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Zahawi Nadhim 2012Nadhim Zahawi MP is Conservative MP for Stratford on Avon. Follow Nadhim on Twitter.

We all know that there's a
significant shortage of housing in this country, a problem that, if current
evidence is anything to go by, is only going to get worse in the future.

The latest figures from the
Cambridge Centre of Housing and Planning Research show that we should be
building 270,000 new homes a year to meet demand, yet housing starts in England
in 2011-12 were just 105,090. Perhaps more worryingly, planning approvals for
the year ending June 2012 were for just 50,233 dwellings.

But over and above the fact
that it's a good idea for everyone to have somewhere to live, house building is
also good for the economy. The latest figures available from the ONS Blue Book
showed that in 2010 each new private sector dwelling built added £129,197 to
GDP.


Much of the blame for the lack
of housing starts and planning approvals is placed at the door of a lack of
available land. This has in turn led to calls for increased building on
greenfield and even greenbelt sites, something that is vigorously opposed by
many Conservative supporters.

Yet the National Land Use
Database shows that there is sufficient previously developed land for 1.49
million dwellings, 660,210 of which would be on land that is currently vacant
or derelict. In a speech last year planning Minister Nick Boles dismissed this
land supply as insufficient, but I think this is something he needs to look at
in more detail.

Firstly, derelict and vacant
land is not a finite resource, it is constantly refreshed. In fact modelling
I've carried out shows that over the next 5 years we can expect to see
sufficient new derelict and vacant land for a further 681,229 dwellings on top
of the space for 660,210 that exists today.

Secondly, we have a large
reserve of land (enough for 2.5 years worth of our housing needs) that is not
being brought forward for development as quickly as it could be, most likely
because of land banking, a lack of willingness by land owners or issues with
contamination.

So how can we encourage land
owners to bring land forward quicker? Technically, there is already an incentive
in the tax system. Remediation relief provides a 100% plus a further 50% tax
relief on eligible expenditure to bring brownfield sites back into use. But
clearly this isn't working.

We have a carrot but no stick.
I therefore believe the Chancellor should bring forward proposals in the budget
for a derelict and vacant land levy set at two levels. A lower level (say
£75,000 per year per hectare) for land without planning permission to encourage
land owners to apply for planning permission and a higher level (say £125,000
per hectare per year) for land with planning permission to encourage land
bankers to get on and build.

The idea behind the levy is to
encourage behavioural change, so any land on which planning permission is being
sought, planning permission was granted up to 12 months ago, or on which
building has started would not be charged.

In order to ensure that this
is not simply a tax grab by the Treasury, such a levy would be administered and
collected by the Local Enterprise Partnerships and used by them for local
economic development work and remediation grants. It is in effect a compensation
to the local area for the lack of economic growth as a result of those unbuilt
homes.

When talking to the
construction industry about this proposal it was clear that one of the blocks
on bringing derelict land forward is the problem of contamination from previous
industrial uses. Yet for many schemes it isn't just the pure costs, it's also
the blocks all too often put in the way by the Environment Agency when
remediation plans have to be approved. That's why alongside a levy I would like
to see a new fast-track 6 month approval process for such plans. In order to
concentrate minds I suggest that in the event that the Environment Agency
missed that target then it would be them, not the land owner, who had to pay the
levy.

The impact of this levy depends
entirely on the level of behaviour change, something that is notoriously
difficult to estimate. However my modelling has shown that if the levy began in
2014 and if as a result, planning permissions on derelict and vacant land
increased by 50%, and scheme starts within 12 months increased by just ten
percentage points then by 2017 we would be building 98,600 more houses a year.
If the number of planning permissions doubled then we'd be building an extra
141,800 homes a year. Not only that, but we'd also be funding Local Enterprise
Partnerships and local economic development to the rate of £500m a year at no
extra cost to the Treasury.

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