Britain’s largest developers have been accused of profiteering on the back of the country’s housing crisis by restricting the supply of new houses to keep prices unnecessarily high.
Latest figures reveal that a record half a million homes in England now have planning permission granted but have yet to be built. The length of time it takes for developers to complete a house has jumped from 24 to 32 weeks.
Ministers are increasingly concerned by the failure of developers to speed up housebuilding and there are fears that some are deliberately restricting supply of new houses to boost profits.
While rates of planning permission for new homes have increased by 60 per cent since 2010 there has only been a 48 per cent increase in the number of new homes being built.
Taylor Wimpey announced a record operating profit margin of more than 20 per cent yesterday as it sold more homes at higher prices. Pre-tax profits at Britain’s biggest housebuilder Barratt Homes have also jumped 40 per cent in the past six months to nearly £300m.
“When you have got housebuilders delivering, on average, 48 homes a year on some [large] sites that’s not good enough,” the housing minister, Brandon Lewis, said.
“We know they can go further. Housebuilders will talk about saturating the market. But we are aware that in too many places we are still taking 20 weeks to build a house when we can do it in three or four.
“Housebuilders should be playing their part to ensure we deliver the homes this country needs.” Ministers are understood to be contemplating new measures to force up the rate of development amid fears that they will fall short of their manifesto commitment to build one million new homes by 2020.
This could include forcing developers that buy publicly owned land to commit to rapid construction as part of the planning process.
Clive Betts, the Labour chairman of the Local Government Select Committee, said: “I think it is clear that the big developers are building at a rate to maximise their profits rather than addressing the country’s housing need.”
Mr Betts added that some developments that have had planning permission were not due to be completed for another 10 years.
“These are private companies who are very simply trying to make money for their shareholders. They are restricting supply and the Government urgently needs to come forward with measures to address this.”
UK news in pictures
UK news in pictures
1/27 27 March 2017
A Tate Britain staff member poses for photographers underneath "Forms in Space...by Light (in Time)" a light installation by Welsh artist Cerith Wyn Evans, during a photo call in the Duveen Galleries at Tate Britain gallery in London
2/27 27 March 2017
Police walk past floral tributes to the victims of the Westminster terrorist attack outside the Palace of Westminster, London
3/27 26 March 2017
People pose for a picture with police officers outside the Houses of Parliament in central London
4/27 26 March 2017
Floral tributes to the victims of the Westminster terror attack are seen in Parliament Square in central London
5/27 26 March 2017
A aerial view of Derwentwater near Keswick in the Lake District, Cumbria, with snow capped mountains in the foreground and background, as the warm weather continues for many in the UK
6/27 24 March 2017
British Conservative Party politician Tobias Ellwood (C), who gave first aid to the fatally wounded police officer Keith Palmer, one of the casualties of the March 22 London terror attack, shakes hands with an armed police officer as he arrives at the Houses of Parliament in London
7/27 24 March 2017
Armed police outside Westminster underground station in central London following the terrorist attack which claimed the lives of four innocent victims
8/27 23 March 2017
A flower left in tribute to the victims of the March 22 terror attack is seen next to the Palace of Westminster
9/27 23 March 2017
Mayor of London Sadiq Khan speaks as Home Secretary Amber Rudd MP and acting Commissioner of the Metropolitan Police Craig Mackey look on during a candlelit vigil at Trafalgar Square
10/27 23 March 2017
People gather during a candlelit vigil at Trafalgar Square
11/27 23 March 2017
A man lays flowers during a candlelit vigil at Trafalgar Square
12/27 23 March 2017
The funeral procession leaves St Columba's Church Long Tower with the coffin after the funeral of former Northern Ireland Deputy First Minister Martin McGuinness in Derry, Northern Ireland
13/27 23 March 2017
Martin McGuinness's wife Bernie leaves St Columba's Church Long Tower, in Londonderry
14/27 21 March 2017
Northern Ireland's Former Deputy First Minister Martin McGuinness Dies Aged 66
15/27 21 March 2017
Beautiful Beautiful George Michael Love Painting of late singer George Michael by Damien Hirst
Damien Hirst/The Goss-Michael Foundation/PA Wire
16/27 18 March 2017
Britain's Prince William, Duke of Cambridge, and his wife Britain's Kate, Duchess of Cambridge, look across the River Seine at a view of Paris through the clock face at the Musee dOrsay - the former Gare d'Orsay train station- during their visit to the museum on the second day of their two-day visit to the French capital. It is the prince's first official visit to the French capital since his mother Diana died there in a car crash in 1997
17/27 18 March 2017
The Duke and Duchess of Cambridge at Les Invalides, where they met a number of victims and first responders from the Bataclan and Nice attacks and also heard more about the important historic and current role of the site, in particular its work supporting veterans and its rehabilitation programmes, as part of their official visit to the French capital
18/27 18 March 2017
The Duke and Duchess of Cambridge at the Trocadero, where attended a 'Les Voisins in Action' event highlighting the strong ties between the young people of France and the UK, during an official visit to Paris, France
19/27 18 March 2017
The Duke and Duchess of Cambridge at the Trocadero, join in a game of rugby with school children as they attends a 'Les Voisins in Action' event highlighting the strong ties between the young people of France and the UK, during an official visit to Paris, France
20/27 18 March 2017
Scottish First Minister Nicola Sturgeon tours the stall at the SNP Spring Conference at the AECC in Aberdeen
21/27 18 March 2017
Thousands of protesters arrived at Portland Place in Central London at around midday holding banners adorning defiant messages of solidarity
22/27 16 March 2017
Amnesty International activists hold banners while taking a demonstration in London
23/27 16 March 2017
Prince Harry leads a panel discussion with former members of the UK and US Armed Forces, Ivan Castro, and Philip Eaglesham, with his Assistance Dog Cooper, during the Veterans' Mental Health Conference at the King's Building in the Quad, King's College London
24/27 15 March 2017
House of Commons Sergeant at Arms Kamal El-Hajji tries a new 360 degree headset which allows people to have a virtual reality tour of the Houses of Parliament in London using their smart phone from anywhere in the world
25/27 15 March 2017
Claire Blackman, wife of the imprisoned British Sergeant Alexander Blackman, poses as she leaves the Royal Courts of Justice
26/27 14 March 2017
Muirfield golf club members have voted to admit women members after the privately owned club voted eighty percent in favour in updating the membership policy
27/27 13 March 2017
A photographer captures the sunrise in Whitley Bay, Tyne and Wear, as today could be one of the warmest days of the year so far with spring just over a week away
Figures compiled by the Local Government Association show that there are now a record 475,647 homes in England which have been given planning permission but have yet to be built. In 2012-13, the total was 381,390.
In comparison, the number of planning applications being approved had risen to 212,468 – up from 187,605 in 2007-08 – and is higher than all previous years.
Peter Box, the LGA’s housing spokesman, said the figures “conclusively proved” that the planning system was not a barrier to house building. “To tackle the new homes backlog and to get Britain building again, councils must have the power to force developers to build homes more quickly,” he said.
A spokesman for the campaign group Generation Rent added: “These are businesses out to maximise their profits so it makes sense for them to limit the supply of housing that is being built. But it shows that you cannot rely on them to fix the housing crisis.”
Some senior Whitehall figures are concerned that because some smaller developers went bankrupt as a result of the financial crisis, the market is now dominated by a handful of big companies reluctant to increase output significantly.
This view is shared by charities such as Shelter which said one of the “major problems” with the industry was that it relied on “a small number of big developers to deliver the lion’s share of the homes we need”.
However, Mr Lewis has ruled out measures such as imposing council tax on plots that have been granted planning permission for fear that such a move could prove counter-productive. Instead, the Government believes that there is a case for trying to split up sites among rival developers to increase production rates. It is also investigating how to promote “ready-made” houses that could be built off site.
“If I go and look at a site like Didcot where they are building roughly 400 properties a year, they are doing it because there are four outlets,” Mr Lewis told the select committee. “If you have got a site which only has one outlet they [developers] will go back to building roughly 50 a year. It’s not about whether that site can take 200 or 400 a year, it’s how they manage it.”
But Labour’s shadow housing minister, John Healey, said the Government could not escape the blame for the overall shortage of housing. “Ministers are right to be nervous about the performance of the private housebuilders,” he said. “For five years they’ve written developers one blank cheque after another, with little to show for it.
“Cutting back planning rules has meant the number of affordable homes developers build has halved, and now extraordinary plans in the Housing Bill will let them dispense with building low-cost housing altogether and build starter homes on sale for up to £450,000 instead.”
A spokeswoman for Taylor Wimpey said that during 2015 the company had built more homes than at any point in the past six years. Pete Redfern, the group’s chief executive, said it would “continue to work with stakeholders to ensure we open all sites with implementable planning and begin building as quickly and efficiently as possible”.
A spokesman for the Home Builders Federation said the most recent government figures showed that there were 170,690 net additions to the housing stock during 2014-15, an increase of almost 25 per cent on the previous year. He blamed the planning systems of local and central government for the shortfall in housing.
“As a priority, government needs to work with local authorities to speed up the planning system and ensure local plans allocate enough sites of different types and sizes that are attractive to a range of companies,” he said.
“It’s simply not credible for ministers to complain that housebuilders aren’t doing their bit. This is a failure of policy and a failure to see that all parts of the housing sector need to be doing much more to fix the cost-of-housing crisis”.
UK’s biggest developers: What they earn
Market capitalisation: £6bn
Pre-tax profit: £604m
Profit margin: 20 per cent
Chief executive: Pete Redfern
Salary (including long-term bonuses) £5.8m
Market capitalisation: £5.9bn
Pre-tax profit: £570m (est)
Profit margin: 18 per cent
Chief executive: David Thomas
Salary (including long-term bonuses): £4.28m
Market capitalisation: 4.43bn
Pre-tax profit: £586m (est)
Profit margin: 25 per cent
Group executive chairman: Anthony Pidgley
Salary (including long-term bonuses): £3.38m
Market capitalisation: £1.29bn
Pre-tax profit: £160m
Profit margin: 16.9 per cent
Chief executive: David Ritchie
Salary (including long-term bonuses): £1.5m
Market capitalisation: £1.6bn
Pre-tax profit: £95m (est)
Profit margin: 17.2 per cent
Group chief executive: John Tutte
Salary (including long-term bonuses): £1.09m