Greater diversity of house types needed to accelerate large site build out rates

In his Independent Review of Build Out Rates, Sir Oliver Letwin has stated that a greater mix of house types, designs and tenures on large housing sites could “substantially accelerate” the overall build out rate of large sites.

Related topics:  Property
Warren Lewis
26th June 2018
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Letwin has released the draft analysis of his review which concludes why there is a “significant gap between housing completions and the amount of land allocated or permissioned in areas of high housing demand”.

In a letter to the chancellor Philip Hammond in March, Letwin identified absorption rates – the rate at which new build homes can be sold into the local market “without materially disturbing the market price” – as the likely key factor of slow build out rates once detailed planning permission is granted for large sites.

In his letter, Letwin also identified that the absorption rate of homes sold on the site was in turn dictated by the type of homes being built and their pricing. Large housebuilders could exert control over these sales rate drivers as there appeared to be limited opportunities for other housebuilders to enter these large sites and offer different products at different prices, Letwin stated.

Letwin concluded that if “either the major housebuilders themselves” or others offered “much more housing” of varying types, designs and tenures on large sites that were suitable for customers, “then the overall absorption rates – and hence the overall build out rates – could be substantially accelerated”.

The review also finds that the industry needs to continue providing housing on both large and smaller sites rather than switching reliance to smaller sites, after identifying the advantages of large sites – e.g; increasing infrastructure and providing higher levels of allocation in areas of high housing demand.

Letwin, with his review team, will now move to formulating policy options for ministers in time for the Autumn Budget. Letwin said he was mindful that the policies should not - among other factors - impede the capacity of major housebuilders to continue large scale construction. Any proposed polices should also widen opportunities for those able to supply homes on large sites, Letwin added.

Andrew Whitaker, HBF’s planning director, said: “Once again housebuilders are exonerated from any accusation of deliberately building slowly to increase land value. What Letwin has recommended is good planning of all areas in terms of choice of sites and locations which is what HBF has been advocating.

But what the review does not address is whether Letwin's recommended mix of dwellings should be determined by developers, local authorities “or somebody else."

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