Property developers have been told to “do their duty to Britain” and build more homes to help people get on to the housing ladder.
Prime Minister Theresa May has revealed plans to penalise developers who do not build homes quickly enough, criticising those who profit from building expensive properties rather than the quantities of new homes Britain needs.
“For decades this country has failed to build enough of the right homes in the right places,” May said.
“We cannot bring about the kind of society I want to see unless we tackle one of the biggest barriers to social mobility we face today: the national housing crisis.”
May argued that in much of the country housing is so unaffordable that millions of people who would reasonably expect to buy their own home are unable to do so.
This is because the “failure to match demand with supply really began to push prices upwards”, and also drove up rents.
“The result is a vicious circle from which most people can only escape with help from the bank of Mum and Dad. If you’re not lucky enough to have such support, the door to home-ownership is all too often locked and barred,” she said.
May plans to take a tougher line against private developers, criticising the “perverse incentive” that allows property executives to profit from building expensive homes rather than greater numbers of affordable ones.
She suggested a company’s past record of delivering affordable housing should be taken into account when it bids for planning permission for new properties.
“The bonuses paid to the heads of some of our biggest developers are based not on the number of homes they build but on their profits or share price. In a market where lower supply equals higher prices that creates a perverse incentive, one that does not encourage them to build the homes we need,” May said.
The Prime Minister claimed developers have failed to build thousands of homes that have been given planning permission, warning that “the gap between permissions granted and homes built is still too large”.
Analysis by the Local Government Association (LGA) earlier this year revealed 420,000 homes that received planning permission in 2017 are still waiting to be built.
May criticised David Cameron, saying her predecessor had presided over “a great and welcome increase in the number of planning permissions granted” but not a corresponding rise in the number of homes being built.
May is likely to face calls to reverse some of the provisions of the Housing and Planning Act 2016, which forced councils to sell off social homes and extended the right-to-buy scheme to housing association tenants. The scheme is another cause of the fall in the number of low-cost homes.
John Healey, Labour’s Shadow Housing Secretary, said: “The Prime Minister should be embarrassed to be fronting up these feeble measures first announced a year ago. After eight years of failure on housing it’s clear her government has got no plan to fix the housing crisis.”
DealMakerz reckons property developers would be happy to do their bit, as long as they are properly incentivised by the government.
In January, the government announced developers could apply for a share of a £7 billion fund to increase the supply of affordable homes, but it later turned out the £7 billion figure was compiled from previous grant announcements from 2016.