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Exclusive: No 10 advised to punish land hoarders

19 October 2012

1:22 PM

19 October 2012

1:22 PM

Though the government’s planning reforms will make it easier for developments supported by local communities to gain planning permission, one of the big blockages in the system is made up of developers themselves. The government is becoming increasingly aware of this, and one ministerial aide close to housing policy has come up with a solution.

Jake Berry, who has worked as PPS to Grant Shapps since November 2010, has written a paper for Number 10, which Coffee House has had exclusive sight of. It argues that developers who land bank sites with planning permission should be penalised for doing so. There are currently 250,000 units with permission for residential development sitting untouched while developers wait for the value of the site to rise, and every five years, developers renew the permission and keep the site empty. In 2007/08, councils granted 50,488 planning permissions. Some of those sites will still be empty and will be coming up for renewal over the next few months. In the paper, which Downing Street officials are still mulling over, Berry suggests that councils should demand payment of the New Homes Bonus from a developer for each unit which has permission yet remains undeveloped as a condition for granting a renewal. Berry writes:

‘This would be a powerful incentive to commence development within five years or the alternative would shorten the time a developer was happy to hold a site as there would be a cost of doing so. This ‘penalty’ for not developing is similar in effect to vacant rates on commercial buildings. The imposition of vacant rates has driven down rents and helped many small business find affordable premises.

‘This incentive to develop would see builders forced to build. In addition their lenders would bring pressure to bear on the building company to either sell the site or to start building. If the site was sold, because of the holding costs, bank funding on acquisition would be conditional on starting to build. The benefit to jobs and growth of construction of new homes is well known and this would be a proactive way of developing out existing permissions.’

Berry is one of the PPSs who, if the Conservative party were governing as a majority, would have been snapped up as a minister months ago. He also knows the housing sector, not just from working with Shapps as housing minister, but also from his previous non-political life as a solicitor specialising in development. His paper makes a number of other interesting suggestions, including one that treads rather neatly on the toes of the Labour party. Hilary Benn and Jack Dromey have been mulling over some form of long-term tenancy agreement for those in the private rented sector, which would give families stability and make the sector more attractive to institutional investors. But Berry has his own idea, which he has badged in the briefing paper as a ‘New Deal for Generation Rent’. It would involve long-term leases of seven years where the rent was reviewed every three years, and tenants could negotiate a discount on their rent by taking over the maintenance of the property from the landlord.

He also wants the government to increase the discount available for housing association tenants who want to buy their homes, in the same way as the government reinvigorated the Right to Buy, and offering discounted internet tariffs for social housing. These ideas may well cheese off certain groups – developers and housing associations being chief among them for the disruption it would cause them – but they could also make a big difference to getting the planning system moving again, without the need for huge legislative overhauls.

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