The draft analysis of the Letwin review of build-out rates for housing was published today. It is a solid piece of analysis. Three elements stand out, and chime with TOWN’s experience as both a strategic land promoter and an SME housing developer.

First, the focus on absorption rate – the volume of housing that can be delivered at any one time without materially affecting the market price – gets to the nub of why large sites in the control of one or more housebuilders, whose business models rely on achieving an acceptable profit margin from open-market sales of standard houses to private buyers, tend to be built out slowly. This must be the first government document ever to acknowledge that not building enough houses to exert downward pressure on prices is not a bug of the system but a feature.

Second, the explanation is essentially that such sites and builders cater for only one market – defined by homogeneity not only of tenure (owner-occupation) but of product. Crucially, Letwin finds that alternative tenure-products including affordable housing, built-to-rent housing and custom-built housing exist in largely separate, non-competing markets. He infers, therefore, that the build-out rate on large sites would be accelerated if greater diversity of tenure and product were introduced on those sites.

Letwin also touches on the barriers to development presented by the need for enabling transport and other infrastructure to large sites, and the need in many cases for land remediation. His conclusion, essentially, is that whilst these are undoubtedly barriers to getting development under way, once overcome there is no evidence that built out rates on such sites are materially different. This suggests that infrastructure needs a different set of solutions that don’t rely on housebuilders to deliver it.

It will be fascinating to see where Letwin’s recommendations go. Implicit in his analysis is that whilst big housebuilders are an essential delivery component on large sites, it makes no sense for them to have oligopoly control of them. It points to a future where the planning and enabling of large sites is done by specialists, working in concert with planning authorities; and housebuilding for the owner-occupier market forms just one – even a minority – activity across multiple land parcels. This could be much closer to the continental ‘zone, masterplan and subdivide’ model not least of the benefits is much faster housing delivery across the board.