Plots are developed as soon as they have planning permission and 557% profit rise ‘comes from very low base’
Britain’s housebuilders have launched a scathing counter attack against Ed Miliband’s claim that they are hoarding land for profit.
The industry said plots are built on as soon as planning permission is secured, and argued that the 557% increase in profits among the nation’s four biggest housebuilders this year comes from a very low base following the financial crisis.
Pete Redfern, chief executive of Taylor Wimpey, said: “The industry is only just returning to the point where it is meeting its cost of capital following the most prolonged downturn in housing history.
“The comparison used for profitability is against a point where many in the industry were loss making, so a percentage improvement is rather meaningless.”
Britain’s chronic housing shortage is expected to push up prices by as much as 8% next year according to the property website Rightmove, unless a flood of new properties are built.
The biggest four developers by turnover – Barratt, Berkeley, Persimmon and Taylor Wimpey – have a collective land holding of almost 300,000 plots.
Miliband is accusing housebuilders of holding on to land to push up values, and claims some “stick-in-the-mud councils” are blocking development.
Redfern strongly rejected the Labour leader’s accusation that housebuilders are hoarding land.
“We continue to start all sites as soon as possible once an implementable planning permission is received. Taylor Wimpey specifically and the industry as a whole have only a tiny percentage of sites that have a planning permission, where construction has not been started.”
A spokesman for the Home Builders’ Federation (HBF), the industry’s trade body, said: “Developers don’t land bank, all the evidence is there. As soon as developers get a planning permission they want to start on site. Developers are not land hoarders.”
One major housebuilder said companies in the sector would be perceived as hugely risky and lose investment if they did not have sufficiently long land bank holdings of typically more than four years.
The HBF said the industry would work with Michael Lyons, the chair of Labour’s new independent commission on housing, to improve understanding of the issues.
“We are looking to work with the Lyons Commission to help them understand the complexity of housing delivery going forward.”
Lyons said the country needed to build more than 200,000 homes a year by 2020 if demand was to be met and the backlog of under-supply addressed.
Shares in the sector were down on Monday morning, with Persimmon shares 1.7% lower, Barratt down 0.9% and Taylor Wimpey off 0.2%.
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