Less than half of permitted new homes in London ‘actually get built’

An infrastructure expert has called for “more direct intervention” to boost the number of homes being built in London, after research revealed fewer than half of new homes given planning permission are actually constructed.

Ian Tasker, a director at consultant Grant Thornton , said London was in the midst of “an extreme housing crisis” and was continuing to fall “seriously short” of the level of housebuilding needed to reach mayor Sadiq Khan’s target of 66,000 new homes a year.

Uncertainty in the market had taken its toll, said Tasker. “While a significant increase in permissions is a welcome sign, without dramatic change and more direct intervention to find out why we are failing to substantially increase this output, we will never fix our broken housing market,” he added.

Tasker said the removal of the Housing Revenue Account borrowing cap “had marked an important, necessary step last year [but] we are yet to see the impact this will have on the housebuilding market”.

Research by Grant Thornton revealed that in 2018 only 46% of the 57,496 new homes that had received planning permission three years earlier had not been built.

This level of “attrition rate” was the same as in 2017 and 13 percentage points higher than in 2016.

But while 2018 saw a 17% year-on-year fall in the number of planning applications – the first time there had been such a fall since 2014 – last year saw a 30% increase in the number of planning permissions given, according to Grant Thornton.

Applications for new affordable homes fell 11% to 24,043, although this was twice the number recorded in 2010, while affordable homes’ completions fell 30% to 5,230, “well short of what the capital needs”, Tasker said.

But permissions granted to affordable homes in 2018 rose to 22,277, three times the figure in 2010 and more than a third of all permissions granted last year.

Grant Thornton’s study covered new-build developments of 10 units or more and excluded homes created through permitted development rights.

Tasker said: “Our analysis shows that there continues to be a huge disparity in the level of new homes being delivered across London, with inner London zones continuing to outperform their neighbours. Boroughs in zones 5 and 6 need to dramatically step up the pace, and all boroughs across London need to focus on finding available land to build on.”

The Greater London Authority had to hold underperformers to account, Tasker said, “and, amidst continued uncertainty heightened by ongoing Brexit negotiations, focus on maintaining confidence in the market”.

A spokesperson for London mayor Sadiq Khan said: “The mayor has always put affordable housing ahead of luxury flats, and this independent analysis is solid evidence that his approach is working. Last year the mayor got more new council homes under way in London than we have seen for 34 years.

“But this report also shows the crucial importance of the national government getting a grip and stepping up too.

“Planning permission for homes will not simply get built unless the government gives London the step change in investment and powers we desperately need to truly fix the housing crisis.”