Planned homes remaining unbuilt, say local councils

House building
Image caption Councils claim building projects are ready to start but funding is being squeezed

Almost 400,000 homes in England have been given planning permission but have yet to be built, research suggests.

The Local Government Association (LGA) study found that little progress had been made in reducing the backlog over the past year.

The LGA called on the government to remove restrictions on how much councils could spend on housing.

But Housing Minister Mark Prisk said the figures were "out of date and therefore misleading".

Boosting growth

The LGA, which represents more than 350 councils in England, said it was time to fund the construction of new homes rather than making more changes to the planning system.

Councils said there were still thousands of "shovel-ready" sites where work had not begun because of a cap on the amount local authorities could invest in new housing.

The report, put together by building industry analysts Glenigan for the LGA, said the backlog was reduced by just 6,000 to 381,000 homes.

Housing has been identified in Whitehall as one of the quickest routes to boosting growth but the LGA said government schemes to help buyers access finance risked creating a bubble if there was not an increase in house building to match it.

Mike Jones, chairman of the LGA's environment and housing board, said: "The bumper backlog of unbuilt homes and drop in the number of planning applications submitted to councils last year is a worrying sign that the housing market is not yet on the road to long-term recovery.

"While there has been progress made, this risks being undermined if we do not find a way to ensure developers keep up with demand.

"These figures conclusively show that it is not the planning system holding back the building of much-needed new homes.

He added: "Government has an unrivalled opportunity to create jobs, provide tens of thousands of homes and help the economy without having to find a single extra penny.

"New homes are badly-needed and councils want to get on with building them. The common sense answer is for the Treasury to remove its house-building block and let us get on with it."

In a subsequent interview with BBC Radio 4's Today programme, he also accused banks of charging "extortionate" mortgage rates to those without large deposits.

"I think the banks are really ripping off the people who want to borrow money to buy homes," he said.

'Unlock sites'

But Mr Prisk said: "Mortgage rates now are at the lowest they've been for certainly the last four or five years, and that's encouraging."

He also argued that the LGA figures were from December 2011 and failed to show the progress of construction on new developments.

"What the current figures show is that of 496,000 sites that have got planning permission, just 60,000 - so about 12%-13% - are actually stalled. So I don't buy the councils' argument," he told the Today programme.

"We've already delivered over 330,000 new homes over the past three years and starts on new homes are up by a third compared to last year, with major developers pledging to use this momentum to increase output and get Britain building again," Mr Prisk had said earlier.

The government claims the housing market has now "turned a corner" - partly because of its Help to Buy scheme.

The scheme, available to both first-time buyers and people moving into a newly built home worth up to £600,000, offers a government-backed loan of up to 20% of the price of the property and aims to make it easier to buy property with a deposit of just 5%.

From January next year, it will be extended to cover existing housing.

Critics claim the scheme is artificially inflating house prices, leading to future problems when the support is withdrawn.

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