopher Pincher]

I had begun a sentence, but as it is the hon. Gentleman I shall end it and give way to him.

[Jim Shannon]

I thank the Minister. In the past year, we have seen a massive increase in the price of houses. In my constituency, house prices have risen 20% and that has been the case across the whole United Kingdom. It probably is not right to say now that developers could not get their price out of a site—they clearly could.

[Christopher Pincher]

The hon. Gentleman is absolutely right. House prices have increased and that is a very good reason why we need to build more homes of different types and tenures across the country to ensure that people can get the home of their dreams either to buy or to rent. I was going to say to my hon. Friend the Member for Bury South and the hon. Member for Strangford (Jim Shannon), both doughty campaigners on behalf of their constituents, that we recognise that build out is important to ensure that communities see the homes they want and need built promptly.

The Government want homes to be built and expect house builders to deliver more homes more quickly and to a high quality standard. Indeed, we are exploring further options to support a prompt and faster build out as part of our proposed planning reforms. We are now analysing the responses to the consultation on our White Paper, “Planning for the future.” We had some 40,000 responses. That work will include pursuing further options to support faster build out of our proposed planning reforms. More details will follow.

I was interested to listen to my hon. Friend and hear ideas raised such as charging council tax on unbuilt permissions. It is an idea that has been mentioned previously, too. That will require some careful thinking because council tax is levied on properties and paid by the residents. Who would pay council tax on a permission? Would it be the developer, the land owner or the promoter? Those are questions we need to address if that option were to be further pursued.