Reality Check: Are property developers hoarding land?

Related Topics

The claim: The body representing developers says that they do not hoard land - they are building houses as quickly as they can.

Reality Check verdict: There is currently a large gap between how many planning permissions are granted and how many houses are built. On average over the last decade, government figures show only half of granted planning permissions have resulted in building work being started. But we can't say exactly why developers are doing this - whether it's for profit, because of delays in the planning system or for another reason.

The prime minister has said she will tackle the failure to build enough houses in England. As part of this, Theresa May said she would make it harder for developers to hang on to land for which they have been granted planning permission without building on it.

Labour's shadow communities secretary Andrew Gwynne told BBC 5 live at the weekend: "There are thousands of planning applications that have been granted and yet developers are just sitting on that land - land banking whilst those developments that are chronically needed, just aren't being built."

But the Home Builders Federation, which represents developers, disputes that this so-called "land banking" is happening.

Their planning director, Andrew Whitaker, said: "Having gone to the expense and time of getting a permission, builders cannot afford to sit on it."

Unused land

Housing charity Shelter has looked at how quickly developers build. For each year they looked at the gap between planning permission being granted, building work starting, and completing. They allowed an 18-month gap between permission being granted and starting building, and another 18 months between building work starting and completing.

On average between 2006 and 2014 in England, fewer than 45% of all planning permissions granted were started and fewer than 50% completed. That suggests that half of all planning permission applications don't result in building activity at all.

The problem is, this doesn't tell us why developers are sitting on the land.

It also doesn't mean these projects will never be built.

One key reason that developers might wait is so they have a "pipeline" of land to develop on in the future.

Dan Lewis, a senior infrastructure advisor at the Institute of Directors, says: "The last thing you want to do if you are a housing company is develop all your land at once, because then you'll go bankrupt."

Government review

As numbers of permissions granted have gone up, house building has not kept pace meaning the gap between permissions and housing supply has grown considerably.

This is something the government is already looking into as part of a review headed up by Conservative MP Sir Oliver Letwin.

The Ministry of Housing, Communities and Local Government says that as of July 2016, just over half the 684,000 homes with planning permission had been completed.

Analysis from the Local Government Association, which represents local councils, found last year there were 423,544 unimplemented planning permissions.

But a Home Builders Federation spokesman said these permissions are measured "at the point when the first condition is discharged but some permissions have 100-plus conditions attached that take months or years to discharge before builders are actually allowed to start building".

He added: "So a lot of the 'permissions' are stuck making their way through the planning system via understaffed local authority planning departments."


Critics say developers hold on to land as an asset. Instead of building on it, once developers have been granted planning permission they may be able to sell that land on at a profit to be developed by someone else.

Shelter accepts that these figures are not necessarily all because developers are speculating for profit.

But nevertheless their figures point clearly to the fact that there is land which is available for house building, on which houses have not yet been built.

The cause of this delay, however, is harder to pin down.

More on this story