England’s housing system has failed. We need to press the reset button on housing – let’s start with planning.
Rampant house price inflation. Hundreds of thousands of people trapped in unsafe buildings. Tens of thousands of families made homeless during a global pandemic. Our housing system is broken.
You would think given the state of things, that fundamental reform of housing would be top of the political agenda and an obvious vote winner. Yet this isn’t the case and we’ve seen no substantive policy action in decades, with the supply of new homes per year now well below the housebuilding highs of the 1960s and 1970s. Despite being badly needed, the popularity of the ‘not in my backyard’ mantra has made housing reform politically untenable, with devastating consequences.
This problem is most obvious at the local level. While many voters are often sympathetic to the problems of housing affordability and homelessness, they too often oppose the construction of new homes, including affordable homes. Building more homes would help tackle such problems by directly increasing the supply of affordable homes and expanding the number of housing options available to people more generally.
England’s housing crisis is a product of multiple local housing crises. In many of the areas where opposition to new homes is strongest, affordability problems are often the worst. Of course, the ramifications of this crisis are not felt equally. It is often the younger and less well-off residents who are eventually priced out of their own communities.
Building more and better homes is not a panacea. But we must acknowledge it is part of the solution. As Geoff Meen, one of the UK’s foremost housing experts has pointed out, it’s ‘perfectly possible for there to be both an absolute shortage of homes and a distribution problem’. In essence, we are not building enough homes in England, and we do not have the right policies to create more sustainable credit conditions or ensure fair access to housing for people on all incomes.
Once we acknowledge that building more homes is part of the solution, then the next question we must answer is ‘how do we build more’? Part of the answer lies in the way we deliver homes through England’s planning system. While the government’s proposed reforms aren’t flawless, they do present a vision. Significant questions about what these reforms could mean for the delivery of affordable housing persist and they certainly don’t go far enough in tackling high land values.
The answer to these weaknesses is better reforms, not no reforms. We must imagine a better alternative to our current planning system if we are to tackle the root causes of the housing crisis.
To show their credibility on housing issues, political parties must better sell a vision for a planning system that delivers the homes we need and in doing so, stops people from being priced out of their communities. That requires putting aside the short-term gains of winning immediate votes by objecting to local development and instead explaining why we need to build more homes in this country. Making the case for more homes nationally while opposing them in their backyard reduces the credibility of any national message politicians might have on housing.
The widespread opposition to the government’s planning reforms suggest that they were dead on arrival. That is not a reason to abandon attempts to address the housing crisis. At the moment, our planning system reinforces England’s broken housing market because land that obtains planning permission increases exponentially in value. This makes it increasingly difficult to build homes at affordable prices. Despite this, suitable policy solutions such as the introduction of zoning policy find few advocates and instead, the dysfunctional status quo persists.
We need to build a new consensus on housing. It is time to move beyond the short-term gains and quick wins that come from opposing new homes. Instead, politicians must present a bold and radical vision for how they will address England’s housing crisis. Now is the time for radical and ambitious vision that would improve the supply of high-quality and affordable homes, while also tackling the unfair distribution of homes. The myriad of problems facing the housing market – from the building safety crisis to rampant unaffordability – will only get worse without action to deliver better quality and more affordable homes.
The longer the housing crisis goes unfixed, the more damage it does. Progressives must not fall into the trap of opposition for opposition’s sake. Instead, they should articulate a clear vision that that explains why the housing market is broken, why we need radical action to fix things and how a fairer society can be created if we get things right.
Jonathan Webb
Jonathan Webb is a Senior Research Fellow at IPPR North. He tweets @jrkwebb.
In the last election Conservatives ran on a manifesto targeting the Gypsy, Roma, and Traveller community. They sought to give police new powers to arrest and seize the property and vehicles of trespassers who set up unauthorised encampments – in “order to protect our communities”. But at what cost and where will these families go?
Unauthorised encampments yet another symptom of a failing planning system
The recent Government consultation on ‘Strengthening police powers to tackle unauthorised encampments’ closed on the 4th March. The Home Office is due announce its findings very soon. These callous changes could have far reaching consequences, resulting in persecution for those living with unmet housing needs.
England is already facing a systemic housing shortage where building new homes is illegal without prior permission. On one hand, the heavy hand of the law seeks to punish minority groups whose nomadic way of life our system fails. While on the other, bias, racism, and political failure to tackle the systemic shortages endemic in our planning system.
Current land use regulations leave the travelling community bottom of the list for unmet needs. Both Government and local authorities have failed to address the needs of the Gypsy, Roma, and Traveller community. The proposed criminalisation of their a way of life does nothing to solve the issues.
Consultation on whether to persecute most disadvantaged communities
Former Home Secretary Sajid Javid previously had plans on unauthorised encampments, in particular to amend sections 61 and 62A of the Criminal Justice and Public Order Act 1994. Priti Patel seeks to lower the criteria for police to be able to direct people away from unauthorised sites by changing this legislation.
Trespass is currently a civil offence requiring landowners or local authorities to seek a court order to evict people if they are occupying private or public land. Some describe the process as tiresome and slow. Out of the 23,000 traveller households in England, it is thought that 14% live on unauthorised sites, equating to around 3,200.
Sadly, lowering the criteria for permitting new sites for homes, or pitches for the Gypsy, Roma, and Traveller community seems to be a political hot potato. The recent planning reforms set out to consult on what new criteria might be required.
It could be a missed opportunity for the traveling community as local plans, which could be substantially consulted on, could outline potential pitches for authorised encampments. Instead of futile attempts at persecution.
Solution is to authorise new encampments
Research by Friends Families and Travellers (FFT) shows that 1,035 traveller caravans are located on unauthorised encampments in England, although this is widely considered to be an underestimate. Many have living arrangements that could currently result in them facing prison, a fine, or having their family’s home taken away from them.
Labour’s last manifesto offered nothing to the Gypsy, Roma, and Traveller community. It did not seek to protect the human rights of those who have the “crime” of having nowhere else to go. This is a community who have lived in England and practised a nomadic way of life since before the 16th century. We have witnessed some local authorities buckle under political pressure, having allocated funding for new sites, only to U-turn.
NIMBYism Leading to Local Authority Persecution of Gypsy, Roma, and Traveller Communities
Milton Keynes Council now seeks to extend the town’s two current sites and put any new ones on hold. Our current planning system caters for the ‘Not In My Back Yard’ (NIMBY), rather than those most in need. The recent story of Bethany Rose, who has been waiting for a pitch for over a year, highlights how the “NIMBY culture” has resulted in the West Sussex’s plan for 50,000 new homes being agreed with not a single authorised travelling pitch.
Attitudes need to change on planning, as well as how we accept others way of life. In England only 13 permanent sites have any available pitches for Gypsy, Roma, and Traveller families, out of a total of 59. Almost 1,700 households are on waiting lists for pitches on traveller sites. This illustrates a severe shortage of pitches available of people living on unauthorised encampments.
Manufactured housing: lessons to be learned from the United States
We must recognise that manufactured housing associated with mobile homes on such parks are considerably cheaper to build than typical bricks and mortar. These can be energy efficient and produce much less waste than traditional site-build construction, with considerably less embodied energy. This results in much more affordable rents.
Permanent sites often demonstrate how small lot sizes can result in high population densities. Market urbanism expert, Nolan Gray, has written for Strong Towns on how planners can learn from US ‘trailer parks’. Gray argues that a more permissive approach to such types of housing settlement should be taken. Primarily to not undermine access to affordable housing. But back here in England our planning system is failing to tackle the inequalities faced by these communities.
Tory persecution of the most disadvantaged affects education
We know Gypsy, Roma and Traveller children leave school at a much earlier age than any other ethnic group. They also have worse attainment standards from early-years onwards. Only a handful ever recording having attended university. Shelter’s report shows us the devastating impact of not having a permanent home. In particular on the ability of a child to participate in school successfully.
Government must stop treating low-income communities such as the Gypsy, Roma, and Traveller community as objects of contempt. We cannot continue to subject them to top-down paternalistic planning. It prevents families from putting down roots. Nor can we accept the unjust criminalisation of a communities nomadic way of life. Especially, not without offering a credible preventative alternative to such criminalisation.
Ultimately this is a failure of our planning system to effectively plan for some of the most disadvantaged groups. It comes as no surprise that the Tories have the Gypsy, Roma, and Traveller community in their sights. Simply because they lack political representation. With nowhere else to go, this criminalisation is nothing short of a targeted attack on the community.
Labour must recognise this and commit to ending the shortage of authorised sites, mandate designated sites, and embrace manufactured housing, if we are to truly commit to a more fair and just society.
Christopher Worrall
Editor of Red Brick. He is currently an Investment Manager at Guild Living, a Non-Executive Director of Housing for Women, and is on the Labour Housing Group Executive Committee.
Chris also co-hosts and produces the PricedOut UK Podcast.
For a significant number of young and low-income people housing affordability is getting worse. Housing affordability, or the lack thereof, is a concept widely understood by those living in the United Kingdom. Or is it?
On 8th July 2020, a ground-breaking new book was published by Bristol University Press. ‘Understanding Affordability: The Economics of Housing Markets’, by Professor Geoffrey Meen (Reading University) and Professor Christine Whitehead (LSE). The book sets out to unpick the complex forces exacerbating the endemic unaffordability of UK Housing. Thankfully, it offers insight and recommendations to improve our country’s dire situation.
Using ‘price-to-earning’ ratios and ‘housing expenditure’ indicators are not the right approach
When discussing housing affordability we often use ‘price-to-earnings’ ratios. Although questions remain about whether this metric is even at all suitable. This is because affordable ‘for whom’ is a question consisting of several interrelated elements, which beyond price should include physical adequacy and overcrowding.
Some argue that using such metrics will not produce any significant improvement in affordability. This is primarily because social norms and demand-side behaviours we find play a crucial role in price determination. We must recognise demand remains a key factor in determining housing affordability.
Meen and Whitehead argue that looking at expenditure indicators alone can be highly misleading. Affordability concepts have their roots in 19th century studies of household budgets. For example, at the turn of the century the USA used the 25 per cent rule of thumb for affordability. This was based on one week’s pay for one week’s rent. Rules like this have informed both mortgage lending and housing policy alike.
More sophisticated approaches using the ‘Lorenz Curve’ tell us more about affordability
The book claims that more complex approaches recommended in academic literature have often been overlooked. This is particularly prevalent in housing policy arena and contemporary political discourse.
“We all know that this country does not have enough homes… the median house price in England is eight times higher than median gross annual earnings; in London, it is 12.3 times higher”
Minister for Housing, Christopher Pincher MP – March 2020
Source: Hansard
Price-to-earnings ratios sadly provide no information on the distribution of outcomes across household types and income levels. The authors are critical of how such flawed basic measures make it into planning policies. For this reason they say it is “worrying that it is still widely used”. Housing expenditure indicators such as rents and mortgage payments relative to incomes are also heavily criticised.
Ratios for example cannot distinguish between households with different income levels adequately. Are these metrics providing us with useful information to make meaningful policy recommendations? They suggest not. It is the distribution of incomes and wealth relative to the distribution of house prices that determines who can afford what. Not metrics that make use of averages such as the price-to-earnings ratio.
Research on affordability undertaken in the first chapter estimated affordability for First Time Buyers (FTBs). In it the authors based their research on variations of a ‘Lorenz Curve’. This approach uses a graphical distribution of the equality of affordability, which easily shows what proportion of FTBs can afford what proportion of housing stock. A quick look on Hansard results in not a single reference to such terminology in the past 10 years.
Measures of inequality still require closer attention despite painting a clearer picture
Research in the book suggests the use of a Gini coefficient to account for regional inequality. This is an index that measures inequality created by Italian statistician Corrado Gini. We can compare how distribution of income in a society compares with another if everyone earned the same amount. A Gini coefficient of zero means everybody is equal. If we measure a Gini coefficient of 1 it shows a single person earning all the income.
Despite being technically sound, using Gini coefficient’s is still criticised by some. Summer and Cobham argue that it does not adequately capture changes in the top 10% of the income distribution, nor the bottom 40%. In turn, due to the under sensitivity of the measure at the extremes, they consider the Palma ratio more suitable. For example, if the richest 10% have five times more income than that of the bottom 40% then the Palma ratio would be 5.
When undertaking a more rigorous analytical approach we find housing affordability issues persist across the country, even in the North East
The Gini coefficient in the South East is 0.70, thus displaying a high degree of inequality. In this region a household with a median income would be unable to afford to purchase a property without paying more than 30% of their income on housing costs. There are no surprises there, but it does highlight where housing affordability is most acute.
By comparison existing homeowners who wish to move, even those in the lower income ranges, could afford to move to higher value properties without paying more than 30%. Some people in this group are effectively able to make hay much easier than those without accumulated equity.
On this more complex indicator, the research shows that to afford a property in the first decile (lowest 10%) of property prices in the South East, you still would need to earn over the median income. The difference between the ‘haves’ and the ‘have nots’ is demonstrably clearer when using such methods.
Yet in the North East, where inequality is much lower considering its Gini coefficient of 0.30, there are still significant proportions of households who cannot afford to buy properties in the lowest decile. This means that after considering the full distribution of incomes, rather than just averages, affordability for FTBs is not just a problem for the South of England.
Forward thinking Local Authorities should be reflecting on these new affordability indicators to assess the distributional consequences of policy changes. A key takeaway is to recognise that housing affordability is not just a South of England phenomenon.
When determining housing policy we need to better understand demand-side factors
The book reflects international comparisons of the average annual growth in real house prices between 1970 to 2015. Over this period Germany had -0.3% growth in house prices while the UK had more than +3.5%. Yet looking at the comparison relative to wages suggests there is more than meets the eye. In this context house price growth in Germany was -1.9%, while in the UK +1.3%.
Since 1970, German housing stock growth relative to incomes has proven relatively constant, suggesting supply is less of an issue. We think this because even after factoring in incomes relative house prices were even lower. This is despite the rate of growth in housing stock remaining constant.
In the UK levels of growth in housing stock relative to incomes have fallen by around 1.5% per annum. This means wages have been outpacing growth in housing stock. From a fundamental economic standpoint, it is no wonder house price growth has been going one way. Clearly we must acknowledge that worsening affordability and rises in real prices in the UK relative to Germany are as much a result of demand-side factors, as it is a lack of supply.
The British psyche of wanting to own one’s own home may play a pivotal role in explaining why we may have had different house price growth to that found in Germany. Our willingness to spend more on housing costs as our incomes increase, perhaps to achieve social norms such as home ownership, is alluded to as an explanatory factor.
The nature of UK housing demand means prices respond quickly to growth in incomes
Low-interest rates can exacerbate housing market price volatility. But it does not explain the long-run trend of increasing price-to-earnings ratios. Historically the UK’s housing stock has grown at a slower rate than income. Professor Meen and Professor Whitehead argue that price-to-earnings ratios can only be constant over the long-run if household incomes grow at the same rate as growth in housing stock.
We must acknowledge that we have a stronger responsiveness to demand pressures in the UK, than in say Germany. Understanding this can help us deconstruct some of the price drivers behind making affordability worse. It is difficult to tackle the issue of affordability with supply alone when the demand impact from incomes is so strong. As a result the UK is prone to faster deterioration of affordability.
Understanding this is a key factors of the counterargument to Ian Mulheirn’s claim there is no housing shortage. Mulheirn’s own paper had a peer review by this book’s author, namely Professor Geoff Meen. In the peer review he explained that it is neither population nor the number of households that affects demand; rather demand needs backing by income to impact house prices.
Surprisingly, Ian’s claims still seem to be gaining traction, most recently by Stephen Bush, who has become “increasingly persuaded” by Mulheirn’s claim that supply has not contributed to the growth in price-to-earnings ratio since the 1990s.
Conventional wisdom is that rises in real house prices reflect a shortage of homes and that the current planning system plays a significant role. The book also demonstrates that increases in housing supply can improve affordability, but that changes need to be large and sustained to produce a noticeable effect. They also acknowledge that a general expansion in private supply does not necessarily filter down to those on low incomes.
The UK demand drivers see income growth translate into higher prices more readily
Fundamentally Meen and Whitehead argue that income growth (and its distribution) reflects demand, whereas housing stock reflects supply and is affected by conditions and policy in land markets. Meen and Whitehead reaffirm that in making such statements, demand must be backed up by income to influence house prices.
In the UK, the demand drivers see income growth translate into higher demand for housing services, which is more likely to translate into owner occupation. This is a sector where the quality of housing stock is generally higher than in the private rented sector.
The book does not deny the unassailable fact we need more funding for social housing. But also acknowledges the total supply of land for housing has been severely restricted. This has led to increased land values off the back of strong demand-determined increases in house price, exacerbated, of course, by easy credit. It is after all the trend which investors and developers have followed all along.
We need to re-calibrate the balance of concerns when discussing supply, demand, and characteristics of investment behaviour
Some have pointed to investor behaviour, low cost of capital, and attitudes of housing being an investment asset as causes of our problems. However, while there is no doubt these have contributed to the trends in price in recent years, research in the book demonstrates that this alone cannot account for the strong growth rate of 3.5% per annum since 1969.
We must accept that rising real house prices are not only a question of supply and investment demand but that it is also very much related to consumption demand.
To stress the point, the authors do not say that supply and investment characteristics are unimportant, rather that there has been a distortion of the balance of concerns. We cannot say it is just supply, or solely interest rates, which has led to this crisis of affordability. Thus, whenever we are framing the narrative, we must not forget to consider demand.
If we keep this in mind when looking to use more sophisticated ways of measuring affordability, while avoiding shallow rule-of-thumb metrics, we may be able to truly understand exactly who in our housing market is being failed by Government. Only then will we be able to devise policy to address it.
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.
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”.
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.
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
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
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.
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.
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.
