In this week's blog, we continue to examine some of our clients' issues and attempt to examine the much-debated and much-questioned issue of UK land banking. The acquisition of available land to build on affects our sector's clients, their entry into the market, and their ability to execute affordable schemes. More than that, it's in the national interest to get to the bottom of the story, so please read on!
This is a particularly hot topic, as we only have to go back to March 2024 to see a Competition & Markets Authority study that categorically stated that there is competition in the land market and that housebuilders "do not hold excessive amounts of development land unnecessarily". Yet this issue isn't going away; in an interview for The Guardian, Craig Bennett, the Chief Executive of Wildlife Trusts, made the impassioned point recently that the government has missed the obvious when attempting to push home its latest set of reforms. He makes the case that "volume homebuilders", the mag 7 of new builders, are market-making to maintain price and won't commit to the building when they can equally profit from land speculation.
This is a concern because the CMA report was quite clear, of the 1.17Mil plots the top 11 housebuilders controlled, in their long and short-term landbanks, the long-term holds are actually just a strategic reserve that don't yet have planning permission - typically held in place (according to our understanding of the report) for around 7 years, to allow for planning to go through, and the land to be prepared to be build on. The report is quite clear that the backlog is the planning system that's being looked into by the government; ergo, there is nothing to see here.
Now, the immediate questions that you could raise here are, number one, even for a substantial development with significant planning requirements, you are talking months, not years, for that process to complete, excluding situations that may arise to create severe challenges and legal proceedings. Number two, and perhaps the most telling, the actual report refers to these businesses having "long-term and short-term land banks", which is potentially a 'tell' in the debate over the existence of land banking. Now, the case for the defence will argue that the volume of land hoarded will increase in the short-term window, and that's entirely acceptable to maintain housing production, but are we really satisfied that land purchased 7 years out of sight of a brick is really being used to support an immediate development pipeline? No further questions, your honour.
So, from a legislative stance, how can the government properly investigate this to better decide on managing this country's most precious finite resource? The Government has announced in the last few weeks that they are finally beginning the process of opening up the land registry, with the plan to legislate to make it free to view titles and for accompanying maps to be created outlying all of the plots owned by companies and corporations, private and public. As it stands, it would cost hundreds of millions in fees shy of a discount for bulk for an independent body to pull apart all of the data on the land registry and figure out some accurate figures. Still, if the entire registry were open source regarding data and mapping, it would finally paint the whole picture of who owns what and where. Now, how would that help to unravel this issue? Well, it would set us off on a road of legal justifications for land ownership. No case can be made against anyone at the minute, as everyone is marking their own homework to a certain extent. However, if it's suddenly clear that swathes of land are being put into cold storage by certain businesses, used as collateral in other projects, or for any other purpose than what's required, there is suddenly a case for intervention and compulsory purchase orders.
Now, it's important to caveat this week's piece with the fact that we are supporting smaller developers, not taking any stance against the big companies; everyone plays their part, but if we are working off a set of assumptions here, 1. To solve housing we need more homes 2. We only get more homes if we build them. 3. We can only build them by increasing the number of smaller homebuilders - if we are standing by those principles, we need a fairer playing field, and complete transparency is the first step towards that.
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