Theresa May tells developers to ‘do your duty’ and build more homes
Theresa May said young people unable to climb onto the property ladder had a "right to be angry", and that developers were partly to blame for the nation’s chronic housing shortage.
Announcing reforms to planning rules, the prime minister said developers had a “perverse incentive” to hoard land once it had been approved for development rather than actually build on it, meaning much-needed houses aren’t being built. She added that they should step up and “do their duty to Britain”.
The Royal Institution of Chartered Surveyors (Rics) said that “urging developers to ‘do their duty’ shows a fundamental misunderstanding of what’s needed to deliver more homes”.
Lewis Johnston, parliamentary affairs manager at Rics, said: "Empowering councils in this way would be a better approach to delivering affordable homes than lambasting private developers.“
Despite this attack on housebuilders, their share prices bounced: Persimmon increased by 2.3pc, with Barratt 1.8pc up, and Taylor Wimpey up 1.3pc. Bovis’ share price climbed 5.2pc, though this was partly down to new boss Greg Fitzgerald buying up more shares.
This positive market reaction to the speech can be explained by the Government’s threat to ‘Nimby’ councils which fail to draw up plans to address local housing shortages. Mrs May said that they will be stripped of their right to decide where properties are built, potentially making it easier for developers to get planning permissions.
In a veiled attack on Persimmon, May condemned the bonus structures at many construction firms, where bosses are paid commission not on the number of homes they build, but on their profits or share price.
In January, the chief executive of Persimmon, Jeff Fairburn, took home a £110m bonus as part of an uncapped scheme that grew as the company’s share price shot up. He has since said he has given a "substantial” amount of it to charity.
Her speech and the proposed changes to the National Planning Policy Framework have been greeted cautiously by housebuilders, with some saying the Government needs to make sure that “rhetoric doesn’t get ahead of reality”.
Brian Berry, chief executive of the Federation of Master Builders, which represents SME builders, said: “There is reason to push back against developers who have a particularly poor track record of delivery, and those who seek planning permissions purely for speculative purposes, but the Government needs to make sure that rhetoric doesn’t get ahead of reality.
"It should recognise that attempts to force building at a rate which makes poor commercial sense could end up slowing down delivery. This could end up discouraging rather than incentivising the SME builders and new market entrants we need to diversify the market.”
Colin Lewis, chief executive of housebuilder Avant Homes said: “Instead of taking advantage of the Help to Buy scheme to build bigger homes, which simply boost profits and increase bonuses for wealthy managers and shareholders, volume housebuilders will need to gain a social conscience.
“In doing so, they will need to build more attainable homes with lower price points to increase accessibility for first time buyers. But with high demand and limited supply, plus incentives from Government-backed schemes, there is little reason for corporate housebuilders to change behaviour,” he said.