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News » UK » Redrow’s Morgan rails against planning system » published 9 Feb 2016

Redrow’s Morgan rails against planning system

Redrow chairman Steve Morgan has reignited the argument over who is to blame for new housing not going up more quickly: land-hoarding builders or inefficient planners.

House-building companies are frequently accused of sitting on vacant land waiting for house prices to go up, or avoiding building too many houses at once so as not to soften selling prices.

Not true, the builders say. The delay is in the local authority planning bureaucracy – red tape hampering building work.

The Local Government Association (LGA) thought that it had settled this one with a report last month demonstrating that the house-building industry’s backlog of unbuilt units with planning permission stood at 475,647 – a figure that has been rising year on year.

The number of planning applications granted planning permission in 2014/15 was a new high of 212,468 – compared to 187,605 in 2007/08 – with councils continuing to approve nine out of every 10 applications.

The LGA also said that its research showed developers were taking longer to complete work on site. It now takes 32 months, on average, from sites receiving planning permission to building work being completed – 12 months longer than in 2007/8.

The LGA said that the biggest problem was the skills shortage – not enough brick-layers.

Redrow chairman Steve Morgan agreed with the LGA that the shortage of skilled people was "a constraint on output" but actually this situation had eased over the last six months, he said. The real problem, he said, was bureaucracy.

“We have invested heavily in growing our land bank over the last two years as the key to our continued growth is increasing the number of active sales outlets,” Mr Morgan said. “Despite the significant increase in our 'consented' land bank in the first half we increased the number of outlets by just 3% to 121.

“One consequence of selling faster is that sites are coming to an end quicker yet bringing new outlets on-stream continues to be delayed by the planning system.  Indeed, approximately 9,000 plots or 42% of our current land bank covering over 60 new outlets, are tied up at one stage or another obtaining reserved matters approval or clearing conditions. It is imperative therefore that this part of the planning system is streamlined if the industry is to increase output to meet the country's needs.”

However, the house-builders may find it hard to garner much sympathy so long as so many of them keep reporting record profits. They do not seem to be suffering.

For the six months to 31st December 2015 (the first half of its financial year), Redrow saw its revenue rise 8% to £603m and pre-tax profits rise 14% to a £104m – a record high for the company.

Redrow legally completed almost 2200 new homes in the period, 18% higher than the previous year.

Mr Morgan said that demand for new homes remained “robust” and the order book was up 51% at the end of 2015. In the first six weeks of 2016, private reservations are up 10%.

“I am confident this will be another strong year of growth for Redrow," he said.

 

 

MPU

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This article was published on 9 Feb 2016 (last updated on 9 Feb 2016).

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