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House Builders Sitting On Land Enough For 600,000 Homes

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http://www.theguardian.com/society/2015/dec/30/revealed-housebuilders-sitting-on-450000-plots-of-undeveloped-land

Britains biggest housebuilders possess enough land to create more than 600,000 new homes, an analysis by the Guardian has found, raising questions about whether they are doing enough to solve the housing crisis facing Britain.

The nine housebuilders in the FTSE 100 and FTSE 250 hold 615,152 housing plots in their landbank, according to financial disclosures. This is four times the total number of homes built in Britain in the past year.

Berkeley, Barratt, Persimmon and Taylor Wimpey the four biggest companies in the industry account for more than 450,000 of the plots. They are also sitting on £947m of cash and declared or issued more than £1.5bn in payouts to shareholders in 2015."

More at link, if it works. Otherwise currently on right hand side of Grauniad home page.

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Hi, whats wrong with holding land? Its what thwy need to build the houses on. Sounds like good business sense to me

Which would be fine if it wasn't a commodity suffering an artificial scarcity due to state intervention in what should be a free market.

Free up land for building and this strategic land banking will no longer make commercial sense.

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Were is the land? 600,000 houses in the outer Hebrides is unlikely to help the housing situation. 600,000 in and around London, that is a different matter entirely!

There is also a question around how quickly they can sell the houses - obviously they wouldn't want to depress local house prices, so they would have to be careful they don't end up sitting on a massive stock of houses they had to maintain etc if they were building faster than selling.

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Were is the land? 600,000 houses in the outer Hebrides is unlikely to help the housing situation. 600,000 in and around London, that is a different matter entirely!

There is also a question around how quickly they can sell the houses - obviously they wouldn't want to depress local house prices, so they would have to be careful they don't end up sitting on a massive stock of houses they had to maintain etc if they were building faster than selling.

"..obviously they wouldn't want to depress local house prices..." Eh?

Provided they're making a profit on their new houses why would they care what second-hand houses were fetching?

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Well, if they lower their prices to sell more, local market drops their prices, so they have to drop their prices more so they keep the rate of sales up - race to the bottom (like supermarket price wars). Of course if the pool of buyers increases to absorb the extra houses then this will be mitigated, but it depends on how much the pool can increase. This then comes full circle to profits, how much do prices have to drop to meaningfully increase the pool of buyers.

Though I was thinking more about the fact that house builders appear to be best buds with the government (lots of cash being thrown their way) so will probably be in cahoots to keep house prices up and thus home owning voter sentiment nice and high.

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Would pretty much solve the housing crisis if all the land were to be compulsarily purchased, homes buit and then rented out to local people at fair rents!

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They own this land because it can be built on and because by holding back on releasing homes increases prices. So either:

A) Tax it

B) Pass legislation to allow surrounding land owned by others to be substituted in and developed on as long as it is built on within a reasonable time. Subsequently removing potential for the hoarded land to be built upon to prevent over development. If they cannot build on it, find other land owned by others that can.

Of course neither will happen. The builders probably will receive tax breaks to incentivise building on this land.

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By coincidence 600,000 is roughly the amount they failed to build under the coalition (if they'd built at the rate of building before the economic collapse).

If they had built those homes then more than likely they would still have 600,000 or so plots being hoarded through rolling land purchases.

Whatever - there's a very good case now for compulsory purchase of the hoarded land to enable builders to do the job of building homes rather than being land speculators with a home building front.

The builders could also serve another useful purpose and use their expertise to identify suitable land for building on and they could earn a fee for carrying out that function.

Edited by billybong

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Some land-banking is necessary for business planning purposes; however, the hoarding has much to do with land speculation - a significant factor in HPI

I see much land with planning permission on brownfield languishing.

Government in cahoots with the builders and needing HPI (as part of budget forecasting), are not going to do much about it - certainly not that which will benefit the majority.

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Hmm would need to dig deeper into the accounts to see if there is an option on reporting land values in accounts, and also when the land was acquired and what price.

From what I can tell most are focused on margins rather than volume.

Occasionally you see bizarre stories about there being not enough bricks, bricklayers, cement, etc

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Hmm would need to dig deeper into the accounts to see if there is an option on reporting land values in accounts, and also when the land was acquired and what price.

From what I can tell most are focused on margins rather than volume.

Occasionally you see bizarre stories about there being not enough bricks, bricklayers, cement, etc

There have been big shortages of bricks and blocks and it has taken the industry a while to ramp up production. More recent problems have revolved around finding enough hauliers to move them. The industry is building about 150k houses per year now and are struggling to find skilled labour to do much more.

Also, these days, planning permission is only the start with the planning process. It can take a significant period of time to discharge a huge array of planning conditions before construction can actually begin. The stats don't seem to indicate whether the plots are ready to be built upon in planning terms.

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Hmm would need to dig deeper into the accounts to see if there is an option on reporting land values in accounts, and also when the land was acquired and what price.

From what I can tell most are focused on margins rather than volume.

Occasionally you see bizarre stories about there being not enough bricks, bricklayers, cement, etc

Have a look at how they re-value the land bank to manipulate their tax positions.

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There have been big shortages of bricks and blocks and it has taken the industry a while to ramp up production. More recent problems have revolved around finding enough hauliers to move them. The industry is building about 150k houses per year now and are struggling to find skilled labour to do much more.

Also, these days, planning permission is only the start with the planning process. It can take a significant period of time to discharge a huge array of planning conditions before construction can actually begin. The stats don't seem to indicate whether the plots are ready to be built upon in planning terms.

With such vast profit margins (20-30%) for the big developers they could easily pay hauliers more. How about actually training more in the professions? There's always an excuse for the very low limit of their building. It happened in the 90s, throughout the boom of 2000s up to 2007 and ever since.

There's been substantial weakening of regulations as well so post-planning conditions aren't that strenuous. Much laxer than just about every other developed nation who also manage to build far more houses per capita.

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So why do the UK brick/block manufacturers have such a stranglehold. Why not import them from the eu - that's the sort of thing that was supposed to benefit eu members (along with common standards) according to the brochure.

All the problems now reported to be blocking building enough houses (labour and materials etc) were supposed to be resolved by eu membership but when it comes to the crunch the problems still exist.

There's even a Channel Tunnel these days to ease the transport of such materials.

It's not that unlike the coal industry - why mine your own when you could import cheaper. Even if they were more expensive they make up a small part of the total cost of a house so it would be worth doing even if only to remove yet another excuse not to build.

Edited by billybong

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Why would they bother with any of that? Their job is to maximise their incomes. I doubt solving national socioeconomic problems is high up their agenda. Similar to any profession/Union, they have an incentive to restrict output (whether that would be builders, doctors, lawyers) to maximise their own and their members income and ensure everyone is forever employed. A risk of a glut that may have a downward pressure on prices or put a lot of members out of work (esp if you have paid for expensive training) must be avoided.

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There have been big shortages of bricks and blocks and it has taken the industry a while to ramp up production. More recent problems have revolved around finding enough hauliers to move them. The industry is building about 150k houses per year now and are struggling to find skilled labour to do much more.

Also, these days, planning permission is only the start with the planning process. It can take a significant period of time to discharge a huge array of planning conditions before construction can actually begin. The stats don't seem to indicate whether the plots are ready to be built upon in planning terms.

:lol:

And thats why hourly rates are no higher now than they were 9-10 years ago

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So why do the UK brick/block manufacturers have such a stranglehold. Why not import them from the eu - that's the sort of thing that was supposed to benefit eu members (along with common standards) according to the brochure.

All the problems now reported to be blocking building enough houses (labour and materials etc) were supposed to be resolved by eu membership but when it comes to the crunch the problems still exist.

There's even a Channel Tunnel these days to ease the transport of such materials.

It's not that unlike the coal industry - why mine your own when you could import cheaper. Even if they were more expensive they make up a small part of the total cost of a house so it would be worth doing even if only to remove yet another excuse not to build.

The UK already does import bricks. There's a handy table here http://touchstoneblog.org.uk/2014/10/boriss-brick-made-at-home-but-brick-imports-are-rocketting/although it only goes to 1st half of 2014.

Government figures are here https://www.gov.uk/government/collections/building-materials-and-components-monthly-statistics-2012#monthly-bulletin

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why do houses have to be made of brick? Is it something imposed onto the builders by govenrment? You cant really import bricks they are too bulky so thats why they stick with home produced bricks. At Redbanks Measham plant which is a very modern plant they have bricks on stock so either they are charging too much or they misjudged the market,

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They sit on it because the money that they would get for it is becoming evermore worthless.....nothing to spend manufactured money on, not gold, not works of art not tat in shops, the banks don't pay no interest, they are not interested in your easy money when they can get it for nothing.......pull up a rocking chair, grab a soft cushion sit back and rock. ;)

https://www.youtube.com/watch?v=kDD5BQlv8iw

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The nine housebuilders in the FTSE 100 and FTSE 250 hold 615,152 housing plots in their landbank, according to financial disclosures. This is four times the total number of homes built in Britain in the past year.

Berkeley, Barratt, Persimmon and Taylor Wimpey the four biggest companies in the industry account for more than 450,000 of the plots.

How many years of their own house building does this represent? This article suggest the top ten builders are nearly 50% of the market,

http://www.building.co.uk/grip-of-big-housebuilders-loosens-on-uk-market/3054581.article

So in round terms they're sitting on land equivalent to about 8 years of future building. Given the enormous time required to steer projects through planning permission that doesn't seem unreasonable.

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