Planning’s not the problem

Firms were queuing up to welcome the reforms of planning promised by chancellor George Osborne and his business secretary Sajid Javid last week. As development businesses, the lifeblood of housebuilders is land with planning - it’s the raw material they need to manufacture their homes (and profits). Competition for land eats away at developers’ margins, and in previous times the lack of sites on which to build was their biggest constraint.

So these businesses will always press the government for greater relaxation of the planning regime, and the thrust of the reforms was clearly positive for them – particularly the move to designate automatic permission in principle for brownfield sites.

But, despite the chorus of approval, it is likely that – in the short term at least – these measures will do little, if anything, to boost supply of new homes.

Ask any housebuilder boss planning to expand their business and they will tell you that construction capacity is their biggest headache

In 2015, planning–- frustrating, bureaucratic and expensive as it undoubtedly still is – is simply not the constraint on home building that it clearly was in the noughties.

You can see this reflected in the so-far modest rises in the price of development land, despite output rising more than a third since its 2012 low. You can see it in the relative lack of M&A activity in the housebuilding sector, with bosses no longer seeing buying their rivals as the cheapest way to get a land bank. You can also see it in the hundreds of thousands of unimplemented planning permissions.

Most of all it is visible in the delays to completions of many major schemes, and the rising construction costs for building homes. Ask any housebuilder boss planning to expand their business and they will tell you that construction capacity is their biggest headache and business risk. Help tackling that problem will be even more welcome.

Joey Gardiner is deputy editor of Building magazine