Cracking down on undeveloped land held by developers could lead to almost 30,000 extra homes being built in the capital, say London Councils.
In July 2013, there were 124,247 homes that had agreed planning permission in London but which had not been built. While London Councils recognises not all of these will necessarily be deliberately held back, it is estimated that tens of thousands of homes in London are ‘landbanked’. In July 2010, London had land with planning permission valued at approximately £12 billion.
Speaking at a Labour Party Conference fringe event Sir Steve Bullock called for the introduction of an ‘undeveloped land tax’ to discourage landbanking – whereby developers opt not to build on land but to wait for its value to increase before building.
Mayor Sir Steve Bullock, London Councils’ Executive Member for Housing, said: “It’s frankly unacceptable that developers are hoarding land which could be used to build much needed homes for Londoners. With London’s population set to top nine million by 2021, we need to think radically about policy options to boost supply. Cracking down on landbanking could add 30,000 homes to London’s housing stock.”
If an undeveloped land tax – the principle behind which is supported by the Mayor of London – were to be levied on land where planning permission had been agreed for housing, and just five per cent of these homes were started each year, this could lead to an additional 26,825 homes being built over a five-year period, say London Councils.
If the Montague recommendations applying covenants to keep new build for rent over a 10-20-year period were applied this would deter speculative land purchases that can raise the price of land by 50 per cent. Ending speculation and land banking will make more sites viable for home building, they say.
Developers responding to the suggestion said that often land is not being held back, but is stalled for economic viability reasons, or because of punitive planning conditions imposed by local authorities that make building uneconomic.