The land banking myth

PipelineIn recent years up to two homes have got planning permission for every one that is built. So does the housing supply problem lie not with planning, but with builders not building? Is housing land being “banked” to keep prices high? In this new research we’ve taken a detailed look to see what’s actually happening on the ground.

This research was done early this year, so should be seen as just a snapshot. It covers London, and was carried out with the help of Molior, using their excellent database of planning permissions, as well as with invaluable insight from some of Quod’s own clients. And credit should go in particular to my colleagues Sasha Gordon and Zach Bacon, who did the hard work of analysis.

The study looked in detail at 604 sites across London with planning permission for 175,963 homes. We identified which sites are progressing, but crucially we also looked into why others are not.

What we found was that above all it is the complexity of planning and development, not “land banking”, that is delaying delivery of housing in London:

  • Many housing schemes are due to start soon or are already underway. Big projects can take years to complete, which doesn’t mean the later phases are being “land banked”.
  • Others are working through issues such as:
    • Additional detailed planning requirements (“reserved matters”), which can be complex and take time.
    • Needing a major infrastructure project (such as Crossrail) to be completed before they can proceed.
    • Awaiting a Compulsory Purchase Order to assemble the land for building to begin.
    • Existing active uses on the site (jobs and business) which means waiting for leases to finish or alternative premises to be found.

Complexities such as this take time to resolve, and account for much of London’s planning pipeline. The full details of our analysis are summarised in the chart below, click for a larger version.


The challenge for London

In 2017/18 a total of 32,000 net new homes were completed in London. The Mayor’s draft London Plan looks set to target 52,000 new homes a year.

Councils are expected to find room for at least five years’ supply of deliverable housing, which in London means 260,000 homes.

This study identified current planning permissions for only 176,000 homes. Given the complexity of delivery, and the many factors that take time to overcome, many more permissions will be needed to meet the new London Plan target.

We should welcome any efforts to speed up housing supply, especially if it can reduce some of the barriers between planning consent and the actual delivery of the homes themselves. But if our response is just to hold up our hands, say planning is already doing it’s part, and blame land banking – well then the detailed evidence from London shows we’ll continue to fall short.

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