Leading regional estate agent Mullucks Wells has hit back at Theresa May’s suggestion that property developers are ‘land banking’ – the practice of holding onto large areas of land on which homes could be built, and watching the value grow until such time as it can be built on more profitably.
In a speech to the National Planning Conference last week, the Prime Minister said developers were part of the reason why enough homes were not being constructed, because they had a "perverse" financial incentive to hoard land once it had been approved for development, rather than actually build on it.
Responding to her remarks, Mullucks Wells Residential Director William Wells said: “This sounds like grandstanding from the Prime Minister; trying to demonstrate the Government’s concern about house prices and property affordability.
“In fact, all the evidence shows that there is very little land banking taking place. Why would developers going through the excruciating and protracted planning process, only to sit on the land, and gamble on a later rise in value? There is uncertainty in the market for a number of reasons, but there is no indication that land values are going up. Therefore to suggest they are holding onto land until it increases in price, simply lacks credibility.”
On the contrary, William Wells says that it’s the combination of a lack of labour and the UK’s faulty planning process which is responsible for a certain amount of land banking inevitably taking place. He explained: “There is sufficient delay in the system that unless developers have some land banked, they will go out of business. So they have to keep some land back to ensure there is a ready supply when needed.
“The reality is that developers want to build, and they need to make a profit to satisfy shareholders or the banks. We can’t see any evidence that major builders have a system in place to build up a substantial land bank, only to do nothing with it.”