It seems that there's plenty of land we can build on, with over 400,000 plots with planning permission, but for some reason the house builders aren't in any rush to build:
The new statistics raise further questions about the pressing need for George Osborne to relax planning rules to boost house building. They will fuel campaigners’ belief that the problem is not with the planning system, but with the slow speed at which builders are converting approvals into new homes.Here's an idea. Take each plot, look at the largest house (or collection of apartments) which could be built with the relevant planning permission. The council is then entitled to the corresponding council tax for that plot, starting from (say) 6 months after planning permission is granted. This is only changed when the house is complete and formally assessed for the correct council tax band. While we're at it, cancel all council tax relief for empty homes - an empty house has a negative externality on the neighbourhood, so it's economically sensible to penalise a house in that state.
Benefits: more money for councils (say, 200,000 plots at an average of £1000 apiece is a cool £200 million per year) straight out of the pockets of any builders who aren't organised enough to build a house after they get planning permission. Builders have an incentive to build more quickly and sell the houses as quickly as possible. There's also now a direct financial incentive to get tenants or buyers into a house as soon as it's empty.
No doubt the Land Value Tax crowd will approve but point out this doesn't go far enough. Well, baby steps. For now it seems to be a point where taxing antisocial behaviour can actually benefit everyone...