Housebuilders often get a bad rap – blamed for land-banking, stalling housing delivery and artificially inflating house prices – but is this commentary fair?
In his report ‘The Housing Problem in London – a broken planning system’, Sir Mark Boleat makes the case that housebuilders are being unfairly blamed when, in fact, the supply of housing is restricted by a number of related factors. These factors include policies on land use, the reluctance of public sector bodies to release surplus land (although this has improved over the last few years) and the imposition of high taxes on house builders through planning obligations such as Section 106 payments and Community Infrastructure Levy (CIL).
The issue of taxation on housebuilders is a serious one. When this is balanced with the task put to them – to develop schemes which will require delivery of up to 50% of units at a heavily discounted price – the business case for developing starts to fall apart. No normal business would be able to operate if they were required to discount up to 50% of their product, whilst facing multiple sector-specific taxes. This is where the problematic issue of ‘viability’ also plays a role – the higher the amount of affordable housing is required, the less viable a scheme becomes, and the likelihood that less homes will be built as a result.
There will be many sites across London where homes are desperately needed, but the planning system has constricted their development through the financial obligations on the housebuilder, making a scheme become unviable and ultimately undeliverable. Simply put, housing delivery could be higher if housebuilders were taxed less.
There needs to be a change in the way housebuilders are perceived. As Sir Mark’s report asserts, there needs to be ‘an honest debate, based on evidence, not assertions’. Only then, can we really get to grips with some of the underlying issues impeding housing delivery.