Developers are continuing to create substantial land banks of application approved land that could enable the government to achieve their aim of 300,000 new homes per year.
Currently, 42% of land that has been granted planning permission in 2018 is being built upon, according to recent data by the Office for National Statistics.
Whilst these figures have increased from 30% of land that was built on in 2010, the 58% of approved land that is squirrelled away represents the desperately needed housing stock that could cure the current crisis as the land represents the equivalent of 236,000 approved homes per year.
Much criticism has been launched at the government’s slow application process for delaying the construction process. However, recent figures suggest that applications granted as a percentage of all applications is on the rise at a rate of 30,000 additional permissions granted per year since 2014.
Furthermore, since 2010, applications granted have increased from 73.5% to 80.5%.
Developers are showing signs of market insecurities with permissions falling from the eight-year average of 471,000 applications to 453,000. Even though the additional approved land would help improve the crisis, many will remain reluctant to build to capacity in the best of market conditions, let alone a slow down.
Additional building stock would place increased pressure on developers to sell their homes which could create a buyers’ market, dampening the exorbitant profits developers have enjoyed in recent years. Although it is positive that 2018 building figures suggest that 6.5% more land was built on compared with the average of 35% since 2010, it is clear that using more of the banked land will help improve the housing stock the market needs.
Colby Short, CEO of GetAgent.co.uk, commented:
“An increase in the number of planning applications granted and the number of homes built is, of course, a positive thing, but when you consider the ‘housing deficit’ that still remains between the number of homes being approved for construction and the amount actually being delivered, it shows how much further we still have to go.
“We know it can be done as despite a recent increase in the number of approvals, completion levels have kept pace and have increased in tandem.
“Of course, it wouldn’t make sense financially for a developer to reduce profits by flooding the market with housing stock, particularly in these current tougher market conditions. But for those unable to make that step onto the ladder due to the issue of housing affordability, the annual profits of these companies are probably far from their first thought.
“Further work is required to re-balance the pendulum to fulfil our national aspirations of home ownership and if a natural cool in house prices is the result, I think there are many that would warmly welcome it.”
Do you think more of this approved land being used each year will improve the housing market? Has a reduced housing stock had any adverse implications for conveyancers?
