The Adam Smith Institute, a right-wing think-tank, has blasted the campaigning charity Shelter over its allegations of land-banking by house builders in the UK.
In a blog entitled ‘Once Again, More Than A Little Misleading From Shelter’, the think-tank’s Tim Worstall says Shelter claims builders are buying land in order to sit on it while it appreciates. This refers to a recent claim by the charity that 10 of the country’s largest residential builders have some 14 years’ worth of develop-able land sitting idle.
This takes the form of 404,000 plots through their current land banks, and a further 558,000 plots in so-called strategic land banks - the latter involving purchase options controlled by, but not necessarily owned by, the developers.
Worstall says there is a basic logic problem with the initial allegation - that is, that the builders would deny themselves the income they would receive if they built properties. “There won't be any profits or dividends unless something is actually sold” he writes.
He says instead the number to take notice of is the 404,000 plots actually owned rather than those not owned and merely on option - and the owned figure accounts for five years or so of supply, not the 14 alleged by the charity. In addition, he says, it can often take several years to secure planning consent anyway, pushing out further the timeframe for building.
“The stock of land therefore seems to be, around and about, sufficient to cover the time it takes to gain more land upon which to build. Just as if it takes a factory a week to gain more of a supply then it will tend to hold about a week's supply of that thing” he writes.
He adds that if there is any genuine land-banking, with land simply being stored for appreciation rather than building, then the way to overcome it is by issuing more planning consents more rapidly.
“The increased supply will mean the speculation doesn't work and thus people will build not speculate.That is, the solution to our housing woes is, as it always is, simply to issue more planning permissions” he says.
In recent years Shelter has shifted its emphasis away from campaigning purely for the homeless and has instead campaigned against some property industry activities, including estate and letting agent practices.
Earlier this year we reported that it had a run-in with housing expert Kate Faulkner over its allegations regarding first time buyers.