Planners accuse homebuilders of hoarding land to keep prices high

Planning experts have hit back at claims that the planning system is slowing the rate of new homes being built, instead blaming homebuilders for holding on to land to inflate prices.

Property firms are making record profits on the back of huge increases in their land banks by manipulating supply, one source said. "Homebuilders get planning permission but delay building houses to keep prices high," he said.

Jim Claydon, president of the Royal Town Planning Institute (RTPI) said it is evident from the number of outstanding planning permissions that the planning process is not holding up the supply of land.

"All landowners, including housebuilders, maintain land values by managing supply," he said. "It is not in their interests to release large quantities of land because this deflates its value. If we are to build houses at a faster rate, we cannot rely on market forces to do this because the current rate of building and land release suits private developers. It will require government intervention."

According to the RTPI, there is a six-year supply of land with planning permission in the South-east, while in London alone there are enough planning permissions to deliver 30,500 homes each year until 2016.

Emma Crowley, at the property consultants Jones Lang LaSalle, said uncertainty over whether or not Chancellor Gordon Brown would introduce a "planning gain supplement" has possibly "made house builders more reluctant to release land for development".

A planning-gain supplement would tax the profits made by landowners selling sites for property development and property firms said it would mean less land being made available for housing.

Ms Crowley added that revised guidance from the Government has attempted to encourage local planning authorities to ensure an appropriate supply of housing land. This is partly through the release of employment land and premises, she said.

However, "there is an insufficiently rigorous application of this policy at the local level", she said, adding that "employment and housing land supply data is often inaccurate or out of date".

John Foddy, at the property consultant King Sturge, said an overcomplicated planning system is part of the problem. Projects are held up by "an extraordinary amount of due diligence", he said, adding that straightforward developments are often delayed by a large number of reports, such as noise reports."From the perspective of developers, it is a complicated, high-risk process," he said.

Homebuilders say the complicated planning system has contributed to the housing shortage. Official figures have revealed that completions grew 0.5 per cent last year to 160,230, and there are fears the Government will fail to meet its target to raise annual house building to 200,000 by 2016.