Money to be made from planning permission


A study carried out by the National Housing Federation and the Centre for Progressive Policy has revealed that housing developers in England made £13bn during 2016/17 on the value of their undeveloped land with planning permission. 

The study shows that agricultural land multiplies its value by 275 times as soon as planning permission is granted - even before any homes are built. This has led to a £13bn profit during the 2016/17 year compared to just £9bn during the 2014/15 year. This compares to a combined profit of £913m for all of the six largest energy suppliers in the UK during 2017.

The campaign groups say that this additional profit should be “captured” and used by local government to build affordable homes, roads and infrastructure. They also suggest that at least half of the homes built on disused land should be made available and affordable for those on the lowest incomes. The Housing Federation has also reported that those wanting to build social housing are frequently outbid on land by private developers.

Chief executive of the National Housing Federation, David Orr has stated that with the current housing crisis, the housing market appears to be broken. He says that the way land is bought and sold is a key cause and a fundamental rethink is required.

This view was backed by Thomas Aubrey from the Centre for Progressive Policy who has said that these figures give evidence for how rural and urban regions can use the uplift in land value to get the funds that are urgently needed for infrastructure and affordable housing. By taking on these points, the government could create economic opportunities and enable a more inclusive form of growth.

However the membership body for developers, the CLA does not agree. Their director of policy and advice, Christopher Price, points out that the figures are not an accurate representation of what the land is sold for and does not take into account that the state already captures some of that increased value in the case of residential land.