UK housing: Councils attack 'bumper backlog' of half a million unbuilt homes with planning permission

Nearly half a million homes have planning permission in England but have not been built, according to a new study, despite a severe shortage of housing supply in some areas. Just under half have not even seen construction work begin.

The research, commissioned by the Local Government Association (LGA), which lobbies for local councils, found 475,647 homes that have unimplemented planning permission, up sharply from 381,390 in 2012-13 and 443,265 in 2013-14. The LGA, which called it a "bumper backlog", wants council tax to be payable by developers on all unbuilt residential properties so they speed up building work. It said nine in 10 planning applications to local councils are approved.

"These figures conclusively prove that the planning system is not a barrier to house building," said Cllr Peter Box, LGA housing spokesman. "In fact, the opposite is true, councils are approving almost half a million more houses than are being built, and this gap is increasing.

"Skills is the greatest barrier to building, not planning. If we are to see the homes desperately needed across the country built and jobs and apprenticeships created, councils must be given a leading role to tackle our growing construction skills shortage, which the industry says is one of the greatest barriers to building."

The Department for Communities and Local Government (DCLG) said in a statement that building work had started on 52% of the homes with unimplemented planning permission. And it said housing completions were up 25% over the past year as house building accelerates. "Alongside this we're working closely with developers to ensure it has the skills it needs and saw 18,000 building apprenticeships started in 2014," a spokeswoman said. "We're also directly commissioning thousands of new affordable homes and recently doubled the housing budget."

The House Builders Association said the LGA figures exclude building sites with fewer than 10 units, unless the property is of high value -- therefore overlooking small builders. "Since the recession, the HBA has maintained that SMEs have been squeezed out of the marketplace by a convoluted and onerous planning system," said Rico Wojtulewicz, policy advisor of the HBA.

"Larger sites, the mainstay of the LGA research, have been the preferred option for development. Small site permissions, those with the highest turnaround, have been mostly overlooked whilst the cost to develop them has spiralled. When SMEs built 60% of our homes, output was at its highest. Now at only 30%, output is at its lowest in decades, with prices spiralling out of control."

A shortage of housing is driving up rents and house prices, particularly in London and the south east, putting pressure on household finances. Estimates on the housing need vary from between 200,000 and 300,000 more homes every year to meet demand. But housing starts in England in the year to September 2015 were 136,830, down by 0.8% on the 12 months before, according to data from the DCLG.

Part of the government's strategy to get more homes built is relaxing planning rules because it believes the process is too bureaucratic and so holds up much-needed house building. Its efforts have met resistance from local authorities, which have planning powers over their communities and are worried about losing control of what is allowed to be built.

Construction firms have long warned of a skills shortage as they struggle to bring in enough labour to cope with a sharp spike in demand during the economic recovery from the financial crisis. The Office for National Statistics (ONS) released figures showing construction sector output falling by 4.3% in August 2015. At the time, Owen Goodhead, managing director of construction recruiter Randstad CPE, said a skills shortage was "putting our homes, infrastructure and economy on the line".

"Construction in the UK could be expanding instead of retreating if the right people were in the right jobs," he said. "But training, skills and flexibility need to accelerate hugely for construction jobs to keep up with demand."

The HBA's Wojtulewicz said the LGA is "right to highlight the skills shortage as a house building crisis, as well as searching for solutions to increase output. However, it should consider whether that skills shortage is affecting local authority planning departments to the point of misunderstanding policy or stalling smaller developments. With small sites and infill taking a back seat to larger developments, perhaps these LGA statistics can help local authorities conclude what the industry already knows: the lack of SME support is the real reason for low output and that the planning system works better for big business."