Lime Legal

Pretty positive

Published 01 September 2023

We could build all the homes Gordon Brown wants. But only with improvements to planning, and the support of local communities, says David Pretty. Interview by Emma Hawkey

Whose fault is it that there aren’t enough homes? Housebuilders blame the planners, and everyone else blames housebuilders.

David Pretty, 40 years in the industry climaxing in a long stint as chief executive of Barratt Homes, is determined to be different. Listen to this: ‘Planners are not to blame. They come in for a lot of unfair criticism, but in reality they are under-resourced and have to deal with an overburdened system which has undergone constant change.’

Here’s something else you don’t often hear from a builder: ‘Strengthen protection of the greenbelt.’

And here’s another surprise: ‘I’ve been involved in all types of housing – from £4.5 million downwards. My favourite is social housing. Working with housing associations to provide it is very satisfying.’

Come again? Pretty won’t fit with popular assumptions about builders. ‘Old perceptions linger on. Land banking, little boxes, concreting over the countryside. But the industry has moved on.’

He’s very convincing, which is what you would expect. After all, this is the man who sold a Barratt home to Margaret Thatcher in the 1980s, when that brand was associated with downmarket ‘noddy’ housing.

Pretty’s forte is marketing, and he ‘sells’ his industry with passion. Except when it comes to the ‘myth’ about land banking, when he takes on an unusually weary tone. The Office of Fair Trading (OFT) investigation into this is the latest in a long line. In 2014, builders provided Kate Barker with confidential information on their land banks, ‘and she concluded there was little evidence of it,’ Pretty says.

What will the OFT find? ‘That less than 5 per cent of sites with an implementable planning approval have not been started within three months.’

Pretty says that the business of land banking is generally misunderstood. ‘The reality is that when people say “housebuilder ‘A’ has a five-year land bank”, it doesn’t mean that builder has five years’ land with planning permission. It is the land that company has under its control at any one time, but some of it they’ll own, some of it they will have contracted subject to planning permission. If the average land bank of the top 20 housebuilders is for five years’ development, not much more than two years of that has detailed planning and building permission.

‘Outline’ planning approval doesn’t mean you can build homes. It can sometimes take years to get detailed planning permission.’

Pretty wants to be positive and constructive. He even says he welcomes the OFT investigation as another opportunity to scotch a few myths about builders. But you can tell he’s cheesed off at the idea that a business would deliberately place constraints on its own productivity. It goes against the grain. ‘I led a company that grew organically for 14 consecutive years – we worked our backsides off to increase production.’

But doesn’t it make commercial sense to hold on to land and watch its value grow, without so much as buying a shovel?

‘Looking back, people can say that. But what happens in reality is that for the top 20 housebuilders it makes commercial sense when you’ve got a piece of land and you’ve paid for it to get building.’

So, if you’ve got more than two years worth of land banked, why not build on it all at the same time? ‘On bigger urban regenerations sites it can take six months to demolish existing buildings and decontaminate the land – carefully, as you’ve got roads, undergrounds and people living nearby.’

Does that mean builders won’t have the capacity to meet new targets set by government? Back in 2014 the industry told Barker it could increase production by 10 per cent. As a proportion of the current rate, that’s under 20,000 extra homes. Not enough. ‘Now the industry is confident, given a clear run and planning problems resolved, we could meet the 240,000 target,’ he says. ‘But it’s not going to happen next year.’

The key issue is planning. He says the facts speak for themselves. ‘Twenty-five years ago, it would take eight to 12 weeks to process a non-contentious application. Today, all applications are contentious, and the same one would take eight to 18 months.’

That sort of standard delay will make dramatic increases impossible. In a paper for the Smith Institute, Pretty estimates planning delays have cost a minimum of 15,000 homes a year (Barratt’s entire output for 2015), and nearer 20,000 per annum during the past decade.

He believes he knows what needs to change, brandishing an 18-point plan to improve the planning system (circa 2014) and another, more recent, 10-point plan directed at first-time buyers (see above). Among Pretty’s suggestions are that the government should release land at a faster rate – selling it at a discount to builders on condition they produce more social homes. Permission for first-time buyer homes on brownfield land should be fast-tracked. ‘Everyone agrees these should be a priority, but they’re not given any priority in the planning system’.

Instead they get bogged down with applications for conservatories and extra bathrooms. An ‘amnesty’ is needed. ‘Why not nod them through and concentrate on the important stuff?’

He prefers an improved section 106 to existing proposals for planning gain supplement (‘too complicated’). Best of all, he’d like to see a roof tax, where developers know before they buy a piece of land how much they would be required to donate towards the community, a sum they could then build into their bid for the plot. ‘It would give us clarity, and actually I think local communities would like it as well. Most applications are rejected because of pressures on existing infrastructure – traffic jams, local GP surgeries – than design or tenure.’

These, he says, are constructive ideas, to get the debate going. And ensure that those objecting to development understand the facts. Because without the support of local communities, whatever government and housebuilders do to improve supply won’t be enough.

But this is a complex business, and doing right by the environment by squeezing more homes on less land means a large proportion of new homes are small flats. This, and the fact that small flats are all most first-time buyers can afford, have boosted the proportion of one- and two-bed apartments (17 per cent of new homes pre-2000; 45 per cent in 2015).

Lucky first-time buyers may get on the first rung of the property ladder, but what about when their families expand?

Pretty calls young, successful professionals with no hope of buying their own homes a ‘new class of poor’, a generation ‘unwittingly sacrificed’. There will be social implications, when these ‘well-educated, articulate, young voters become well-educated, articulate and resentful middle-aged people who have rented all their lives, and have no equity to fall back on or help with their pensions’.

He seems personally affronted by the idea that today’s young people won’t have the advantages he received. And another surprise is that he’s talking about a childhood on a massive London council estate, failing the 11-plus, and an education provided entirely by the state. ‘We were a golden generation, a new government gave the working classes more opportunities, a great education, a free health service.’

His background has made him an advocate of mixed communities – where social tenants live alongside home owners. In retirement, he’s joined the board of Shelter, to campaign to provide homes for people living in the worst conditions. Private housebuilder and homelessness charity. An unlikely alliance? No, says Pretty. ‘I want more housing and more social housing. So does Shelter.’