• Land-banking’ culture to be scrapped to encourage house-building
• Firms have been exploiting loophole in order to wait for house price rises
• New rule comes weeks after Labour’s criticised ‘land seizure’ policy

Housebuilders will no longer be allowed to delay big developments after the government introduced stricter rules to prevent so-called ‘land banking’.

Planning minister Nick Boles has scrapped a 2008 measure – introduced in the midst of the financial crisis – which allowed three-year permissions to be easily extended.

Some developers exploit the loophole and hoard plots for years as they wait for house prices to rise before starting to build homes.
Mr Boles said: ‘This measure to extend planning permission was always intended to be temporary and, while it made sense in the aftermath of Labour’s financial crash when there was no money to build, as the economy improves the focus must be on accelerating the number of homes being built to meet demand,’ he said.

‘This ending of the measure will increase the incentive for developers to start on site before permission expires. We are also now seeking to tackle the inappropriate use of planning conditions and speed up the process of gaining non-planning consents.’

Mr Boles said those policies amounted to ‘heavy handed…taxes and land grabs’ which would slow the process and result in fewer homes being built.

‘If developers fear new development taxes or state confiscation of land, they will be less willing to undertake complex land assembly projects; they will let their existing planning permissions lapse; or they will simply be more cautious in applying for planning permission in the first place,’ he said.

Mr Boles dismissed the 400,000 figure as a ‘canard’ deployed by local authority chiefs, insisting the latest data showed that of 257,200 unstarted private projects, 184,600 were ‘progressing towards a start’, 13,500 were ‘being sold or information was not available’ and only 59,100 were ‘on hold or shelved’.

Simon Walker, director general of the IoD, questioned the effect of ending the rollover measure – which would require fresh applications should a permission lapse.

‘Obtaining permission, particularly for large projects, is a very expensive and time-consuming process,’ he told the Daily Telegraph.

‘If builders do not have certainty that they will be able to use the land when they are ready to do so, it seems likely that it will deter some from applying in the first place.’

Shadow planning minister Roberta Blackman-Woods said: ‘With even the Government’s own statistics showing that there are hundreds of thousands of units with permission but not being built, they should support Labour’s comprehensive measures to stop land banking of sites where the local community has given permission for homes to be built but developers are not building them.’