Labour threatens ‘hoarding’ house builders

Housebuilders could be forced to build on land they are sitting on, or face fines – under new plans by Labour.

In a speech on Saturday, Ed Miliband, the Labour leader, will announce potential plans to give councils more powers to penalise firms that do not proceed with building projects, despite having planning permission.

Labour believes that firms are "sitting on land" as it gains value, and that they should “use it or lose it” – in a practice known as landbanking.

Milliband will call for more housing to be built across the country but the priority he will say, should be to develop land that already has planning permission.

He also believes that the lack of housebuilding cannot be blamed on local councils, with planning permission already granted for over 400,000 homes across the country.

In cases of landbanking, Miliband also believes Councils should be given “compulsory purchase” powers to buy back sites that lie empty for years.

The government has dismissed the plan, insisting rules that are already in place encourage builders to start work.

Planning minister Nick Boles said: "Most normal planning permissions already expire after a three-year period and councils don't have to renew them – confiscating any land from development will not help build a single house.

He added: "We're already incentivising developers to build 170,000 affordable new homes for hard-working people by getting mortgage lending flowing again; using our Getting Britain Building scheme; unlocking development on stalled sites and renegotiating planning permission for sites that weren't previously commercially viable to build on.”

The idea has been greeted with criticism from developers and house builders who believe that the focus should be on incentivising rather than penalising.

Assad Maqbool Partner at Trowers & Hamlins law firm explains how developers have a duty beyond just delivering new properties, and that they must consider the sale value of the land and the “economic value that will be gained by the area as a whole from the regeneration.”

He said:“Commercial developers have a duty to their investors and shareholders to make decisions based on their own commercial interests – and do not have the same responsibility that the Government has to resolve housing shortages.”

Adding that in most cases, “as soon as it is in a developer's commercial interest to develop land, they will do so."

He also believes that going forward: “public sector bodies that do own land that could be redeveloped should be looking at entering into development agreements with private developers on terms that will be commercially viable for the developer.”

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