John Lewis has urged Rachel Reeves to introduce tax breaks for developers that start building immediately.
Writing in The Telegraph, Katherine Russell, the director of build-to-rent at the John Lewis Partnership, said the Chancellor “should look at tax incentives… where a developer commits to building right away.”
Ms Russell also urged the Government to slash red tape for builders to help the industry meet Labour’s goal of building 1.5m new homes over this parliament.
It comes as John Lewis looks to push into property by building rental homes above its shops.
The partnership warned that construction has stalled across the country even as “most people accept the drastic need for new housing”.
“Many good schemes… still continue to be refused,” Ms Russell added.
John Lewis’s own attempts to break into property development have faced setbacks, with local councillors dragging their feet on planning decisions.
The partnership is attempting to build flats on top of Waitrose stores. Its first project in Bromley, south London, was approved last month after a two-year wait. It has launched an appeal on a second scheme in Ealing, west London, after councillors took too long to decide on the project.
Ms Russell said “cutting red tape” would speed up investment in new housing, as would spending the billions of pounds worth of unused development levies.
Local authorities have the ability to charge developers a tax when they build new properties, with the money meant to be used to fund local infrastructure such as schools and roads. However, research by the House Building Federation last year found £2.8bn was currently sitting unspent.
It estimated that the property industry pays more than £7bn in direct taxes each year.
Tax breaks in return for immediate construction starts would help tackle so-called “land banking”, where companies buy up land but wait for the most advantageous time to develop it. This practice has been blamed for the slowdown in the delivery of new homes, though the industry argues it is a necessary practice for financial management. A Competition and Markets Authority (CMA) report earlier this year said it was not a major cause of delays.
The call for tax breaks comes after Labour last week unveiled a drive to get Britain building in an effort to fast-track thousands more first-time buyers onto the property ladder.
Housing Secretary Angela Rayner has reinstated compulsory house building targets for councils and said the default decision for new homes in urban centres, including towns and city centres, should be “yes”.
However, developers are wary of committing to new projects after a series of recent changes that have increased costs and slowed down the system. For example, former chancellor Jeremy Hunt earlier this year moved to scrap multiple dwellings relief when building new homes, claiming there was widespread abuse of the tax break. The relief allowed entities to lower their stamp duty liability when buying more than one property.
Rental landlord Grainger, housebuilder MJ Gleeson and trade body the British Property Federation (BPF) were among a group that wrote to Mr Hunt in April warning that the move would result in fewer new homes being built, as well as a drop in investment into UK housing delivery.
The BPF has also previously called for a stamp duty exemption for new developments that include more than 100 rental homes.
John Lewis is one of several retailers that has been exploring how to use their significant land holdings in prime areas for housing.
Asda in May unveiled plans to sell the land under one of its London superstores to Barratt, Britain’s biggest housebuilder, to turn the site into a new 60,000 sq ft Asda store with 1,500 homes.
It followed a similar step by Sainsbury’s, which previously sold its Fulham Wharf site to Barratt for conversion into residential properties. Last year the supermarket agreed a tie-up with developer Ballymore to build a complex of homes, high street shops, restaurants and a new Sainsbury’s store in Kensington and Chelsea.
Tesco started working with Newsteer property consultants in 2015 to look at how it could repurpose parts of its land portfolio.
A spokesman for the Ministry of Housing, Communities and Local Government
said: “Over the past month, we have committed to a Planning and Infrastructure Bill, and begun a consultation on significant growth-focused reforms to the National Planning Policy Framework. We are committed to fixing the system and will consider what additional steps we may need to take to support our pro-growth agenda and build 1.5m homes over the next five years.”
Government must not overlook build-to-rent as solution to housing crisis
By Katherine Russell, director of build-to-rent, John Lewis Partnership
Across the country, everyone is trying to do more with less. Nowhere is this truer than when it comes to housing development in cities.
Much has been said on the subject over the last two weeks as the new Government gets to grips with Britain’s housing crisis. While reforming the planning system is not without controversy, building on brownfield land is one area where all parties agree.
Squeezing homes into Britain’s ever-expanding urban centres has become an increasing headache for planners. Building close to infrastructure and transport without eating into the green belt means getting creative. The answer must include looking to those who already own large swathes of land.
Our housing plans are focused on creating thousands of homes for rent – managed by the John Lewis Partnership – with the same trust and quality service that our customers receive from our brands. Renting is often overlooked by politicians trying to support home ownership, but the private rental sector accommodates millions of people caught between ownership and social housing.
Our so-called ‘build-to-rent’ plans involve redeveloping existing Waitrose stores in Ealing and Bromley, the latter where we gained planning consent last month for 353 homes, which prioritise local people. We are also redeveloping a former warehouse site in Reading, creating over 1,000 homes. Because we’re a partnership – owned by our 70,000 partners (as our staff are known) – our focus is on the long-term and on creating a positive impact locally while using the new housing to strengthen our business so we can invest in our core retail offer.
The key difference of ‘build-to-rent’ is that homes are designed specifically for renting. Shared spaces can be used for anything from fitness to home working. And above all, residents will have the certainty of being able to stay for the long term, which is not always possible in the buy-to-let sector.
Even though most people accept the drastic need for new housing – homelessness, poor energy standards and the need to untangle younger people from reliance on their parents – building has stalled.
It’s fair that some people will be frightened by and resist change, but what I would say to them all is that we need to consider the greater good that can be provided by new housing, new public realm and the ability of younger people to be able to live in quality, energy efficient homes.
Transport for London (TfL), like the Church of England and Oxford University, all have plans to build homes on their land. Yet even TfL’s proposals to build on a London car park were refused, before being given consent on appeal.
Our retail competitors also want to build on existing land. We firmly welcome Asda’s plans for thousands of new homes in the Park Royal regeneration zone close to the planned HS2 terminus. They echo proposals announced two months prior by Sainsbury’s, in another west London opportunity area.
These are all brownfield sites – previously developed, now under-utilised land, that can be cleaned up and used far more efficiently to provide critically needed housing next to Crossrail. This is important, because we take our environmental goals seriously and all our developments will be gas-free, with rooftop solar panels and heat pumps in every apartment.
We even plan to pipe waste heat from refrigerators in our Waitrose stores up into the apartments to heat water and help lower bills further.
Due to the sheer weight of different cultural and political interests around urban sites – and the pressures of building on top of major businesses – they are harder to develop. Yet if we are serious about tackling the housing crisis quickly, there are few better options.
With our stores often acting as community hubs, we should harness the potential to create future-proofed housing, while also helping support local charities and community groups.
Prioritising social value and support for local groups in Bromley – where our joint venture with Abrdn will invest £200m – meant we received far more letters of support than opposition. The council voted 10 to five in favour of the plan.
London has enough land to build 65,000 new homes a year, according to the Mayor. But with the population projected to grow by 70,000 a year up to 10.5m by 2041, London also needs schools, shops, amenities and space for tens of thousands of new jobs.
The 2021 London Plan agrees that we should “prioritise sites which are well-connected by… public transport [and] explore the potential to intensify the use of land to support additional homes and workspaces, promoting higher density development”.
Yet many good schemes that fit these criteria still continue to be refused.
The numbers are startling. Policy Exchange’s report identified 1,220 sites across London that could theoretically accommodate between 250,000 and 300,000 new homes alongside commercial uses.
There are three things that should be prioritised in order to get Britain building again.
First, reforms to the National Planning Policy Framework set out by Housing Secretary Angela Rayner need to clarify “brownfield urban regeneration” as being a subset of “previously developed land”.
This requires no primary legislation changes and, as a recent report from British Land and Landsec put it, “would allow specific and targeted policies to be developed to unlock the potential of brownfield urban regeneration – and exclude more contentious sites disconnected from urban infrastructure”.
The British Property Federation made the same point back in 2011.
Second, Chancellor Rachel Reeves should look at tax incentives to support investment, which would make sense where a developer commits to building right away.
Finally, we need firmer links between development levies (so-called section 106 payments) and local benefits. Around £2.8bn of this lies unspent, according to the Home Builders Federation. Such cash should be spent right away and would help reduce opposition caused by people not recognising the socio-economic benefits that investment in new homes creates.
As a partnership, each of our stores is deeply embedded in its local community, supporting thousands of community groups, and together contributing millions nationally each year. Adding housing and community spaces to some of our under-used land will enable us to do even more. Cutting the red tape will speed up investment and while we’ll always compete with our rivals in retail, we all need to collaborate if we are to help fight the housing crisis.
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