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Councils say ‘yes’ to house building, but private sector is slow to deliver

Councils say ‘yes’ to house building, but private sector is slow to deliver

🕔22.Aug 2013

The notion that councils are reluctant to grant planning permission for new housing has been challenged by a report exposing a backlog of 400,000 homes across England where approval has been given but building work is yet to be finished

Research conducted for the Local Government Association shows that local authorities approve nine out of 10 proposals for new housing, but the number of applications coming before planning committees fell sharply last year.

The average time in England taken to build a house from obtaining planning permission to completion is now more than two years.

It takes 27 months, on average, from sites receiving planning permission to building work being finished – seven months longer than in 2007-08. Last year the mean average was 25 months.

The study, commissioned by the LGA and carried out by Glenigan, shows there has been little progress made in reducing the bumper backlog over the past year.

According to the LGA, councils are concerned that the fall in planning applications they are receiving may threaten the prospect of a long-term house-building recovery.

The LGA said the figures show the need for Government to remove restrictions on council investment in housing, and concentrate efforts to rejuvenate house building on funding the construction of new homes, rather than further meddling with the planning system.

The slow pace of new-build could have serious implications in Birmingham where the city council estimates an additional 80,000 homes must be built over the next 15 years to address an acute housing shortage.

The length of time taken by the private sector to complete housing development sites, even after permission has been obtained, suggests that Birmingham’s bid to deliver the largest injection of new build since the 1960s may be stalled by a lack of market capacity.

Private sector developers completed 84,000 new homes in England last year, compared to 147,000 in 2007-08 before the credit crunch hit home.

A Birmingham Development Plan to be published later this year will identify sites for house building including, controversially, green belt land in Sutton Coldfield.

Council leader Sir Albert Bore has said there is room in Birmingham for no more than 50,000 new homes on previously developed brownfield sites and he is negotiating with neighbouring authorities in Staffordshire and Worcestershire in an attempt to identify potential development sites across the city boundary.

He has also ordered a feasibility study into the potential of creating a housing investment company underpinned by the value of council land and property assets.

A ceiling on the amount of money councils can spend on housing investment which has been imposed by the Treasury is stalling recovery and new build, according to the LGA.

The LGA report’s main findings show that:

  • The backlog in homes with planning permission yet to be built in England was reduced by just 6,000 in the past year.
  • The number of planning applications fell by five per cent last year.
  • 3,057 schemes obtained planning permission last year, totalling 165,903 potential homes.
  • There were 6,500 schemes with planning permissions yet to be completed on 31st March 2013, consisting of 381,390 unbuilt homes. Building work had yet to start on 61 per cent of the uncompleted schemes.

Thousands of shovel-ready sites could be kick-started into action if the cap on the amount councils can invest in new housing was lifted, according to the LGA.

Councils could build up to 60,000 additional new homes over the next five years if they were allowed to invest in housing against normal borrowing guidelines. This would create jobs, boost GDP by 0.6 per cent and reduce the housing benefits bill, the LGA claimed.

Cllr Mike Jones, Chairman of the LGA’s Environment and Housing Board, said: “The bumper backlog of unbuilt homes and drop in the number of planning applications submitted to councils last year is a worrying sign that the housing market is not yet on the road to long-term recovery.

“While there has been progress made, this risks being undermined if we do not find a way to ensure developers keep up with demand.

“These figures conclusively show that it is not the planning system holding back the building of much-needed new homes.

“Councils are approving nine in every 10 planning applications we receive and we know that there has been an increase in the numbers of first-time buyers getting mortgages.

“The challenge now lies in actually getting houses built. Government schemes to help buyers access finance risk creating a bubble if there isn’t an increase house building to match it

“Government has an unrivalled opportunity to create jobs, provide tens of thousands of homes and help the economy without having to find a single extra penny. New homes are badly-needed and councils want to get on with building them.”

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