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Levelling-up the land market under Labour

On the 6th August 2020 the Conservative Government announced a change to the standard method for calculating the housing need requirement. The debate had up until this point shifted from the ‘numbers’ question. Towards the ‘how’ and ‘where’. Now the proposed new method seeks to achieve a ‘fair share’ under Boris Johnson’s ‘levelling-up’ agenda. But is this the right approach?

The Government’s housing targets have come under fire for contradicting its ‘levelling-up’ agenda.

Recent claims by the Local Government Association (LGA) argue the proposed new standard method would seriously jeopardise the Government’s ‘levelling -up’ agenda.

While the Campaign to Protect Rural England (CPRE) said “the last thing we need is another ‘mutant algorithm’ – this time deciding where development takes place”. We have seen from the exams fiasco the damage that can be caused by erroneous calculations.

Backlash has also come from within the Conservatives. Neil O’Brien, MP for Harborough (Leicestershire), claims “it would be quite difficult to explain to Conservative voters why they should take more housing in their areas to allow large Labour-run cities nearby to continue to stagnate rather than regenerate”. Neil had written for Conservative Home. He argued the new formula would “level down our cities, not level up”. Yet we know large parts of existing suburbs in England and Wales are providing almost no new homes. Tory shires staying untouched? Evidently delusional.

Analysis by the LGA found under the new formula lower growth in housing stock would be expected in Northern regions. London on the other hand would see a 161% rise in homes built. An increase of 57% is expected in the South East. 39% in the South West. For those in the North East proposed targets are 28% lower. While 8% lower in the North West.

On average the house price-to-earnings ratio across the UK stands at 10.7. However, price-to-earnings ratios are still below their previous 2007 peaks in the North East, North West, Yorkshire and Humber, and Wales. In London, the price-to-earnings ratio has worsened by over 50% since 2008. Similarly, the South East, South West, East, and the East and West Midlands have all surpassed their Pre-Covid19 crisis peak. Surely adopting this approach makes sense for these targets to be reduced. Or does it?

On new projections the housing targets are well below what we really need, and fall short in basic economic terms.

On the new proposed standard method it is estimated to be 337,000 – so an annual increase of 1.4%. Currently the Tory housebuilding target of 300,000 accounts for an annual increase of 1.2%. Compared with the two decades between 1931 and 1951 housing stock grew on average at 2.85% per year.

Labour should be attacking the Tories over their lack of ambition. To achieve the levelling-up agenda we need greater supply responsiveness to house prices and housing stock to grow faster than incomes. Only then will we achieve a less volatile housing market. But how could we achieve this?

The Bank of England targets inflation at 2%. As at April 2019 the total number of dwellings was 24.4 million. In effect to ensure growth in housing stock exceeds growth in full-time earnings. Thus, we should be setting the national target closer to 490,000. Somewhat 45% higher than the Tories current level. If we achieved the growth in housing stock at rates seen between 1931 and 1951 this figure would be closer to 696,000.

The average house price-to-income ratio now stands at a whopping 18 times the average salary in London. In London housing supply targets have either been based on land capacity. As seen in the recent Draft London Plan. Or in times gone (and still to date) by projections based on ‘nonsense demographics’.

It makes sense for the Government to require those areas that are seeing the most demand. And demonstrably so in areas that have increasingly high price-to-earnings ratios. Even the North West, North East, and Wales have seen increases in price-to-earnings ratios from their Pre-Covid19 crisis trough. Housing supply should remain an important policy concern for all when considering the ‘levelling-up’ agenda.

It is no surprise why house prices have rocketed in London, the growth in housing stock has not exceeded incomes.

For the period 2009 to 2019 housing in London stock grew by merely 8.6% in aggregate (0.8% p.a.). While full-time earnings grew at 16.9% (1.6%). Almost double the rate. A ten-year target set at the anticipated growth rate in wages, using the inflation rate as a proxy, would see London housing stock need to grow by 2% p.a. or 21.9% in aggregate.

By the end of 2019 London the total number of dwellings across all the tenures reached 3.6 million. London would need 786,700 net additional stock delivered over the following decade. Sadiq Khan would need to increase his original annual target from 65,000 homes per year up to 78,700. This would see London take its fair share of the levelling-up agenda.

London has not seen such levels built, largely by the private sector may I add, since 1935. This is a time that pre-dates the permanent protection of London’s antigrowth local land regulation, namely the ‘Green Belt’. And the tortuous Town and Country Planning Act, which has poisoned London’s well of supply ever since.

Figure 1: New build homes in Greater London, 1871 to 2018
Source: GLA, Housing in London 2019

Sadiq had his own target reduced by the naysayers. An independent review said his small-site target was unachievable. This reduced the original target of 65,000 to 52,000. Still more than Boris Johnson’s 41,882. Yet considerably lower than the proposed new standard method of 93,532. A figure London has never built in its history.

Targets set under the Housing Delivery Test (HDT) over the three years between 2016 to 2019 required one home for every 80 residents on average. Or 38,400 annually. Output would need to increase by 200% to increase housing stock at the same pace as income to hit a target of 78,700. Or 243% to hit the levels set out using the proposed new standard method.

The race to the bottom of build cost and quality is a symptom of a broken land market.

The endemic cladding scandal has left over 3 million in worthless flats. Economic incentives of landowners under the current planning system have led to economic growth and value from cost cutting measures absorbed by land values. The result? A race to the bottom on build quality to pay the highest price.

Our land market has been so constrained that the economic interests driven by the current planning system has seen build quality deteriorate. Literally to the point where basic fire safety has too often become hard to achieve.

Housing targets under the Tories remain a tabula rasa, only Labour has the ambition to level up our nation.

Levelling-up the land market requires planning reform and appropriate housing targets. And densifying cities. Only then will we re-balance the see-saw between land values and build quality. Liberal socialist John Rawls has advocated a move from a broken system of welfare state capitalism, to a property-owning democracy. Where everyone can participate in the productivity gains of a nation.

If every British citizen had a stake in a sizeable amount of property, access to capital and the productive decisions of society, then we can put power in the hands of the many and not the few. In China, the homeownership rate is as high as 90%. We should try to emulate this ambition. And while no silver bullet, revolutionary rent-to-buy schemes such as Rentplus could provide one such solution.

The levelling-up agenda will require a significant amount of homes at social rent levels for those on low-incomes. Particularly in big cities. Labour needs to ensure housing targets are driven on the premise we need to make homes more affordable. This can only be achieved by committing to more supply. And a huge, huge amount of it.

<strong><span class="has-inline-color has-accent-color">Chris Worrall</span></strong>
Chris Worrall

Editor of Red Brick. He currently works in land acquisition for Guild Living. Chris currently sits as a Non-Executive Director of Housing for Women and is a member of the Labour Housing Group Executive Committee.

Previously Investment and Finance Manager at both Quintain and Thor Equities. Chris has expertise in developing new residential investment strategies, real estate development finance, and the investment and development of affordable housing. He writes in a personal capacity.

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We can’t end homelessness without sweeping legal reform

The four nations of the UK have some of the most generous legal entitlements for people facing homelessness. The legacy of Cathy Come Home is the Housing (Homeless Persons) Act of 1977. Since then more than four million households have been helped into alternative housing because they qualify for this almost unique addition to a western welfare state.

Over the years, this settlement has been changed and expanded. Devolved government in Scotland and Wales has charged progress with the former abolishing the idea of non-priority homelessness between 2003 and 2012, and the latter legislating for homelessness prevention in 2014. The landmark Homelessness Reduction Act (2017) introduced prevention formally into law in a similar way in England.

This seemingly progressive settlement hides a multitude of sins. Under the surface it is largely a battleground between homeless ‘applicants’, and local councils who are charged with using the legalistic framework as a rationing tool for scarce housing stock and social support.

Should you find yourself homeless in 21st century Britain here is your challenge:

Are you someone with the right immigration status? Living and working in the UK for years, paying taxes for decades even, is not a guarantee, especially if the state tells you that you have ‘no recourse to public funds’.

Are you at fault for your own homelessness? This bizarre concept of ‘intentionality’ exists to stop the mythical scrounging masses from claiming falsely, but if for example you have rent arears, as thousands do through no fault of their own, then bad luck.

Are you from the local council area you are applying to? Do you have uninterrupted proof over a period of years? If not, you’re out.

Are you in one of the stated ‘priority need’ groups? This one has been seen off in Scotland, but everywhere else you have to have dependent children or qualify under one of the other limited descriptions. If your situation isn’t on the list, then your last shot at this one is appealing to the council to deem you in some way ‘vulnerable’.

Let’s say you haven’t fallen foul of one or more of these – and here is the real kicker – what if the council has nowhere to offer you anyway?!

The system is quixotic. Cash and housing strapped councils are spending their time fighting off legal challenges that their decisions were unlawful. People are sent hundreds of miles to live in squalor because local social housing has been converted or sold, or because the private rental market is too expensive. Private consultants scurry about the system, offering new innovations in gatekeeping it from applicants to grateful housing officers.

The pandemic has brought this murky system into the light. When Louise Casey sent her now famous ‘Everyone In’ email to English councils at the end of March, she basically told them to forget the last 43 years of litigious argument. The instruction on a Wednesday evening to get everyone off the street by the weekend was an instruction to do the right thing and ignore the rules. And in Scotland and Wales, the pandemic responses went even further, with councils given more generous funding settlements and directives from ministers about the public health emergency.

These efforts have been the exception that proves an important rule – that if you offer legal routes out of homelessness for some, you make it inevitable for others.  

For a few weeks the numbers on the street went dramatically down, and gave the public a glimpse of a future without rough sleeping. Politicians have seen that decisive intervention can have dramatic and positive results. And as an unnamed Conservative politician said in the Times last week: ‘My worry is that we’ve shown it is possible to get everyone off the streets during the Covid crisis so if homelessness goes up now people will know it’s as a consequence of government’s actions.’

So, what now? How should we build on the extraordinary efforts of the last six months? And how do we apply the short-term successes of reductions in rough sleeping to the wider homelessness response?

Our first principle should be to move from incomplete legal entitlements, to a universal model of guarantee that anyone facing homelessness is helped to avoid or quickly resolve it. The current model is cruel in its legally sanctioned denial of help to thousands every year. But it also labels people. You are ‘the homeless’, you should be grateful for what you get, and if you get nothing, soon the labels keep coming: single homeless, entrenched, complex, service-resistant, etc.

Let’s abolish the legal tests that create and sustain homelessness.

Second, the Everyone In initiative was a fleeting glimpse of assertive state action on homelessness in England. Louise Casey has come and now gone again, officially moving on in late July, leaving the UK government rudderless once again. Devolving the problem to the myriad responses of each local council is fundamentally flawed and we know all too well what that leads to – with every measure of homelessness in England going up in the last ‘decade of disaster’, under the cloak of decentralised but declining resources.

Governments in Scotland and Wales have recently begun an overhaul of their homelessness systems. This rediscovery of assertiveness and vision is desperately needed in England too, and a blueprint is written in the Crisis plan for ending homelessness. There are solutions ready and waiting, from scaling up Housing First, to the case for social housing at scale, PRS reform, etc. And the good news is that financially these reforms easily pay for themselves over a 10-year period.

The current government target of ending rough sleeping by the end of the parliament is the first of its kind. Rough sleeping is of course the most damaging for of homelessness. But in order to reach this goal, we need a consensus across all political parties on wider basis.

Since 1977 the legal system has designed in homelessness. This must be reversed, and replaced with a universal guarantee of housing support, and then backed by an assertive government strategy to make homelessness in all its guises a thing of the past.

<strong><span class="has-inline-color has-accent-color">Matthew Downie</span></strong>
Matthew Downie

Director of Policy and External Affairs, Crisis. Matt, who joined Crisis in 2014, played a leading role in the introduction of the Homelessness Reduction Act – one of the biggest reforms to homelessness legislation in England in a generation – as well as the publication of ‘Everybody In: How to end homelessness in Great Britain’, a landmark body of work showing how homelessness can be ended for good. He was awarded an MBE for his services to tackling homelessness in June 2019.

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Working from home or living at work?

On March 23rd, 2020 UK was formally placed into lockdown. Those who were not key workers were asked to not work or to work from home. This meant the decades-old tradition of working professionals putting on suits and commuting into work to go into an office and sit at a desk for several hours a day ended. Abruptly.

At first, some rejoiced at this news. We all learned about the intricacies between Zoom and Microsoft Teams and most of us became pop-quiz experts. The concept of moving from your home to go miles away to do the same thing you could do from your couch seemed insane. Most of us also found that we work better in pyjamas and are never late when our bed is also our office. Long live the “Boffice” we cried!

However, as time went on, difficulties emerged for the working poor. Those who could leave their cramped city flat and run away to a big house in the country did. Oxford University found that during lockdown over 250,000 people left London to go to live elsewhere, many whom were under 30. Those who could upgrade their Wi-Fi did. Those who could create an “office” like environment with comfy chairs, a working desk, and several monitors, did. Those who could not – struggled.

Many young people realised that no garden, no living room, and several people using the same kitchen and bathroom were acceptable before Covid-19, but not during lockdown. Landlords profiteering from turning that pesky living room into a third, fourth or even fifth bedroom in a House of Multiple Occupancy were making homes unliveable in lockdown. After a few weeks – the “Boffice” was not as great as we thought it was. People were not working from home. They were living at work.

The property developer Pocket Living found that 37% of those in London who were living in shared accommodation, were living and working in their bedrooms during the lockdown. Many reported that this was affecting their mental and physical health.

Participants reported issues like “noise, lack of work surfaces, and privacy” that severely affected their ability to work. Of those asked, 46% of participants reported not having a suitable place to work. Now, after the first lockdown and as a result of these changes, the Independent reported that 70% of young people are feeling more anxious about the future as a result of the Covid-19 pandemic.

This year might be the first time that young people move out of London and other city centres on masse – or do not actually move there in the first place. At the beginning of the year, it was predicted that the number of young people living in their own private rented sector (PRS) was going to rise by over 1.3 million. Now, I would not be so sure.

But fear not landlords – help is at hand. A landlord’s best bet lies in effectively extending regulation of the minimum shared space required for houses in multiple occupation (HMO). Regulation should enhance the need for shared living spaces. Young renters need to have space in order to live and work in separate and private areas. Ensuring shared living spaces are available would provide the stability and space young people need to be efficient and productive at work.

By creating living spaces that are living and working friendly – landlords will ensure that they can keep their tenants in good mental and emotional health, and ensure their properties are occupied. It is not a huge amount of effort – but it will be well received by tenants thrice over. As young people find themselves in a new working environments and central offices become a thing of the past – landlords should act now to ensure a good relationship with their tenants for the future and the “New Normal”.

Additionally, for those unlucky enough to be on the ever-growing list of industries impacted by Covid-19 and find themselves now on furlough or in a tough job market, landlords should allow late or partial rent payments. The stress of renting as a young person is high enough, and a little flexibility from landlords would go a long way.

The “New Normal” does not have to be all bad for young renters. Instead – tenants and landlords must act together to ensure better working and living conditions. There should always be a difference between working from home and living at work and with a little communication and adjustment, better housing is possible.

<strong><span class="has-inline-color has-accent-color">Cathleen Clarke</span></strong>
Cathleen Clarke

Cathleen Clarke is a youth campaigner and Labour Party activist. She is currently running for Chair of Young Labour and works for a migrants’ rights charity.

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Shared ownership: a scheme beyond repair?

Shared ownership has its benefits, but it is not the panacea for the country’s housing crisis.  

Home ownership is becoming an ever-distant dream. Nowhere is this seen more acutely than in London where exorbitant house prices mean exorbitant private rents are often considered the only viable option. So those with the opportunity to get on the property ladder through the somewhat elusive shared ownership route are the lucky ones, right?

Well let us explore that further.

You can get a shared ownership home through a housing association. You buy a share of your home (between 25% – soon to be lowered to 10% – and 75%) and pay rent to the housing association on the rest. 

Northern Ireland and Scotland set their own criteria, but elsewhere in the UK you can buy a home under this scheme if your household earns £80,000 a year or less (capped at £90,000 in London) and are either a first-time buyer, someone who used to own a home but can’t afford to buy one now, or are an existing shared owner. 

It is true, there certainly are benefits to this arrangement. Shared owners have more stability than those renting. They are not so much at the mercy of a landlord who could evict them almost immediately under section 60. Greater permanency is met with greater control. Shared owners can paint a wall or put up a shelf without first seeking permission from a reluctant landlord. 

Then there is the cost. Shared ownership can form a happy medium for those wishing to leave the private rented sector but who cannot yet meet the stratospheric costs of full ownership. This is again particularly true in London where the average house price is more than double that of the national average.  

But just because this can be the more affordable option, it does not automatically mean it’s affordable by anyone’s definition. Which is where we begin to uncover the flaws of this scheme. 

In London, shared ownership is increasingly expensive. An investigation by the London Assembly Housing Committee found that the incomes of new shared owners, and the deposits they must put down to buy their share, are generally higher than those of the average earner. 

Affordability is called further into question when you compare what a share in a London property will get you with what you could afford in a part of the country with lower house prices. For example, a 30% share on a two-bed flat in Wandsworth could get you full ownership of a four-bed semi-detached in Wigan. 

The purse strings must be loosened again when service chargers are factored in. Service charge estimates given to prospective shared owners often increase following completion. Residents can be presented with service charge statements a chartered accountant would have trouble understanding.

Any credit can soon turn out to be a false credit because the managing company has forgotten to charge for building insurance and service charge bills can increase each year because the faulty lift requires additional maintenance. 

This is all compounded by the expense shared owners must take on to extend their lease, problems with poor maintenance of properties, and the difficulties in staircasing to full ownership. Moreover, residents continually report that Housing Associations are unresponsive to their queries and concerns. 

With so many pitfalls, we might ask why shared ownership is considered the preferred option for many people. There will always be the lure of home ownership, but there is more to it than that. 

Most shared owners are first-time buyers. Many have no experience of buying property, nor the financial and administrative burdens of shared ownership. The Assembly’s Housing Committee found that many reported not knowing what exactly they were getting into. 

For those who have already undergone that process, some say the model still is not working for them, that they had not been given enough information when buying and that they’re now lumbered with spiralling costs.  

So, what is to be done? Well, the positive news is that the scheme is not beyond repair. With the right political will, there are actions we can take today to make it work for those already in shared ownership, as well as prospective shared owners. 

A requirement on housing associations to report on service charges and maintenance costs for every block of shared ownership homes is an essential first step, because the biggest hindrances to making these fairer are the lack of transparency and scrutiny. 

This should be met with a requirement on housing associations to set out for prospective buyers, in one clear document, an accurate description of what shared ownership entails – and costs – in reality. Clear guidance should also be provided on routes for redress for those who feel they do not receive a decent enough service for the amount they fork out in service charges.  

To understand the value of shared ownership in helping first-time buyers successfully get a foot on – and then move up – the property ladder, housing associations should be required to publish annually the types of tenure those that sell their shared ownership property are moving into, alongside staircasing sales.

Given the call upon affordable housing resource that shared ownership necessitates, this is the very least we should expect from those organisations who benefit. And on a similar note, the Government should reverse their decision to make it easier for shared ownership properties to be sold on the open market and work instead to ensure they remain affordable housing stock. 

Labour’s role is, and always will be, to level the playing field. Shared ownership is a good place to start to explore how that might look under a future Labour government. Overhauling the scheme to make it more accessible to the many is one option.

But of course, there is always the alternative of moving away from this type of model in favour of more affordable housing options accessible to those on lower and middle incomes.  

Sadiq Khan’s action in delivering record levels of affordable housing, driving up council house building in the capital and implementing the London Living Rent are shining examples of what can be achieved when Labour is at the helm. Now, just imagine what could be achieved under a Labour Government. 

<strong><span class="has-inline-color has-accent-color">Len Duvall</span></strong>
Len Duvall

Len Duvall is the London Assembly Member for Greenwich and Lewisham and has been Leader of the London Assembly Labour Group since 2004.

Before joining the London Assembly, Len was Leader of Greenwich Council for 8 years. On the Assembly, Len is Chair of the GLA Oversight Committee, Deputy Chair of the Budget and Performance Committee, and a Member of the Police and Crime Committee and the EU Exit Working Group.

Len leads on the London Assembly’s Campaign for a Domestic Abusers’ Register. He has been in elected office since 1990. 

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Shared ownership – affordable housing or overpriced?

With property prices for first time buyers increasing 69% over the past 10 years[1] and an average deposit of £47,059 needed it is no surprise that shared ownership is thought to be a good option for first time buyers.

The part-rent part-buy properties are mainly developed by housing associations as “low cost home ownership” and so can qualify as the affordable housing needed to secure planning for new developments.

But does it really represent good value for money for the purchaser and the wider public?

There is a lot to love in shared ownership if you are fed up with paying rent to a buy to let landlord.  You don’t have to have keep paying out management fees, deposits and all the other costs associated with renting. You also benefit from rising house prices.  

With shared ownership only have to save for a 5% the deposit on the proportion of the property value that you are buying – if you are buying 25% of a £400,000 property the minimum deposit is £5,000. If you buy in the open market you need a £40,000 deposit for a property of the same value because mortgage lenders require a 10% deposit.

The downside is that you are responsible any repairs and maintenance – your shower breaks down; you must pay the plumber. Even if you only own 25% of the property, you’re responsible for 100% of the cost of new doors to meet changing fire regulations.

It can be expensive buying additional shares in the property, especially if you repeatedly buy small shares. If you want to buy any part of the remaining portion there will be legal, valuation, stamp duty land tax and mortgage fees to pay. If house prices are rising you will be paying more for property as the cost is based on current market value, not the price you originally bought it for.

Another drawback is that most shared ownership is on leasehold flats so that on top of the rent, owners must pay service charges and ground rent. Nor can shared ownership residents exercise the “right to manage”, so you will be stuck with your managing agent even if they are useless. 

But the main problem is down to the so-called new build premium – a term used to describe the fact that most new build properties cost more than otherwise similar homes. In 2019 Zoopla found that on average a new build was £65,000 more than a similar older home in the same location. It is tempting to buy a property that has a dishwasher in the fitted kitchen, and a 10-year guarantee against major property defects. But is it worth £65,000?

All the aspirational property TV programmes focus on the “potential” in buildings – essentially buying something run down, making improvements with new kitchens and bathrooms, and creating additional value. So why is shared ownership restricted to properties which have no room for improvement, and where the main beneficiaries appear to be large scale builders who get their planning permission for large blocks through low cost home ownership and not true social, affordable housing?

The first two homes I owned were wrecks, cheaper than new builds and I was able to put in central heating, double glazing, and new kitchens over time. Just the sort of properties that are snapped up by buy to let portfolio landlords today. Why can’t subsidies be directed to people who are happy to take on a project and use local builders to make improvements rather than hand profit directly to the large-scale building developers?

In England there have been some co-operative shared ownership schemes, but these have mainly been based on a new development rather than benefit from the lower prices in the second-hand market.  A number of housing associations work with disability charities to provide adapted housing through the government-backed HOLD (housing for people with long term disabilities) scheme in England.

Qualifying people can buy any home for sale on a shared ownership basis (part-rent/part-buy) and this model works well for people who have received compensation for an accident and qualify for long term disability benefits. 

To assist people to buy their first home I think there needs to be a second-hand market option, backed by a housing association to manage the rental element and ensure the finances are in order.  We don’t have to look far for a model – based in Belfast the Co-Ownership Housing Association[2] is enabling first time buyers to part-rent and part-buy in the second-hand housing market across Northern Ireland.

Since 1978 more than 29,000 people have been assisted to buy their first home and currently 9,000 people are currently co-owners.  A 50% own/50% rent is cheaper than private renting and normally no deposit is needed. The home owner is able to choose the property they want to part-rent part-buy in the open market and, subject to valuation the housing association will buy 50% of the property and charge rent based on 2.5% of the value of the rented portion.

This will require a new way of thinking for housing associations and there will need to be some seed funding but rental incomes and purchases of additional portions of the property should make the scheme sustainable in the long term. If we want sustainable communities, we need to have a variety of tenures and affordable homes, and shared ownership can help achieve that.

<span class="has-inline-color has-accent-color"><strong>Sue Rossiter</strong></span>
Sue Rossiter

Sue Rossiter is the Chair of Bethnal Green and Bow CLP and is an expert in mortgage policy with more than 20 years experience of regulatory policy development.


[1] Halifax House Price Index September 2020

[2] www.co-ownership.org

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The ‘Planning White Paper’ and a basis for possible reform

The Government’s Planning White Paper proposes to replace the current regime of local authority determination of specific development proposals by a system of zoning.

Local Plans would define three zones: growth zone (where designated sites have “outline permission”), renewal zone (statutory presumption in favour of development being granted for the uses specified as being suitable), Protected zone (“more stringent development controls”). There is an option to combine growth and renewal areas.

For growth and renewal zones plans would “set out suitable development uses, as well as limitations on height and/or density as relevant. These could be specified for sub-areas” (eg town centres).

For protected areas, plans “would explain what is permissible by cross-reference to the National Planning Policy Framework”.

Development Management policies would be set by National Planning Policy Framework (with an option to have limited development management policies in local plans), plus local design code(s) supported by national design code. There is a national design guide and manual for streets (where there is no local design code, the national one would be applied).

How zoning works in the US

Traditional zoning involves local municipal zones for locales with zoning ordinances (ordinance is a municipal by-law).  These can be by land use and sub-categories within land use – ie different housing types ( single detached dwellings/apartments) or by density (low/medium/high).

There are a number of important variations:

a) Inclusive zoning (includes affordable housing)
b) Incentivised zoning (allows higher density development in exchange for higher local taxation)
c) Form based zoning (new urbanist approach – design based rather than directly land use/functional based)
d) Performance zoning ( based on environmental impacts)
e) PUDs (Planned Urban Development) Zoning sets parameters but individual schemes negotiated between developer and municipality

The Planning White Paper is however unclear on what form of zoning would apply in England.

Current  planning practice in England

Local plans (district/borough wide) allocate development sites  and/ or for specific uses and set both specific policies for designated sites and more general policies for non-designated ones. Local plans set policy requirements to supplement national planning policy requirements and/or facilitate their implementation locally. 

These can set density policies and housing type requirements for different sub-areas or for individual sites. Area Action Plans/ Area Supplementary planning guidance can be determined for development/ redevelopment areas. These can be supplemented by design guidance/ design code, by masterplans (for major sites) and site briefs. Local Development Orders can set specific policy requirements for areas within a local plan area.

UK Land use allocations can be considered to be a form of zoning (though the term not widely used) though not all Local Plans allocate specific land uses to sites and development can still be considered on non-allocated sites. Land use allocations may also not be strictly applied and although in theory we have a plan-led system, alternative uses may be permitted.

Local Plans however set parameters within which individual development allocations should be considered.  This system is comparable with the US PUD system which is also a two-stage system. The distinction between American system as ‘zonal’ and the English system as ‘discretionary’ is a gross over-simplification.

In England, Section 106 planning contributions (s106) can be negotiated on site by site basis in exchange for increased density and Community Infrastructure Levy can be varied by sub area (both in practice similar to US incentivised zoning system).  Affordable housing requirements set in local plan policy, which can vary by area, are parallel to US inclusive zoning approach.

The Planning White Paper would appear to propose a very simplified broad-brush approach to zoning – simplified when compared to the traditional US approach to zoning, which allows much more specific zoning categories.

The key question is whether the proposed English approach to zoning will allow for any of the variable approaches operated in US cities (where zoning is determined by the municipal authority), which are in effect deliverable in practice within the pre-existing English planning regime.

A basis for possible reform

The current planning system and planning practice in England does need reforming. (As planning is a devolved function,  the White Paper proposals do not apply to Scotland, Wales or Northern Ireland). There is a case for Local Plans being much more specific about permissible land uses on specific sites and the specific requirements which would then apply.

This would certainly increase certainty for both developers and local residents. It would also ensure land values reflect permissible uses. However, local authorities, at both officer and member level, need to have the power to ensure that development proposals are fully compliant both with the land use allocations in the published plan and with the policy requirements set out in the plan.

This means that a LA development management function is still required. This will include any decisions as to community mitigation and benefit through a form of scheme specific planning obligations regime, which would, where appropriate, be additional to any value-based form of infrastructure levy.

Objectors should not however be able to block schemes which are fully compliant with the published Local Plan in terms of land use and policy requirements. Moreover, applicants should not be able to appeal against LA planning decisions which are supported by a published Local Plan.

However,  local plan making must be set within a wider strategic context, as many local authorities cannot meet their housing needs within their own area, while other authorities may  resist  helping out neighbouring authorities within their travel to work area. 

The Planning White Paper is largely silent on this critical issue, and in fact proposes to abolish the current ‘duty to co-operate’ with neighbouring authorities and the requirement to produce statements of common ground. 

It is necessary that we re-establish a framework of national and regional planning which links national funding of infrastructure to decisions about the locations most appropriate for both residential and employment growth.

Neighbouring authorities should be required to agree a strategic plan within this national and regional framework. No local council should be allowed to opt out of making a contribution to meeting an area’s housing and employment needs.

Localism on its own is not enough and we need a balance of powers between the different spatial levels of governance and democratic accountability.

<span class="has-inline-color has-accent-color"><strong>Duncan Bowie</strong></span>
Duncan Bowie

Duncan Bowie is a semi-retired academic and strategic planner who has written a number of books on housing and planning.

He is a long-term member of the Labour Housing Group.

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Time is running out for renters

At the eleventh hour, late on a Friday afternoon, the Government finally decided to stop ploughing ahead with reopening eviction cases in the courts on 24 August.

This news came as a relief to the many thousands of renters struggling to pay their rent due to the economic shock of Covid-19. However, a stay on evictions keep renters safe for now but it is just a sticking plaster. It is time the Government dealt with root cause and took action to end the rent debt crisis.

Even before the pandemic hit, two million households in the private rented sector were struggling to pay their rent – paying a staggering 40% of their income to private landlords on average. 

Already stretched thin and with no savings to fall back on, private renters now find themselves without work or at risk of losing their job. 

Having to rely on the welfare system, many for the first time, renters wait anxiously for money to arrive and are devasted when the housing allowance, even with the recent Government increase, nowhere near covers the rent they owe.

New research by Generation Rent found that just 12% of those who applied for benefits after lockdown have been able to cover their rent – meaning hundreds and thousands of renters have been forced to rely solely on their landlord’s goodwill.

With unemployment rising, the furlough scheme coming to an end, and an endless wait for an inadequate benefit payment, thousands of renters are at serious risk of losing their homes.

Renters like Elizabeth, Tim, Roy, Laura and Chrissie:

Elizabeth: ‘Our three-year contract is up. We informed our landlady we weren’t able to pay full due to cuts in our salaries due to Covid19. The landlady agreed – then the landlady gave us Section 21 eviction notice.’

Tim: ‘Covid 19 has meant that income has dried up. My landlord wouldn’t or hasn’t taken the three month mortgage payment holiday. I am 3+ months behind with my rent and frightened about receiving a Section 8 eviction notice from my landlord.’

Roy: ‘My landlord has been texting me once a month since this (pandemic) started telling me I’m going to be “out on my ear” if I don’t pay, trying to increase the rent while my income has halved and my savings are dwindling, I’m terrified for my children’s future.’

Laura: ‘I’ve been furloughed and the money hasn’t been coming in until the middle of the month so I’ve been unable to pay the rent on time. I haven’t slept I’ve been ill anxiety and depression levels have gone up.’

Chrissie: ‘We explained that we hadn’t been able to work for 3 months and we’ve rented for just under 30 years. The landlords agent said ‘well you know what to do, give the keys back if you can’t pay’. We’re not eligible for benefits as we own a retirement property abroad. We are both over 60.’

These stories break my heart. Sadly, Elizabeth, Tim, Roy, Laura and Chrissie are not alone. Their stories are just a snapshot of the renter experience Generation Rent hears every day.

Many have lived in their properties for years. They have children at local schools but now find themselves priced out of the area they call home. Some are behind with rent and others haven’t even been given a reason; their landlord has simply issued a ‘no fault’ eviction notice and asked them to leave.

Our research, carried out just a few weeks ago, has shown 1 in 5 private renters who has struggled to pay rent during the pandemic has already been told to move out, been given a rent increase or been threatened with eviction. Nearly half of struggling tenants were found to be already searching for a new home, with 59 per cent unable to find one they can afford or a landlord who will accept them – meaning homelessness will be the only option for renters as they find themselves with nowhere else to go.

Time is running out for renters.

In March, Robert Jenrick promised to keep renters hit by Covid-29 in their homes. He has to deliver on this promise. He has to put in place a permanent solution to alleviate the coronavirus rent debt crisis being faced by hundreds of thousands of renters. 

With Parliament back from the summer recess, Generation Rent are more determined than ever to help renters saddled with rent debt. 

That’s why we’re campaigning for an end to the rent debt crisis through lifting the benefit cap and increasing benefits to cover average rents, no rent increases until March 2021, and make grants available to cover the rent of the most financially vulnerable through our Coronavirus Home Retention Scheme.

We want to see an end to coronavirus evictions through emergency legislation to prevent ‘no fault’ evictions and evictions for rent arrears. This will ensure renters who have been hit by the pandemic do not lose their homes through no fault of their own.

And we want to see a permanent end to Section 21. Evictions for no reason were a leading cause of homelessness before the pandemic. Section 21 eviction notices are in frequent use and the pandemic has highlighted that the law is not fit for purpose. The Government has pledged to end ‘no fault’ evictions, and now is the time for it to honour this pledge. 

Without a permanent solution to the rent debt crisis and evictions due to Covid-19 thousands of renters are at serious risk of losing their homes when the ban ends.

Generation Rent will be doing all it can to stop private renters tipping over the edge into homelessness.  Homelessness destroys lives. Help us end the rent debt crisis – sign up at GenerationRent.org

<span class="has-inline-color has-accent-color"><strong>Alicia Kennedy</strong></span>
Alicia Kennedy

A leader in strategic planning and campaign organisation, Alicia has had a 25-year career operating at the highest level of national politics.

She worked with Prime Ministers, Cabinet members, hundreds of MPs, and thousands of Councillors and volunteers to deliver successful local and national election campaigns for the Labour Party. She was made a life peer in 2012 and is non-aligned.

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We need a flexible zoning system to end the housing crisis

There are three things which are connected yet almost unique about the British economy. It has exceptionally stark geographic inequality; it has an extremely sharp housing crisis in its most expensive cities; and it has an unusually dysfunctional planning system.

Addressing those regional divides and the housing shortage requires replacing our discretionary planning system with a new flexible zoning system. The new reforms underway are one approach, but there are other examples from abroad which would also be major improvements over what we have now. But there must be fundamental change in how the planning system works if we want fundamental changes in inequality and housing outcomes.

Our discretionary planning system rations new homes

The current planning system is highly discretionary. This means that the planning system is empowered with a great deal of discretion to decide whether a development should take place on a specific site or not. In effect, new homes are rationed by the planning system, case-by-case.

Although there is often a local plan which “leads” development, this is not always true – York has not agreed one since the 1950s. Even when there is a local plan, the real power as to whether new homes can be built or not is in the case-by-case decisions by planners and planning committees. Applying for planning permission to build private homes, affordable homes, or social housing is never certain. One in ten planning applications fail, despite the fact that developers are presenting proposals they believe will succeed.

The discretionary planning system makes inequality worse

This discretionary planning system creates poor outcomes which have previously been set out in Red Brick, and which underpinned Centre for Cities’ contributions to the Labour Planning Commission. It forces new development into the sites with the lowest political costs rather than the sites most suitable for new homes. This is why half of all suburban neighbourhoods build less than one house a year and a fifth build zero, even though these neighbourhoods already have the infrastructure to absorb some population growth over a long timeframe.

The discretionary element also makes inequality worse, as it decouples the local supply of new homes from local demand. Some of the most expensive and prosperous cities in the country, such as Bournemouth and Oxford, build far less housing than cities with weaker economies such as Wakefield and Telford. These local housing shortages mean that the average house in Oxford costs 17 times the average income, and 6 times average incomes in Wakefield.

This mismatch between supply and demand creates terrible housing crises in the cities with the most successful labour markets and fuels inequality. In expensive cities, it widens divides between renters and homeowners. As housing costs for renters in Bristol increase, so does the wealth of their homeowning neighbours as house prices rise.

But it also creates divides across the country. As we do not build enough homes in cities like Brighton to stabilise prices, average housing equity per house in Brighton rose by £89,000 from 2013-2018. But an identical twin of such a homeowner in Sunderland would only have gained £3,000, as local land values have not risen due to the struggling local economy. This is the opposite of levelling up – the planning system redistributes wealth from the poor to the rich.

The discretionary design of the planning system creates a permanent shortage of homes

For reform to solve these problems, we need to understand why the planning system systemically creates them. The explanation lies in the discretionary, case-by-case decision making of the current planning system. Few places abroad have such a system where this feature is so important. Ireland and San Francisco are two locations which do, and accordingly have dire housing shortages.

In fact, England’s discretionary planning system can be understood most clearly by comparing it to the planning systems of the former Eastern Bloc. In these planned economies, production was also rationed by the discretionary and uncertain granting of permits by planners, but for things such as mayonnaise or cars rather than new homes. Many of the behaviours which are sometimes described in England as unique to housing popped up across sectors in these Soviet-style economies – shortages, equivalents to land-banking, absorption rates, endless negotiations between planners and firms, poor quality new products, inequality in access to supply and speculation, among others.

These are more than just parallels. Both the former Eastern Bloc and the UK housing market are “shortage economies”. Their permanent state of undersupply is maintained by how the discretionary design of their planning institutions rations production, and is the defining characteristic of their systems. A few policy tweaks here or there or a little bit more funding won’t solve this core problem.

Instead England’s planning system needs fundamental reform which learns from other planning systems abroad that result in better housing outcomes, and for the discretionary element in our system to be minimised or removed.

England’s new zoning system is a move in the right direction

Moving away from a discretionary system implies a new flexible zoning system, where provided a proposal agrees with the local plan and building regulations so that the new structures are safe, it legally must be granted permission. This is a common form of planning around the world.

The new zoning reforms introduced earlier this month – establishing growth, renewal, and protected zones in England – are a big step in this direction. Within growth zones, there is no discretionary element, as the principle of development is already accepted by the zoning. Developments which comply with a design code and legally must be granted planning permission, after planning has resolved technical elements such as road layouts. This certainty will, within growth zones, end the unpredictable rationing of new homes that the current planning system creates, and by extension, address the housing shortage.

We can argue about the details, but we need a new zoning system to end the housing crisis

There are political choices to be made as to the inner workings of such a new zoning system, and Centre for Cities has previously set out how these could work. Japan is the clearest example of such an alternative framework abroad, where there are twelve different zones which shape the density and use of land while still providing much more flexibility than our current system.

As a result, Japan has much more affordable housing than England, as it builds 900,000 homes a year while England struggles to build 240,000. An English flexible zoning system could achieve this too. We could also make the political choice to provide far more social housing than Japan, or have a greater focus on energy efficiency and climate change, or public realm and design, and the Labour Planning Commission set out some of these areas as priorities.

But while the details of such a new flexible zoning system are contestable, the principle that we need one to solve the housing crisis is not. The discretionary granting of planning permissions is the single biggest systemic problem with our framework. If we want to improve the conditions and affordability of homes across England, we need to do things differently. We need to replace our planning system with a new flexible zoning system.

<strong><span class="has-inline-color has-accent-color">Anthony Breach</span></strong>
Anthony Breach

Anthony is an Analyst who has worked as part of the research team at Centre for Cities since 2017, where he focuses on housing and planning. He won the Thinkhouse Early Career Researcher Prize 2019 for Capital cities: How the planning system creates housing shortages and drives wealth inequality.

Anthony has also worked on research on commercial property in cities, services exports, productivity, and manufacturing. He also has a particular interest in lessons for planning, housing, and UK cities from Japan and the countries of the former Soviet Union. Previously he worked at the Fawcett Society as a Research Officer.

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Busting the housing supply shortage ‘myth’

Supply is one of the key problems in the UK housing market. Sadly, the latest in-vogue argument is that the perceived housing supply shortage is a misconception. This track of thought has permeated right across the political spectrum. But do these claims hold weight?

Both centrists and the left have bought into the housing supply shortage myth. It is wrong to do so.

Last year the Labour Party produced its ‘Land For The Many’ report. In it all housings ills were laid at the feet of finance and speculation. Namely by the likes of Beth Stratford, Guy Shrubsole and Laurie Macfarlane. They argue there were “more powerful forces, besides supply shortages, putting upward pressure on house prices”. ‘Red tape’ in the planning system? Merely a “discredited theory”.

But this argument has not become just a line for the left. Even centrists from across the globe have bought into the mantra of the ‘housing supply myth’. Both Dr Cameron Murray and Ian Mulheirn of the Tony Blair Institute cited all sorts of claims recently on The Jolly Swagman Podcast. From “look at all these approvals”. To if supply were the issue “rents would be increasing at the same rate as prices”. Or it is the cost of capital doing “most of the heavy lifting” for changes in price. All these claims are false. Misguided at best.

Regulatory supply constraints inherent within the current system have made house prices substantially more volatile. Research by Hilber and Vermeulen found the planning system has been an important causal factor behind England’s high housing prices. It was published in the flagship title of the Royal Economic Society. The Economic Journal.

Of course, undoubtedly more than just supply shortages over the past 30 years has exacerbated house price rises. Particularly given the global trend toward lower interest rates. Yet even those at the Bank of England widely acknowledge lower interest rates are not the sole determining factor of house price inflation. In this blog I set out why as progressives we must give planning more attention, better understand its relationship with housing supply, and acknowledge that solving the housing crisis does indeed require some form of planning reform.

Low interest rates would not explain 90% of house price growth if supply was more responsive

“Soaring UK property prices are due to low interest rates, not lack of housing supply, Bank of England finds” states yet another tabloid headline. Housing supply “will not solve the housing crisis” clamours Ian Mulheirn. If there were two more opposite statements of the truth these are it.

The low-interest rates “fuel” house price rises line of argument has caught up far too many economic commentators. Mulheirn claims institutions, lending policies, narratives, all interfere with the transmission that is the tide of global interest rates. Supply though? Not the answer.

Ian’s claim simply bears no logical validity. First and foremost, the same Bank of England report that acknowledges low interest rates have been the key explanatory factor of house prices rises, does not validate his own understanding. The doubling in house prices over the past 30 years would have been different if supply were more responsive to changes in price.

It suggested that had we had doubled the responsiveness of our housing supply to changes in price, and assumed lower income elasticity (i.e. the same change in income triggered a smaller percentage increase in demand), house price growth would have been cut by almost half. House price growth would have amounted to 88%. In contrast to the 173% modeled by the Bank of England on the current assumptions.

Income growth would have explained 55% of the increase. Decreases in interest rates explained just 40%. Therefore if supply was more responsive then both centrist and left-wing economist claims of mortgage lending being the key driver of house prices would simply not hold true.

In Japan housing affordability has improved despite a low interest rate environment

We can look to other countries and see low interest rates do not always explain housing unaffordability. For example, Japan has had low interest rates since the 1990s. Yet Japan’s price-to-income ratio has decreased by 31.3% since the year 2000. Over the same period the UK the price-to-income ratio has increased by 35.7%.

Cheap credit simply puts rocket boosters on demand in an already supply constrained market. Nothing more. Progressive housing policymakers need to recognise there is more to increases in house prices, and subsequently land values, than mortgage lending alone.

Antigrowth land regulations hand massive windfalls to landowners

Beth Stratford, one of the authors of Labour’s ‘Land for the Many’, claims the planning system is “counter intuitively” not the major driver of recent land price inflation. Despite claiming “housing is unaffordable because the land underneath our homes has ballooned in value 544% since 1995”.  Guy Shrubsole, argues that “ripping up the Green Belt and planning regulations will simply hand massive windfalls to landowners”.

Both are sadly defending the very man-made regulations that capture value into land. Enrico Moretti from UC Berkeley argues fixed or equitably anaemic housing supply results in productivity increases capitalised into land values. On the contrary if housing supply were infinitely on tap to meet demand then these productivity gains would go into workers’ wages. This is a given where there are fundamental economic drivers at play.

Not to mention what we have witnessed. In Central London for example, residual land values increased by over 600% in 20 years. Sounds to me like under the status quo landowners have been capturing massive windfalls for quite some time.

Research by Albert Saiz tells us the biggest determinant of poor housing supply responsiveness is geography. This is predominantly due to the physical constraints on land availability. Poor responsiveness of housing supply occurs indirectly due to increased land values resultant from this scarcity of land. Geography also indirectly creates higher incentives for antigrowth regulations such as the Green Belt. Of which ‘neighbourhood defenders’ like Guy Shrubsole and the CPRE vociferously protect.

Prices and past growth is empirically linked to planning regulations

Saiz tells us prices and past growth is derived from both physical and man-made (planning) regulations. Ian Mulheirn was presented this widely acclaimed study during his feature on The Jolly Swagman podcast.

But what did Ian Mulheirn make of the Saiz study dating back to 2010? He embarrassingly admitted he has never heard of it. Although still acknowledges there is relationship between prices and supply. Despite not recalling the paper Mulheirn claimed studies like this get the “order of magnitude wrong”. But we know this to be false. The assertion low-interest rates hold a higher magnitude does not hold true if supply responsiveness were more in line with international norms.

The link between responsiveness of supply and planning is not widely understood by housing supply shortage critics

We know poorly designed planning policies restrict supply responsiveness. Cross-country research by the OECD found that housing supply responsiveness is related to regulations on land-use and planning.

Professor Ed Glaeser found in Greater Boston the decline in new construction, and associated increase in price, reflected increasing man-made regulatory barriers to building. Based on his empirical analysis he calls to ease housing regulation to increase supply.

Shrubsole, Stratford and Mulheirn all ignore or deny the empirical link between restrictive antigrowth land use regulations, lower levels of housing stock expansion, and exacerbated house price growth. While in places with relatively fewer barriers to construction the results are moderate increases in house price growth and a larger expansion of housing stock. Development professionals understand these international comparisons. And funnily enough, so do landowners.

The Federal Housing Finance Agency analysed a US data set of 14 million land values. It found supply restrictions and levels of land price positively correlated. Regulatory burdens and topographic difficulty in building result in an increase in the price of land. It is the largest dataset to suggest planning regulations impede the responsiveness of supply.

Unlike other countries Britain keeps making land more scarce in areas of high demand rather than expanding its supply

We must recognise the UK’s discretionary planning system is deepening wealth inequality by design. Political reluctance to review the Green Belt in terms of suitability for new homes has meant these restrictions have persisted for a prolonged period of time. All the while British urban conurbations have grown.

Other countries regularly review Urban Growth Boundaries (UGB) for expansion. For example, in the USA the state of Oregon expanded its UGB no less than three dozen times since it was first drawn. In the UK, the Green Belt has doubled since 1979. Instead of releasing land as our cities grow, we have done the complete opposite.

Thinly traded markets demonstrate the scarcity of land

The Investment Property Forum (IPF) notes the paucity of information on residential land values in the UK reflects the thinly traded nature of its land market. Being thinly traded means it cannot be sold easily without a significant change in price. This is due to there being a limited number of buyers or sellers.

Laurie Macfarlane believes this paucity of information makes it “difficult for policymakers and market participants to make informed decisions”. I argue to the contrary. Actors are making rational informed decisions. And those who are in the know are in the know. Landowners know in the long-run the economic incentives derived from the planning system will rule in their favour and that prices are sticky.

Developers on the other hand do face difficulties. Mostly with the planning system. In Britain developers can propose something not forbidden by the local plan, yet still lawfully be denied the right to build.

The planning system in Britain forces developers and planning authorities to haggle over height and affordable housing. Once a scheme is consented the permission can be sold on to crystallize the planning gain. The current system drives behaviour that plays on this uncertainty.

Some landowners (but not all) try to capture uplift from planning rather than build out. Particularly in times where it has become apparent more and more people cannot afford to buy in places they grew up in. The lack of market confidence has led to record levels of unsold stock.

Land traders and middlemen punt around a thinly traded market consented schemes. Where often it can be slim pickings. This is in the hope another developer will take a view on height, massing, affordable housing once again. If house prices have moved on, they can capitalize these gains into land value. Simply stating 9 out of 10 applications are approved does not absolve the planning system for not seeing homes built out. It is at the heart of driving landowner economic incentives.

The current system has failed – how should Labour respond?

Anthony Breach draws parallels of the current system to the failed former Eastern Bloc. Our “Soviet-style planning system” has created crippling shortages of housing through institutional design. All ratified by political will. It is the case-by-case discretionary planning permission system that has created shortage economy in our housing market. This needs to change.

To grapple with the planning system Breach recommends a move to reconnect local demand through a rules-based zoning system. He claims should a developer propose a compliant scheme within zoning, design code, and building regulations then it must result in a building permit. Development proposed in line with neighbourhood plans that have been consulted on with the community will be determined by the need for new homes. Rather than by how much land has been rationed by the local authority and remains unsanctioned by local opposition. This gives the market certainty and takes the haggling out of land values.

In today’s context Breach’s recommendations should be revisited with a renewed focus on how such a planning system interacts with housing and the wider community. It is a myth to claim there is no housing shortage. And a myth to suggest planning plays no role in the responsiveness of supply to changes in price. We must turn to the academic literature and an empirical evidence base to inform our decision-making. Breach’s proposals may just have the answer.

Duncan Bowie argues the Labour Party has in the past failed to grapple with the planning system. He also said the Labour Housing Group should focus acutely on the relationship between housing supply and planning. I agree this needs to change. Labour needs to recognise and debate the positive and negative consequences of discretionary planning. Perhaps Breach’s proposals to the Labour Planning Commission can garner some further attention from the left. After all, they may be more relevant now than ever before.

<strong><span class="has-inline-color has-accent-color">Chris Worrall</span></strong>
Chris Worrall

Editor of Red Brick. Land Acquisition, Guild Living. Non-Executive Director of Housing for Women. Labour Housing Group, Executive Committee.

Previously Investment and Finance Manager at both Quintain and Thor Equities. Chris has expertise in developing new residential investment strategies and real estate development finance. He writes in a personal capacity.

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Rescuing the Affordable Housing Commission Report from the chaos of Covid-19

It is the misfortune of the Affordable Housing Commission to release their report in March 2020, just as Covid -19 took hold. Not only did the report get buried by more pressing news, but the Commission also had to rush out a Covid-19 supplemental report in July 2020.

We need to rescue the report because it offers a great analysis of the housing crisis and realistic policy proposals. This is exactly what you would expect from a Commission headed by Lord Best, one of the sharpest minds in UK housing and supported by the left leaning Smith Institute.

The main argument is the last 20 years has seen the continuing decline of social rent housing, and the doubling in size of the Private Rented Sector (PRS) up to 22% of current housing. There are now 1.5m private landlords. Whilst, the social rent sector has continued to decline. The problem is that people who need the security of social rent sector face the insecurity of the PRS. Those on a low and insecure income, elderly, the ill and those with children should not be living in a sector where you can be required to leave with just a couple of months’ notice. For instance, a quarter all households with children now live in the PRS compared to 8% in 2004.  People are staying longer in the PRS, often into old age. The Commission describes this as a ticking time bomb, as an increasing number of older private renters will find that they can no longer pay the rent when they retire.

The commission found that 23% of private renters are paying more than 40% of their income on rent, which is creating poverty. A Nationwide Foundation survey in 2019 found that a third of private renters had less than £39 per week to live on after they had paid essential bills.

In London the difference between social rent and private rents is the greatest, driving many below medium income into poverty. In the area of Bermondsey, south London where I work 50% of ex –council homes are now rented out, with private renters paying nearly four times more than their council neighbours and having to find a deposit of around £2,000.

The other effect of high rents is that it stops renters from building up the funds to escape into owner occupation. Bob Colenutt estimates a third of people born in the 1980’s and 1990’s will never be able to afford to buy their own home (Colenutt 2020). The average deposit needed by a first time buyer is London was a staggering £146,757 in 2019. Also the Commission highlights that the explosion of Buy to Rent mortgages has helped to force up house prices. Even George Osborne, the most political of Chancellors, recognised the need to slightly dampen down the increase in Buy to Let.

Within social housing, there has been a trend towards higher rent ‘affordable’ homes, rather than genuinely affordable social rents. Higher rents are seen as the way of spreading government money more thinly and building more ‘sub-market’ homes. Government subsidy has dropped by a third since 2010 and housing associations have moved 100,000 properties from social rents to higher affordable rents. The problem, as noted by the Commission, is that for low earners higher rents mean more poverty.

The Commission argues for a re-balancing of the housing market by increasing social rent housing, to provide an alternative for those for whom PRS is unsuitable. The Commission accepts that it will take 25 years to rebalance, and proposes that we start now so that a child born today should be able to live in an affordable home when they are 25 and want to live independently.

To achieve this, 90,000 new social rent and 55,000 shared ownership/ intermediate rent homes are needed each year to address the overall shortage of 3.1m social rent homes identified by Shelter

This will require an increase in government expenditure from 1.9% to 3%, which is £12.8 billion per year. To put this into context the housing benefit bill was £25 billion in 2016 and £1 billion was spent on poor quality temporary accommodation for homeless people in 2019, but neither expenditure resulted in any new homes. The cost of Help to Buy, aimed at helping first time buyers, was £10 billion in 2013 and there is a debate about whether the scheme added to supply or merely forced house prices up.

The Commission does argue for PRS rent caps, the end of Section 21 evictions and a landlord registration scheme to give some protection to those remaining in the private rented sector.

The Commission also calls for local authorities to be given discretion over the selling of their council homes, in the context of the intensity of housing need in their area.  

In a Zoom meeting with LHG members, Thangam Debbonaire, Shadow Secretary of State for Housing, was clear that this is too early in this Parliament to make spending commitments, especially as the full effects of the Covid-19 recession are not known. However, this report seems to set out a good general direction of travel.

<strong><span class="has-inline-color has-accent-color">Andy Bates</span></strong>
Andy Bates

Andy is on the Executive Committee of the Labour Housing Group and is a member of Old Southwark and Bermondsey CLP.

His is an advocate of residents collectively managing their own homes. Andy is a JMB Manager at the Leathermarket JMB. Southwark’s largest resident-managed housing organisation covering over 1,500 homes.