It’s official: House building activity in strong recovery

HAMISH_MCTAVISH

ILW wrote: »

Good reason to tax these plots then.
If nothing else it would bring in a few quid to the treasury.

All taxes are ultimately paid by consumers.

But if you want to jack up house prices through increasing builder costs, crack on..

Thrugelmir

Originally Posted by HAMISH_MCTAVISH
Not at all, so far.

There are several hundred thousand empty plots with full planning permission granted already. About 3.5 years worth of supply at current building rates.

That isn't the reason building has been at the lowest levels in a century.

The credit famine is solely to blame for that.

Any current increase in building is down to a greater availability of finance, whether it be development or mortgage funding.

Plenty of plans to build around here. Problem is there's no net increase in jobs. As major employers are still cutting back. So until the economy picks up and a major employer relocates here. Demand will remain sluggish in the private sector.

Percy1983

HAMISH_MCTAVISH wrote: »

Not quite.

We need 250,000 a year to keep up with current and future housing need.

We need another million to alleviate the existing shortage.

300K a year for 20 years would just about do the trick and balance housing supply with housing need.

If only we had kept on top of immigration...

ILW

HAMISH_MCTAVISH wrote: »

All taxes are ultimately paid by consumers.

But if you want to jack up house prices through increasing builder costs, crack on..

I thought you said that prices were set by the market. Surely taxing unused land would lower it's value. In fact it could become a liability.

Generali

ILW wrote: »

I thought you said that prices were set by the market. Surely taxing unused land would lower it's value. In fact it could become a liability.

I'm not an accountant but if you tax land in the way you describe then you have 2 things: an asset (the land) and a liability (the cost of holding the land).

I would imagine that in the short term, holders of land with planning permission would look to build on it quicker in order to reduce the liability. But then what?

Land banking has become expensive so builders look to buy land to build on quickly. That is hard to do given the UK's planning laws. Builders would either have to charge more in order to continue the current business model of having a few years of land in stock or go bust if they can't charge more.

Reduced supply as a result would likely push up prices.

Happy to see a different interpretation though.

ILW

Generali wrote: »

I'm not an accountant but if you tax land in the way you describe then you have 2 things: an asset (the land) and a liability (the cost of holding the land).

I would imagine that in the short term, holders of land with planning permission would look to build on it quicker in order to reduce the liability. But then what?

Land banking has become expensive so builders look to buy land to build on quickly. That is hard to do given the UK's planning laws. Builders would either have to charge more in order to continue the current business model of having a few years of land in stock or go bust if they can't charge more.

Reduced supply as a result would likely push up prices.

Happy to see a different interpretation though.

I believe that land banking (speculation) has restricted building as developers (or just land bankers) will hold onto land for a long time if they think it's value is likely to increase. Oddly enough this can then cause a shortage of useable land which drives up prices.

Thrugelmir

ILW wrote: »

I believe that land banking (speculation) has restricted building as developers (or just land bankers) will hold onto land for a long time if they think it's value is likely to increase.

Can take years to obtain the necessary planning permissions for a major development. Let alone design the buildings and plan the infrastructure requirements.

wotsthat

ILW wrote: »

I believe that land banking (speculation) has restricted building as developers (or just land bankers) will hold onto land for a long time if they think it's value is likely to increase. Oddly enough this can then cause a shortage of useable land which drives up prices.

Isn't holding 3.5 years supply of building plots with permission a common sense approach for a capital intensive business. That's based on today's low transaction figures too - an increase is going to reduce that timeframe.

ILW

wotsthat wrote: »

Isn't holding 3.5 years supply of building plots with permission a common sense approach for a capital intensive business. That's based on today's low transaction figures too - an increase is going to reduce that timeframe.

There are smaller plots near me (London/Kent borders) which have been sat on now for about six years by speculators waiting for the prices to rise. Outline planning granted in 2007.

HAMISH_MCTAVISH

ILW wrote: »

Outline planning granted in 2007.

Given the dire availability of mortgages since, hardly surprising that few houses have been built.