Developers leave thousands of new homes unbuilt ‘to drive up prices’

DEVELOPERS have been accused of deliberately restricting the supply of new houses to keep prices high after figures suggested that planning permission has been granted for 750,000 homes which have not been built.

A report by Civitas, a respected right -of-centre think tank, found that overall more than 2 million planning permits were issued between 2006 and 2015, a rate which would be enough to build average of 204,000 new homes a year. However, foundations were laid for just 1.26 million of the properties, suggesting developers and land owners are sitting on the sites rather than building new homes.

Theresa May, the Prime Minister, has made building more affordable homes one of the cornerstones of her premiership and will chair a meeting of a new Cabinet committee on Thursday to discuss how to tackle the problem.

Last night, MPs promised a parliamentary inquiry into whether developers should be forced to build on plots once planning permission has been granted. The Coalition controversially shook up the planning system in 2012 by writing a presumption of “sustainable development” into the rules, which campaigners feared would allow more greenfield sites to be built on.

The Daily Telegraph ran a “Hands Off Our Land” campaign, which helped to persuade ministers to water down the full extent of the changes when they were introduced in March 2012. However, campaigners said that they should have included a “sunset clause” which would have forced developers to build on land granted planning permission within a set time period.

The analysis shows that between 2011 – the last full year before the changes were introduced – and 2015, the number of unused planning permits jumped by 88 per cent, while new housing starts increased by just 26 per cent. One third of “unbuilt planning permissions” were thought to be held by non-builders, Civitas said, which “points to land hoarding in the hope of further rises in land values”.

Civitas accused housebuilders of reducing sales to a “drip-feed” to maintain profit margins.

Clive Betts MP, the chairman of the Communities and Local Government select committee, said: “Planning reforms will be a failure unless the Government can act and turn planning permissions into completions.”

David O’Leary, policy director of the Home Builders Federation, said: “From outline permission it can take considerable time to progress through the stages necessary to be able to build, including meeting conditions imposed by local authorities … Over-simplified analysis trivialises a serious subject.”