Government proposals for new house building may not help smaller developers

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The government’s land banking review was announced in the Autumn Budget. Under the chair of Sir Oliver Letwin, it looks at the gap between the number of planning permissions and the number of houses built. In London alone, 270,000 residential planning permission sites remain unbuilt.

The review will look at how the housebuilding process can be speeded up following planning permission, but a January 2018 article has noted that many of the proposed solutions may not help the smaller developer.

One problem is that local authorities can add stipulations to planning permission that take considerable time to implement. This means that smaller developers do not have the resources or manpower to manage this.

Another proposal suggested by Chancellor Philip Hammond is that land withheld for commercial reasons could be compulsorily purchased and sold to developers.

Much building land that has planning permission is comprised of large lots that are beyond the scope of smaller developers.

Another area of concern is large public-sector construction projects. Brian Berry of the Federation of Master Builders has suggested that these large projects could be divided into small and micro projects and offered to small developers. The Carillon liquidation has highlighted the danger of large developers being awarded huge public construction projects.

Although commercial mortgages are available to small developers, many cannot raise enough funds for large developments unless they can be broken down into smaller projects.

The government is committed to building more houses, but proposals to do this could favour larger developers over smaller ones.

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