How house builders plan to increase build rates and what that means for the land market

The house building industry recently announced plans to increase the speed at which they build new homes. This is intended to help the government meet its target of delivering 1 million new homes by 2020. This blog explains how developers plan to do that, and what the impacts might be for the land market.

4 steps to increasing build rates

The 14 largest home builders in the UK, who build over 60% of new homes between them, have signed a Statement of Intent to increase build rates. This was a direct response to pressure from the government to ensure that homes with planning permission are actually built.

Allegations of ‘land banking’ by major developers have persisted for some time despite there being little evidence that the practice actually takes place, as a previous blog revealed. This latest announcement is apparently an effort to further emphasise the industry’s commitment to delivering more homes.

House builders plan to increase build rates in four main ways:

1. Reviewing sites to see if additional sales outlets can be opened.
2. Investigating if a wider range of house designs could help increase sales rates.
3. Considering the release of later phases of sites to other developers.
4. Establishing a ‘Land Exchange’ service to make buying and selling sites simpler, with a particular aim of encouraging small- and medium-sized developers.

Cynics might point out that house builders already do the first three of these as part of their normal business operations. They are often done on an 'ad hoc' basis though, so an increased focus is likely to produce some positive results.

To help monitor progress, developers have committed to providing annual returns to councils on actual and projected build rates on sites in their areas.

How these changes will impact the land market

If this initiative does result in an increase in the rate of housing development, what are the implications for the land market?

Although building 1 million homes in four years might sound like a lot, at 250,000 a year it is no more than the minimum that needs to be delivered to address the housing crisis. Any increase in build rate that does result from these steps shouldn’t be thought of as a temporary phenomenon. Instead it needs to be a ‘new normal’ - a higher build rate that can be sustained in the long term.

For that to be a reality, we’re going to need more land. As sites with planning permission are turned into homes more quickly, councils will have to grant new planning permissions to ensure that those build rates can be maintained.

That means now has never been a better time to start promoting your land through the planning system. The Strategic Land Group is skilled at delivering planning permission for new homes through both planning applications and Local Plan promotions. We can help you benefit from increased rates of build from house builders, entirely at our cost and risk. Get in touch to find out how.

Find out how we can help.