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UK's largest property developers accused of 'profiting' on the back of the housing crisis


*UK's largest property developers accused of 'profiting' on the back of the housing crisis by restricting the number of homes to keep prices high... as experts demand the *Government starts building houses itself. A record 475,647 homes granted planning permission but yet to be built

*Planning permission rose 60% since 2010 but rate of new builds just 48%.
*Time it takes to complete new homes jumped from 24 weeks to 32 Some of *Britain's largest home developers recorded profits of up to 40%
*Influential committee chair calls for direct building from the Government



Housing developers have been accused of exploiting Britain's housing crisis to make profits by deliberately slowing the supply of homes.

Last two weeks has seen five national house builders, post bumper profits, in their yearly reports to the city.

Barrat 
At an average selling price of new build home was £254,000, up 11% higher the £229,200 average price in the first half of the prior financial year 2014

Persimmon .The Group's average selling price of new build home was £199,127 up 4.5% higher (2014: £190,533).

Bovis Homes 
Average sales price increased by 7% to £231,600 (2014: £216,600) with the average sales price of private legal completions (excluding PRS) 8% higher at £272,100 (2014: £250,800).  

Taylor Wimpey Plc 
8.0% increase in total average selling price to £230,000 (2014: £213,000)

Red Row Homes 
Outside London [2 % within average house selling price increased by 11% to £300,000 ,(2014: £267,000)  gross margin increased from 22.3% to 24.2%.

Berkeley Homes 

October 2013 were at an average selling price of £350,000 ,(2014: 1,372) London and the South of England average selling price £506,000,average selling price of £473,000 (30 April 2015: £456,000) a crafty trick of raising house prices higher between 2013 to 2014, but still making similar 2015 profit margins, as other house builders.

It has led experts to call for the Government to start directly building homes to send a signal to the industry that 'landbanking' - profiting from sitting on land while prices rise - is unacceptable.

Nearly half a million homes in England have been granted planning permission but have yet to be built - a new record.

And the time it takes to complete new homes has jumped from an average of 24 weeks to 32 weeks. 


A record 475,647 homes in England that have been given planning permission but have not been built - nearly 100,000 more than in 2012-13
Planning permission rose 60% since 2010 but rate of new builds just 48%.

A record 475,647 homes in England that have been given planning permission but have not been built - nearly 100,000 more than in 2012-13

Despite authorities increasing the rates of planning permission - a rise of 60 per cent since 2010 - the rate of home building has increased by just 48 per cent. The Independent reported.

These figures come at the same time as some of Britain's biggest developers have declared record profit margins and coincides with a growing housing crisis in the UK.

Profits Over The Needs of the Countryy.

'I think it is clear that the big developers are building at a rate to maximise their profits rather than addressing the country's housing need,' Mr Betts, the Labour MP for Sheffield South East.

Britain's biggest housing developers have recorded profits of up to 40 per cent for 2015. Among them are:
Barratt Homes - Britain's largest house builder, which recorded pre-tax profits of 40 per cent in the last six months - £570million
Taylor Wimpey, which announced profits of more than 20 per cent yesterday - £604million
Berkeley Group's last recorded profits were 25 per cent - an estimated £586million
Bovis Homes recorded a profit margin of 16.9 per cent - £160million
Redrow declared pre-tax profits of 17.2 per cent - an estimated £95million
Mr Betts added: 'These are private companies who are very simply trying to make money for their shareholders. They are restricting supply and the Government urgently needs to come forward with measures to address this.'

He said most of their profit comes directly from sitting on land and watching the price of it increase.

The growing housing crisis in the UK led to George Osborne pledging a further £7billion with the aim of building 400,000 'affordable' new homes - in addition to existing schemes that he claimed was the 'biggest housebuilding programme since the 1970s'
The growing housing crisis in the UK led to George Osborne pledging a further £7billion with the aim of building 400,000 'affordable' new homes - in addition to existing schemes that he claimed was the 'biggest housebuilding programme since the 1970s'

Clive Betts (pictured), chairman of the Local Government Select Committee, accused developers of  prioritising their companies' profits over the needs of the country




Clive Betts (pictured right), chairman of the Local Government Select Committee, accused developers of prioritising their companies' profits over the needs of the country. Housing Minister Brandon Lewis (pictured left) said the current rate of house building was 'not good enough'

Even ministers admitted that the current rate of home building was 'not good enough' and insisted developers had a part to play in alleviating the housing crisis.

Brandon Lewis, the housing minister, told The Independent: 'We know they can go further. Housebuilders will talk about saturating the market. But we are aware that in too many places we are still taking 20 weeks to build a house when we can do it in three or four.

'Housebuilders should be playing their part to ensure we deliver the homes this country needs.'

The Local Government Association (LGA) published figures showing there are a record 475,647 homes in England that have been given planning permission but have not been built - nearly 100,000 more than in 2012-13.

GEORGE OSBORNE'S AUTUMN STATEMENT HOUSING ANNOUNCEMENTS IN BRIEF

George Osborne (pictured leaving Downing Street this morning) promised to build one million new homes by 2020 
George Osborne (pictured leaving Downing Street this morning) promised to build one million new homes by 2020 
George Osborne made another round of headline-grabbing housing announcements in his mini-budget last November. The top announcements were: 
- Budget for housing to double to £2billion 
- 400,000 new homes to be built across England 
- 200,000 starter-homes aimed at first-time buyers being built, which will be available for buyers under 40 at a 20 per cent discount
-135,000 of new homes built will be used for the Help to Buy Scheme, where shared ownership options will be available  
- £2.3billiion will be paid directly to developers to build the starter homes 
- 8,000 specialist homes for older and disabled people being built
- £4billion going to housing associations, local authorities and the private sector to provide 135,000 Help to Buy shared ownership homes by 2021
- 3% increase on stamp duty for second homes and buy-to-let properties from next April
- Introduction of London Help to Buy Scheme, which will give a 40 per cent interest-free loan rather than the 20 per cent under the current equity loan scheme. Buyers will still need a 5 per cent deposit. 
- Five housing associations launching Right to Buy scheme for housing association tenants from midnight tonight. The five associations has not been revealed. 


Mr Betts said housing developers control the supply of houses for sale by releasing a fraction of homes on their site each year.


The problem has been made worse since the financial crisis bankrupted a number of smaller developers and now the big firms are able to monopolise the industry.

He said it was time for the Government to 'send a signal' to the industry by directly building homes itself.


And he said his committee of MPs were considering ways of forcing developers to speed-up its housebuilding, such as introducing council tax on sites after a period of time or imposing direct penalties.

'What they’re doing is getting planning permissions on very big sites and create a building model of how they maximise their profits,'

'You do this by probably delivering 50-60 homes a year on a site of around 1,000 and control the supply.

'There are half a million planning permissions in this country and yet we can’t build even half this figure in a year.

'Why it matters now more than 10 or 20 years ago is because the bigger developers are more important – before you’d have smaller or medium-sized firms as well but they got squeezed to death [by the financial crisis].

'By controlling and restricting homes on large sites it is having an even bigger impact now on building rates because they are a much larger part of the industry than 10-20 years ago.'

Calling for direct Government action, he added: 'The Government ought to get councils involved in directly building houses to send a signal to the industry – councils have lost the ability to build over the last 10-20 years.

'The other big problem is we’ve got no building programmes for houses to rent – all the money in the spending review went into home ownership shared ownership.'

The Government is under pressure to meet its target of building one million new homes by 2020 and ministers are believed to be considering introducing new measures to force developers to increase the rate of construction.

Last week Barratt Homes - Britain's biggest housebuilder - announced a pre-tax profits of 40 per cent in the last six months, reaching nearly £300million.

The increase in profits was due to selling more homes at a higher price, Barratt said.

And yesterday the housing developer Taylor Wimpey announced profits of more than 20 per cent yesterday, also saying it had sold more homes at higher prices.

The growing housing crisis in the UK led to George Osborne pledging a further £7billion with the aim of building 400,000 'affordable' new homes - in addition to existing schemes that he claimed was the 'biggest housebuilding programme since the 1970s'.

The LGA said councils must be given the power to force developers to build homes more quickly.

Housing charity Shelter said the problem was exacerbated by a small number of big developers dominating the market - a problem that has worsened since the financial crash bankrupted smaller firms.

Shadow housing minister John Healey accused the Government of being too concerned about the profits of housing developers.



'Ministers are right to be nervous about the performance of the private housebuilders,' he said. 'For five years they've written developers one blank cheque after another, with little to show for it.

'Cutting back planning rules has meant the number of affordable homes developers build has halved, and now extraordinary plans in the Housing Bill will let them dispense with building low-cost housing altogether and build starter homes on sale for up to £450,000 instead.'

But a spokesman for Taylor Wimpey insisted that the company built more homes in 2015 than at any point in the last six years.

Pete Redfern, the firm's chief executive, said it would 'continue to work with stakeholders to ensure we open all sites with implementable planning and begin building as quickly and efficiently as possible'.

Meanwhile the Home Builders Federation blamed local and central government for the slow rate of home building.

A spokesman said: 'As a priority, government needs to work with local authorities to speed up the planning system and ensure local plans allocate enough sites of different types and sizes that are attractive to a range of companies.

'It's simply not credible for ministers to complain that housebuilders aren't doing their bit. This is a failure of policy and a failure to see that all parts of the housing sector need to be doing much more to fix the cost-of-housing crisis'.

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