Dotted across the country is industrial land with nothing on it. Derelict or simply vacant, there is an empty space where once machines hummed.
Making use of land that has potential for housebuilding or a return to its former industrial purpose should be a priority for any government.
Yet at the moment landowners can sit happily on their inert patch of ground without any penalty.
It’s the reason why all the big house builders can boast three or more years of land with planning permission and allow it to sit idly on their books.
Just ignorant, ignorant tosspottery.
Being a big housebuilder is a continual process. You’ve a workforce, machinery, management, designers and all. You do not develop one site then sit around for a year until the next one is ready to develop. Rather, you’ve got you planners planning the next but one, the designers designing the next and the builders building the current one at any one time. And when the current one finishes then the builders move on to the next, the designers onto the next but one and the planners and acquisition agents onto the next but next but one.
You are continually putting land to be developed in at one end of the process and pumping out houses at the other end.
Such a continual process will, obviously, have a certain amount of land in it lying around waiting to be developed. The question is, how much of that is optimal for any one firm to hold?
The biggest influence on that (the cost of finance will be important etc, but this will be the biggie) is how long does it take to get planning on a piece of land? No, not the basic “Yup, you can build houses there” sort, but the “Yes, we the local council approve your plans for this development”?
I’m told that it takes two to three years for a development of any size. So, how many years of work will the land bank be? Two to three years, obviously, so as to ensure that there is always something fort the workforce to go work on.
And that’s why those land banks. It’s not because the builders are cackling with glee as they cough up interest payments on land they’re not using. It’s because the bureaucracy takes so fucking long to allow them to use it.
It gets worse:
An LVT would be an annual tax on land based on its market price. This doesn’t move very much and with a tax in place would move even less. There is no speculation in land in the same way there is in property.
Idiot tosspottery. The whole property speculation game is actually piss all to do with property. Or even land: it’s speculation in the right to build on a piece of land. It’s the planning permission that rises and falls in price. There’s a very simple method of proving this too. Look at the insured value against destruction (fire, say) of a three bedroom house in Bradford and one in Westminster. The amount the insurer will give you if the place does burn down will be roughly the same (same sized house etc, obviously). And it won’t have changed much over the past couple of decades, normal inflation aside.
Obviously, the value of the whole package, land, house and planning permission has changed over those years and between the two places. But it’s the value of the planning permission that changes, not the bricks and mortar.