George Osborne is considering introducing a version of Labour’s controversial “use it or lose it” policy, which could see housebuilders stripped of land if they fail to build homes fast enough.
The Treasury is driving government discussions on the proposals in a bid to crack down on developers sitting on land with planning permission, a source close to the situation has revealed to Property Week.
The chancellor has been directly involved in these discussions, the source said – a sign of the extent of government frustration at the housebuilding industry, which has failed to significantly boost housebuilding levels despite government support.
Last year, 160,000 homes were completed, well short of the 250,000 that most estimate are needed to meet demand, and this week the RICS reported that the rate of housebuilding slowed sharply in the first quarter of the year.
Under Labour’s version of the policy, which was first mooted in 2013, developers would be forced to sell undeveloped sites to local councils, or face stiff penalties.
Conservative MP Bob Blackman, who sits on the communities and local government select committee, told Property Week that internal government discussions were at “very early stages” and no decisions had been made.
While Blackman was not against the policy in principle, he warned it could bring about “unintended consequences”.
“I think housebuilders will secure options [on land] as opposed to buying it, and then they won’t apply for planning permission until they’re ready to go,” he said.
His concerns were echoed by the Home Builders Federation (HBF), which said it had discussed the policy with officials from both the Treasury and the Department for Communities and Local Government in the past month.
The talks took place as part of “wider discussions” about ways to increase housing supply, an HBF spokesman said.
“We have suggested that a ‘use it or lose’ policy, or similar onerous legislation, could risk reversing the current upward trajectory in output.
“Housebuilding remains a high-risk business and introducing further risk could make investing in future housing delivery less attractive,” he said.
The discussions come after influential think tank Civitas recommended giving councils the power to strip housebuilders of land in a report late last month.
“Certain officials have seen this and think it’s a good idea. They are looking at everything,” the HBF spokesman said.
The news is the latest indication that the government is starting to get tough on the sector.
It comes after a senior Treasury official this month hit out at housebuilders for holding onto land to boost profits.
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