TELEGRAPH OP-ED: If Sajid Javid Really Wants More Homes Built He Should Take On The Big Developers

Aaron Senessie is a maths teacher at a leading London secondary school. Whitney Joseph is a trainee lawyer in the City. A couple for several years, and now in their late-20s, Aaron and Whitney want to buy a modest home close to Whitney’s parents in Essex.

“It’s an uphill struggle – we’re saving hard, but always battling rising prices,” Aaron tells me, as part of my recent Channel 4 Dispatches investigation into UK house-building. “It’s really upsetting,” Whitney continues. “We’re hard-working people with good jobs – and we haven’t got a chance”.

The UK faces a chronic housing shortage. Over the last two decades, we’ve built around 2.5m too few homes. The yawning demand-supply gap has driven up prices – making ownership increasingly unaffordable. In the early 1990s, low- and middle-income workers needed to save 5pc of their wages for three years, on average, to build the deposit for a first-time property. Today, they’d need 24 years of such savings.

That’s why so many youngsters are priced-out like Aaron and Whitney. Ten years ago, 64pc of 25- to 34-year olds were owner-occupiers. Now it’s 39pc. The majority of young adults, then, are being denied the chance to own their own home. Among those lucky enough to be first-time buyers in 2015, over half were helped by the bank of Mum and Dad”, rising to two-thirds in London and the South East. The UK housing market, once a source of social mobility, is now a source of growing resentment.

The government says it understands the frustrations of “generation rent”. Today’s housing White Paper contains proposals to encourage long-term rental agreements and crack down on rapacious lettings-agents. That’s all very well, but doesn’t tackle the main problem – that millions of renting youngsters want the security and long-term financial stability of home-ownership.

While previous initiatives such as “Help-to-Buy” shored up the demand-side of the market, Communities Secretary Sajid Javid says he wants to boost housing supply. That will only happen if ministers take on the large house-builders. The UK needs 250,000 new homes annually to keep up with household formation. But for most of the last 20 years, we’ve struggling to get above 150,000.

Until recently, the notion that large developers build slowly to keep prices and profits per unit as high as possible was dismissed as a conspiracy. Now, with local councils granting ever more planning permission, but house-building still far too low, the evidence is clear.

During 2014 and 2015, a combined 28pc rise in the number of houses granted planning permission led to just a 10pc rise in new homes coming to market. Over the last five years, the average delay between planning permission being granted and home completion has rocketed from 21 to 32 months.

For years, large house-builders have blamed the go-slow on “the planning system” and “nimbys”. Across much of the UK, this argument no longer holds. “We’ve granted over 20,000 permissions since 2011, but have seen less than 5,000 news homes built,” says Sean Hannaby, Head of Planning at East Cheshire Council. “It’s frustrating when we give permissions, yet the government and big developers still insist on blaming us”.

The three largest UK developers (Persimmon, Taylor-Wimpey and Barratt) build a quarter of all new homes, with the eight largest accounting for more than half. The “big three” finished 43,000 dwellings in 2015, but had planning permission for another 201,000 and additional land-holdings for 278,000 more.

Beyond direct land ownership, the large developers also use subsidiary holdings and private options agreements to control further acreage, allowing them to determine how many houses get built, by whom and when. The UK housing industry “resembles an oligopoly”, according to a recent House of Lords report, published in the depths of last summer. “The big house-builders are basically a cartel”, a former Housing Minister tells me.

When the UK last built 250,000 homes a year, back in the mid-1980s, small builders accounted for more than two-thirds of them. Now it’s just a fifth. The government needs to help small developers, with every incentive to build quickly, gain access to land and trade finance.

For now, the White Paper headlines are largely about building on the greenbelt. That’s an argument for another day – which we don’t need to resolve to tackle our housing crisis. What’s needed is for the big developers to face genuinely punitive sanctions – like council tax charges on unfinished units – if planning permissions don’t result in completed homes within a two-year time frame. Javid, to his credit, has publicly accused them of “land-banking” and of “having a stranglehold” on the supply of new homes. In the wake of this white paper, tough talk must translate into action.

“We’re not asking for a hand-out, or something for nothing,” says Aaron. “We’re asking for a chance to buy a house – and we’re asking for our entire generation”.

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