May to tell sluggish housebuilders to ‘do their duty’

New housing in Bristol.

Construction firms that have been slow to build new homes could be refused planning permission in future under a shake-up to be unveiled by Theresa May.

The PM will tell developers to “step up and do their bit”, warning that sitting on land as its value rises is not on at a time of chronic housing need.

Housing has become unaffordable to anyone without the support of “the bank of mum and dad”, she will say.

Labour has accused ministers of warm words but little action on housing.

The prime minister has made increasing levels of house building among her most pressing domestic priorities, announcing £2bn for new council homes in England in October.

In a speech in London, she will say that too many people have been locked out of the housing market and point the finger of blame partly at developers who she will say have a “perverse” financial incentive to hoard land once it had been approved for development rather than actually build on it.

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Bonuses in the construction sector have been under the spotlight since Persimmon announced last year that 140 staff would share a bonus pool of £500m and that its chief executive was in line for a pay-out of £110m, a figure that has since been reduced by £25m following an outcry among investors.

While the firm defended the payouts, saying they were a reward for success, critics say the tripling of the firm’s share price since 2013 was in part due to government subsidies for new homes via the Help to Buy Scheme.

Mrs May will criticise bonuses which are “based not on the number of homes they build but on their profits or share price”.

“In a market where lower supply equals higher prices, that creates a perverse incentive, one that does not encourage them to build the homes we need,” she will say.

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Although the number of planning permissions being granted has risen since 2010, the PM will say this has not been matched by a corresponding rise in the number of homes being built.

While the planning rules need to be rewritten and simplified to make it easier to bring forward land for development and to fast-track approvals, she will also say that councils should be allowed to take firms’ past development records into consideration when deciding whether to approve projects.

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“I want to see planning permissions going to people who are actually going to build houses, not just sit on land and watch its value rise,” she will say.

“I expect developers to do their duty to Britain and build the homes our country needs.”

Recalling the joy she and her husband felt when they bought their first home and the security it gave them, she will say the dream of home ownership risks being denied to an entire generation while the gulf between supply and demand have pushed up rental prices way beyond peoples’ means.

“The result is a vicious circle from which most people can only escape with help from the bank of mum and dad.

“If you’re not lucky enough to have such support, the door to home ownership is all too often locked and barred.”



Labour wants action to address what it says is a 30-year low in home ownership

Up to 80 proposals set out in last year’s housing white paper will now be implemented, including requiring councils to adopt a new nationwide standard that shows how many homes they need to plan for in their area.

But she will insist that “tearing up” the Green Belt is not the answer to the UK’s housing crisis and that existing protections will be maintained and, in some cases, strengthened.

Councils will only be able to amend Green Belt boundaries if they can prove they have fully explored every other reasonable option for building the homes their community needs.

When developments do go ahead, councils will be expected to create “new spaces” to compensate.

Labour said action was drastically needed to address what it said was the fall in home ownership to a 30-year low since 2010 and the doubling in rough sleeping.

“There are thousands of planning applications that have been granted and yet developers are just sitting on that land and developments that are chronically needed are not being built,” said shadow minister Andrew Gwynne.