Top Treasury official attacks housebuilders over delivery

A top Treasury official has hit out at large housebuilders, claiming they are holding onto land and refusing to increase housing supply in order to boost their profits.

The broadside, which echoes the Labour party’s critique of housebuilders, suggests frustration may be growing in Whitehall with the industry, as housing supply continues to fall short of demand despite significant government support.

Last year, around 160,000 homes were completed - an increase on previous years but still well short of the estimated 220,000-250,000 that are needed to meet demand.

Speaking at a policy event in Westminster last week, Stephen Dance, head of infrastructure delivery at the Treasury, accused housebuilders of deliberately holding onto land and building houses slowly to maximise their profits.

“It is partly [down to] the economics of the industry, which allows them to hold on [to land] and probably make more profit by building fewer houses,” Dance said.

Landowners have got too big a hand in the honey pot - Stephen Dance

There are consents out there; there is land that is allocated for housing, but it is just being pushed down the pipe too slowly.”

Housebuilders can afford to build faster - as shown by the fact that their returns to shareholders have “shot up” in recent years, Dance said.

Underlying the slow building was the fact that companies were buying land simply to trade it, rather than to build houses on it, he said.

“Landowners have got too big a hand in the honey pot.”

Stranglehold on the market

Public bodies are worsening this through infrastructure projects that increase the value of land, Dance said.

“We build a railway or a road or something else, and then discover the landowner along the route is sitting on a gold mine.

“The housing itself becomes unviable or marginal, and the quality goes down,” he said. “There’s a systemic issue there.”

The government would “love” to stop large housebuilders’ stranglehold on the market, Dance added.

“There’s clearly that issue of the top eight housebuilders delivering such a large proportion of our new housing starts, against the large number of small and medium-sized housebuilders that are sitting on land where actually it’s much more difficult to get it started.”

The Home Builders Federation, which represents volume housebuilders, said it “completely refutes” Dance’s comments.

“He clearly must not be aware of the actual figures, which demonstrate there has been a huge increase in supply,” a spokesman said. “If you go back to the historical low point of a few years back, clearly the industry is progressing.

“We see the big companies up about 60% from their trough. Clearly the government wants further increases and the industry is committed to that. But it takes time.”

Dance’s critique strikes a similar note to the Labour party, which remains committed to a “use it or lose it” policy that would allow local councils to crack down on developers that are failing to build on land with planning permission.

Under Labour’s plans, developers would be forced to sell sites they are not building on, or face stiff penalties.

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