Steve Midgley, MD of homebuilder, Fairgrove Homes, responds to Local Government Association proposals to charge full council tax on unbuilt developments from the point that planning permission expires.
The Local Government Association, which is the national voice of local government, has highlighted its new research that reveals there are 475,647 homes in England which have been given planning permission, but have not yet been built. This is an increase from 443,265 in 2013/14.
While citing the skills shortage affecting the construction industry as being one of the main barriers to building new homes, and quite rightly suggesting that ‘devolving careers advice, post-16 and adult skills budgets and powers to local areas would allow councils, education and employers to work together to help unemployed residents and young people develop the vital skills to build’, it is also proposing to ‘force developers to build homes more quickly’.
And how do they propose to do this? They are suggesting that Council leaders should have powers to charge developers full council tax for every unbuilt development from the point that the original planning permission expires.
This is an outrageous proposal in my opinion and totally counterproductive. While keen to apportion blame on the skills shortage and lack of production, the LGA seems to have conveniently overlooked barriers within its own four walls.
Planning applications are supposed to be dealt with within 13 weeks. While this timescale regularly overruns, even if approval is achieved, it then takes months and sometimes even years to get Section 106 legal agreements, or planning obligations, between Local Authorities and developers signed and planning conditions approved. Before this has happened, developers are not in a position to start on site.
After all these delays, developers still have to find finance and hope that the market remains the same as when they first made the planning application.
During the recession Councils chose to charge council tax on unsold new homes, thereby increasing the costs and subsequent misery for struggling smaller developers, putting many out of business. As a result, smaller housebuilders have dropped in numbers from over 12,000 20 years ago to less than 3,000 today. This is primarily due to the whole planning system favouring larger sites and therefore larger developers, and secondly the availability of finance.
Charging business rates on unoccupied business premises has severely curtailed speculative development in that sector, and now that the economy is growing, there is a shortage of readily available property. This suggestion would have the same effect on new homes, as developers will not take the risk.
The Home Builders Federation’s own research suggests that the ‘vast majority of the 475,647 homes quoted by the LGA are either on sites where work has already started, or where there is not a fully implementable permission and where it is not legal for builders to commence construction.’ Research and statistics aside, the government has committed to build one million new homes in England by 2020, with David Cameron promising to ‘pull out all the stops’ to ensure this happens.
In which case, Council planning and legal departments need to work with developers, including smaller homebuilders and not just the larger developers, rather than imposing yet more financial strain on businesses that will play an essential part on the continuing economic recovery.