Tag: Planning

Wealth Inequality Starts at Home

Post author By Christopher Worrall
Post date September 25, 2021
2 Comments on Wealth Inequality Starts at Home

Housing wealth inequality is a key driver in the reduction of social mobility.

Every child deserves a chance of economic success, no matter what their background. In England inheritance has become an ever-growing share of national income since the 1970s. It is these inheritances that are to blame for increasing wealth inequality between those with richer and poorer parents. We know there are substantial inequalities in the distribution of housing wealth in Britain. Often related to social class an income.

Sadly, stringent restrictions on new housing supply effectively limit the number of workers who can access the opportunities to create this wealth.

This article explores to what extent attempts to reduce housing wealth inequality can tackle these issues and help win Labour soft Tory votes?

Neighbourhood factors and wealth distribution make or break upward mobility

We know from studies in the United States that if a child moves to a wealthier neighbourhood, it increases the likelihood that the child would go to college. It also increases earnings on average by over 30% by the time they reached their mid-20s. We do not know exactly what the causal factor is in these studies, whether it be going to better schools or engaging with families with higher socio-economic status. But what is clear is that keeping people in places where earnings and job opportunities are not as good hampers social mobility and exacerbates wealth inequality.

Living in England means parental wealth is distributed extremely unequally. One fifth of people born in the 1980s have parents with wealth ‘per-heir’ of less than £10,000. Yet a quarter of people have per-heir parental wealth of £300,000 or more, while one in ten have £530,000 or more. Education and region are strong predictors of parental wealth. Children of Londoners have parents with over twice as much wealth, on average, as those with parents living in the North East such as my own.

Land use regulation is linked to house price increases, restricts the movement of labour, and is a causal factor of rising wealth inequality

It goes without saying policies that successfully redistribute these inheritances would have large effects on inequality and social mobility for later-born generations. The OECD recognises that land use determines health, environmental, social and economic outcomes. Arguing that rising inequality in recent decades is explained by “rising land and property prices”.

Even small changes in valuations of land and property can have major consequences on the distribution of wealth. Meanwhile we know increases in land and property prices tend to benefit older and wealthier households. This often comes at the expense of younger and poorer households.

For most of the 20^th century workers moved to areas where new industry and opportunities were emerging, with farmers and the like moving from rural settings to cities. In the Great Migration of the United States some six million African-American workers left the South for factory jobs in cities like Chicago.

Yet when housing supply is highly restrictively regulated in certain areas, house prices are higher and population growth is smaller relative to the level of demand. Professor Edward Glaeser of Harvard University and Professor Joseph Gyourko of Wharton Business school make this argument. It is this tight regulation of land markets, often in a country’s most productive places, that leads labour to locate in places where wages and prices are lower.

NIMBYism and stringent restrictions on building new housing holds back the economy, harms workers, and hampers social mobility

In turn reducing a country’s overall economic output in the process. In arguably the single most influential article ever published on housing regulation, Chang-Tai Hsieh and Enrico Moretti’s “Housing Constraints and Spatial Misallocation” determines such these restrictions that have held by the US economy by over 36% of Gross Domestic Product between 1964 and 2009.

The rise of the property-rights revolution that is “Not In My Back Yard” has reduced the construction of new homes tremendously. In particular where the economy has been strongest and most productive. This is not just an American phenomenon. In England we know the impact of supply constraints have a substantive impact on house prices. A fact we cannot choose to ignore.

The Social Mobility Commission released it’s “State of the nation 2021: Social mobility and the pandemic report” earlier this year in July 2021. It acknowledges that recent trends have shown wealthier families increasing levels of second home ownership and an apparent increase in intergenerational wealth transmission.

Its own findings highlight “as inheritance of these houses comes into play, we will see stark rises in inequalities”. The increasing sizes of inheritances received by those from wealthier backgrounds sets to limit the prospects of upward mobility for those from poorer backgrounds.

Labour needs to ask itself: does it care more about the preservation of housing wealth or the affordability of housing

As Michael Gove starts his new role as the Secretary of State for Levelling Up, Housing and Communities we must look back to his views on the matter. For example, he acknowledges in his 2013 Keith Joseph Memorial Lecture that “access to home ownership has become the preserve of those with family wealth”. In England, with reference to superstar cities like London, we know that two-thirds of house price versus rent increases between 1997 and 2018 can be explained by labour demand shocks and supply constraints.

A strong labour market is one a full employment and where employers must compete for workers. This makes an area more desirable to potential migrants and increases one’s willingness to pay for housing in an area. If the Labour Party is to be the party for labour, it must understand its role alongside supply constraints.

This means finding ways to allow labour to go to move to where the jobs are. We currently limit the number of workers who have access to such high productivity. But this is why we must build houses there to allow more workers to create wealth of their own.

Labour voters should care more about housing affordability than protecting housing wealth

Interestingly, Labour Party voters feature as an instrument in research methods to identify planning restrictiveness. On average, voters of the Labour Party have below-average incomes and housing wealth. Thus, it is expected that we should care less about the protection of housing wealth. Instead more about the affordability of housing.

Campaigners are fighting for planning reform to make housing more affordable

Sadly, in England we have seen the housing wealth preservers successfully lobby Government into submission. This has come much to the horror of campaigners for affordable house prices. Director of Priced Out, Anya Martin, said:

“We are horrified that Government is u-turning on planning reforms.”

“Renters have faced decades of rising costs because of our failure to build enough homes, and our planning system is at the heart of this failure.”

Priced Out finds itself alongside the National Federation of Builders. Who also have cried out they won’t forgive Conservative backbenchers for derailing the planning proposals. To note, smaller builders used to deliver 40% of homes during the 1980s, but now that figure is just 12%. This is in large part blamed on the current systems barriers to entry.

While some on the left deem the reforms a “ferocious attack on democracy”, they find themselves standing shoulder to shoulder with the wealth preservation lobby of some of the most affluent areas of the country.

Maidenhead, where the house price to earnings ratio is 12.7x, see its MP Theresa M a y having led the Tory revolt against planning reforms. Theresa Villiers MP for Chipping Barnet, where the household income needed to buy is £140,000, railed against the alleged reduction of democratic involvement in the planning system.

Both of whom see the ability to veto new homes in their local areas as the holy grail. Sadly, ignoring the fact local plans are politically led community consulted processes in themselves.

Labour needs to think about how they can win Tory safe seats like the Isle of Wight

Other Tory backbench MPs, such as Isle of Wight’s Bob Seely, have vociferously made the case against the “planning revolutionaries”. He represents an area with one of the worst levels of child poverty in the South East. Boasting below average incomes and weak productivity.

Average disposable household income on the Isle of Wight languishes below the UK average at £18,366 (-13% lower). The constituency has 2,149 households on its social housing waiting list. You would think with such demographics it would present itself as a target Labour seat for Keir Starmer.

Yet the Isle of Wight boasts a Tory majority of over 21,000 votes. Labour, being the party of tackling wealth inequality, needs to think about how people like Bob are effectively challenged. Last time Labour ever came close to winning Bob’s seat was in 1945. The year the Attlee government put housebuilding at the heart of its agenda.

These questions come at a time where Labour recognises the need to win Tory voters. Director of Progressive Britain, Nathan Yeowell, says “Labour must be ruthless in going after soft Tory voters if it wants a swift return to national government”. Perhaps revised planning reform is Labour’s chance to show just how ruthless it can be. After all the Tories lost their majority of the council in the Isle of Wight in May this year.

Backbench Tory MPs block homes to preserve wealth off the backs of working people

The case of Bob Seely epitomizes how wealth preservers hamper housebuilding and damage equality of opportunity for his constituents. The wealth preservation lobby on the Isle of Wight are challenging the housing targets set for it by Government, with Bob Seely at the helm.

There are concerns about how the island will handle the additional 400 new homes per year. Most of which arising from the latest housing need calculation. This comes on top of the 640 calculated using the meagre standard method. Shockingly, the Isle of Wight has a price-to-earnings ratio of over 8x the average income. But this bears no relevance to the Tory preservation lobby, no doubt as they directly benefit.

Construction provides jobs, wages, and keeps income in the community. It improves the local economy as workers employed on each project have wages to pass onto other local businesses. The Isle of Wight is crying out for such opportunities. But those hell bent on preserving wealth continue to deny them the opportunity.

But the issue goes much further than the island itself. For example, the ONS states that those living in neighbouring Central Hampshire have an average annual disposal income of £26,302 (+24.6% higher than the UK average).

For those looking across the water for opportunities from the Isle of Wight the outlook is bleak. New Forest District Council, next to the Isle of Wight, is only delivering half as many homes as it needs. In effect pricing out poor islanders who may wish to move to this more productive part of the country.

Backing meaningful planning reform means creating more opportunities for workers. Only then will wealth become redistributed more evenly.

Changes to land use regulations can form part of the biggest redistribution of wealth under a Labour government

Historically, local economic booms matched with local building booms. Prior to 1946 building was lightly regulated and housing was allowed to be built in areas of high demand. For example, there were 80,000 new build homes created in London in a single year of 1930 alone. Over 2.5x the net number of new homes delivered in 2017/18. A year that marked a decade long high, mostly by the private sector subsidised by government.

Source: https://www.london.gov.uk/sites/default/files/housing_in_london_2019.pdf

We know extensive restrictions on land use and building leads to higher house prices, rather than more homes and workers. If Labour is to be once again the party of the worker, it must deliver more homes. People used to move from poor places to richer places. However, due to restrictive land use regulations this pattern is on the decline.

We must allow the population to seek work in wealthier places. These are places where demand is strong and productivity is high. In doing so we will avoid unequal mobility and poverty traps created by a lack of new housing.

We must counter the NIMBY property-rights revolution to improve prosperity for all – and say ‘Yes In My Back Yard’

For constituencies like Bob’s to prosper, we must tackle the misallocation of labour. This means allowing workers to cross the Solent to the New Forest West and building more homes. While wealth inequality starts at home, it ends with allowing others to access creating that wealth of their own.

Thus, Labour needs to present the country with a vision for prosperity. It must do this by challenging the NIMBY property-rights revolution. One steeped in a world of draconian regulation, high prices, and ever more entrenching wealth inequality. In allowing more families to build wealth through the property owning democracy, it can create one that will become less unequal.

Labour must focus on improving opportunities for the workforce through land regulation. By redistributing wealth more fairly through building more homes in high demand areas it can achieve this. After all we know that data on wages shows big cities do bring prosperity to their wider areas.

The problem is they just aren’t generating enough of it.

By moving to “Yes In My Back Yard” (YIMBY) Labour can tackle wealth inequality and become once again the party of aspiration. Equipped with this vision it will can attract soft Tory voters, while at the same time putting labour back at the core of its policy-making.

Christopher Worrall

Chris is the Editor of Red Brick blog and sits on the Labour Housing Group Executive Committee.

He currently is Chair of Poplar and Limehouse CLP, co-hosts the Priced Out podcast and is the Local Government and Housing Member Policy group lead for the Fabian Society.

He writes in a personal capacity.

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Tags Bob Seely, housing wealth, inheritance, Isle of Wight, Labour, Labour Party, land use, Michael Gove, National Federation of Builders, New Forest, NFB, NIMBY, NIMBYism, Planning, Priced Out, wealth inequality, workers, YIMBY

Blog Post

How do we reset the housing market?

Post author By Jonathan Webb
Post date August 9, 2021

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.

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Tags distribution problem, geoff meen, Homelessness, house price inflation, Housebuilding, Housing, housing affordability, Housing market, housing shortage, NIMBY, not in my back yard, Planning, planning reform, progressive, progressives, shortage

Blog Post

Compromise and Council Houses

Post author By Leo Gibbons-Plowright
Post date February 20, 2021
3 Comments on Compromise and Council Houses

In part two of this three part blog contribution we continue to hear from inside the tent to what extent our planning system is truly representative and democratic. Do cries of ‘social cleansing’ hold any veracity, or does left-wing NIMBYism refusal to accept trade-offs manifest itself to the same effect?

Once upon a time, I would’ve stood on Reginald Street in Deptford in searing anger. Even with the land cleared and the hoardings up, I would still be bitter about what my colleagues had been put through. But today I’ve found myself mellowed. As I watch the diggers at work, laying the foundation for 117 new social homes, I wryly smile to myself. Today, the fight for these homes seems so easy, so tiny, so inconsequential.

The old Tidemill school site on Reginald Road had long been earmarked for the development of new homes. Instead of allowing the vacated site to fester, Lewisham Council agreed to a ‘meanwhile use’ leased and the area was handed over to a volunteer community group to operate. With the land, they created a ‘community garden’.

A ‘community garden’ is a bit of a misnomer, as it conjures up the image of an area open and shared by all in the neighbourhood. In reality, due to a lack of volunteers, by the time of its closure, the garden was overgrown, locked up, and open for a few hours each Saturday. Insiders say that a small clique living on well-heeled streets over in Brockley, operated the site as their own semi-private enclave. No big deal, we felt, because at least the land was semi-utilised.

The trouble only started when the council request the stewardship of the land to be returned so that our long-awaited housing development could get underway. Reneging on their promise to hand back the land when the ‘meanwhile use’ was up, the community group refused to hand over the keys. And thus, the ‘Save Tidemill Garden’ campaign arrived.

It quickly snowballed.

Opposite the development site, sits the Birdnest pub in Deptford. I like the boozer, but if I say it wears its counter-cultural chic a little too earnestly on its sleeve, you might get what I mean. It’s filled with students, old rockers and geezers, and was a perfect local meeting point for the Save Tidemill campaign.

Close your eyes and picture a row of wooden tables, on each one, sits a different segment of the Save Tidemill campaign’s coalition.

Table 1: The founders of the garden, mostly your classic NIMBYs, primarily asset-rich and comfortable. They’ll miss their garden when it’s gone and they don’t want pesky social housing spoiling their Saturday afternoon sun-spot.
Table 2: Assorted Left-wing groups. Nearly all older NIMBYs as well, these lot are driven primarily by political opportunism and they want to find a wedge issue to campaign against the local Labour council (internally in the Labour Party, or externally). For this group, they’ll reject any council-led development programme from the pin-head of ideological grounds. Any development that is not 100% council ‘target rent’ is rejected, even if the private sale properties on-site are necessary to fund the building of the social homes. It means that in reality, they reject any new large-scale affordable house building.
Table 3: Eco-Nimbys, probably Green Party members, you know the ones — the type of people who weep over fallen trees on the HS2 path, despite HS2 being a piece of crucial infrastructure to increase our rail and freight capacity and reduce our over-reliance on private cars and lorries which has a huge knock-on effect on our nation’s carbon emissions and the death of more of your bloody trees.
Table 4: Anarcho-crusties / Green-Black Groups. A bit like the Eco-Nimbys but they are more inclined towards violence towards the man.

The Save Tidemill campaign only got as noisy as it did because Tables 1 & 2 framed the building of this new social housing as corporate ‘ecocide’ and therefore managed to connect with Tables 3 & 4. The campaign itself was risible. Misinformation was spread in the neighbourhood and councillors who spoke up for the scheme were relentlessly attacked. Eventually, the rhetoric spilt over into direct action.

Cllr Joe Dromey, one of the few who were brave enough to face the misinformation head-on, would eventually be attacked on the street by masked protestors. Cllr Paul Bell, who led the scheme, would take his address off the Lewisham Council website out of fear of reprisals. He had been accosted in the street as well, while leaving a council meeting.

But as nasty as the campaign got, I never felt like our plans were in jeopardy. Here were 117 new social homes, as well as 41 for shared ownership and 51 for private sale, replacing a ‘meanwhile use’ garden and an old and dilapidated block at 2–30a Reginald Road. The new green space on the development would be accessible to all unlike the Tidemill Garden, and the tenants of 2–30a Reginald Road would be provided brand new high-quality homes on lifetime tenancies. Those in housing need would be given what they deserved. The case was a no-brainer.

Lewisham Council has a Residents’ Charter that guarantees all residents impacted by a regeneration scheme are given the right to remain on their estate and guarantees an increase in genuinely affordable housing. To me, these guarantees are not only morally right, but they also make political-strategic sense.

Left-wing groups and other opportunist political opponents have desperately and repeatedly tried to leap into our estate regeneration proposals for political gain. And while they may have recruited a few new paper-sellers in the process of campaigning, they have failed to stop any major schemes.

Take the regeneration of Achilles Street, New Cross. Despite a campaign by left-wing NIMBYs spreading fearmongering and disinformation among tenants and leaseholders, an estate ballot returned 73% in favour of the regeneration. The likely outcome of this renewal will be 450 homes on site, with a minimum of 50% of the total homes built being affordable, and a minimum of 35% of the total homes built will be Council-owned homes for social rents.

Similarly, even Lewisham Council’s joint-venture with Grainger to build 324 new homes for rent off Besson Street in New Cross slid fairly comfortably through planning, with the ward’s left-wing councillors speaking in favour of the proposals. On the Besson Street scheme, 65% will be leased at market rent to fund the 114 homes which will be lease at London Living Rent. The scheme also delivered an array of other amenities for the area including a new GP surgery and community space for the New Cross Gate Trust.

The left-wing NIMBY groups rejected Besson Street because London Living Rent is not social housing. Instead, these are genuinely affordable rents set by the average incomes in the Telegraph Hill ward. Each household will sign a secure 5-year tenancy that is automatically rolled-over if they want to remain. In Lewisham, we need to build all sorts of tenures, not just social housing, and these homes are designed and will cater to our key workers who will never be eligible for social housing.

On the hoardings that line Besson Street today, someone has scrawled ‘stop social cleansing’. But in fact, these new homes will help key workers — your nurses, your police officers, your school teachers, remain in our borough near where they work. Even more absurdly, the cries of ‘gentrification’ and ‘social cleansing’ were used for Achilles Street and Tidemill Garden. These schemes offer net-gains in social housing — they are a firewall against gentrification and help low-income families remain in our community.

The left-wing NIMBYs have tried to peddle the falsehood that these estate regenerations are not supplying social housing because the new homes will be provided at London Affordable Rent — which is pegged at 2016 social rent levels. London Council target rent is now £105.87pw for a two-bedroom property, while London Affordable Rent is £158.85pw. The 13 residents of Reginald House who would be offered a new home on the development, would continue to be housed at their target rent. For the 104 homeless families being offered a new home, it’ll be a huge fall in rent and for many, the first time they’ve ever had a secure, decent home for their family.

Affordable housing funding is extremely restricted by an austerity-driven Conservative government. But as this article highlights, in 2016, Sadiq Khan as Mayor of London, managed to negotiate funding from central government for new affordable homes. While funding for social homes, at target rent, were ruled out, the government did agree to fund new homes at Khan’s London Affordable Rent. London Affordable Rent is sent at 2016 target rent levels and is deemed a social rent. While target rent levels have fallen since, year on year – a plan devised by George Osborne to reduce the housing benefit bill — London Affordable Rent has stayed static, that’s caused the disparity.

The long and short of it is that for these homes to be funded and built at all, they’ll need to be at London Affordable Rent. Working with a charitable provider and building at London Affordable Rent was the only way Lewisham Council could get this many genuinely affordable homes built at the Old Tidemill site. For activists, it’s a choice of viable developments, providing social homes at London Affordable Rent, or no new social homes at all. Sadly, I know where some groups would side.

The refusal of these left-wing activists to accept those trade-offs, reveals, more than anything else, just how out of touch they are with the lives of London’s precariat and working-poor. The median rent for a two-bedroom property in Lewisham is £365.75 per week, above the housing benefit cap. Moreover, ‘no DSS’ discrimination remains rife in the private sector. Many of our poorest residents cannot afford the private sector and if they can, they remain in overcrowded sub-par accommodation.

Even if new homes on Achilles Street and Tidemill Garden are more expensive than target rent council homes, they are seismically cheaper and more secure than the private sector. The homeless families moving into these homes will care more about a new chance in life than the fact that a registered charitable provider is supplying them a life-time tenancy and not the council. Nor are they likely to quibble about a rent far more affordable than their temporary accommodation or home in the PRS.

Don’t let perfection be the enemy of the working class.

And that’s why these campaigns do not work and never build traction beyond those four tables. Because their arguments are devoid from the lived-reality of the housing crisis and the trade-offs necessary to build new social housing. Despite our reputation, councillors are not daft. We clock that no young renters joined the chorus against the Tidemill Garden development at our local Labour meetings, even if they did follow the Momentum whip.

During Lewisham Labour’s manifesto working groups in 2017, it was noted that it was our young Momentum members who were the ones most enthused by our Besson Street plans. Not only did they like that the income generated from the scheme would help provide services for our residents, they knew from personal experience how life-changing it would be to move into long-term, stable housing in the private rented sector. Like me, they can only dream of a home at London Living Rent.

Councillors speak to residents in our wards all the time and we know that the overwhelming majority accept schemes like Achilles Street, Tidemill and Besson Street are positive. Of course, we still take precautions — we ensure we engage early on any estate regen project and we ensure the facts of a scheme are widely disseminated. On Achilles Street, we held meet-and-greet drop-ins to tackle misinformation. Yet when push comes to shove, sensitive and policy-compliant council-led schemes to build new social and affordable housing are going to have broad support.

While not as politically-heated as large estate regeneration, smaller social housing developments, such as estate-infills can be trickier. Faced by densification of their area without an offer of a new home, current tenants and leaseholders on an estate often take a ‘what’s in it for us?’ approach to the building of essential affordable housing. Moreover, infills often only remain viable if they are larger in scale than many residents are willing to accept.

However, colleagues, alongside the wider public, accept the trade-offs needed to deliver social housing schemes and policy compliant applications will often be looked upon sympathetically. Broadly, public and institutional support (i.e. amongst the council’s political group) work in tandem. It is why councillors can feel emboldened to champion our promised new social and affordable housing schemes and face down the political pressure from noisy campaigns to abandon policy complaint schemes.

But in the grand-scheme of things, I know that all these battles for social housing are small-fry. Local authorities do not have the resources to purchase new land to build social housing on. The scope of what we can achieve is extremely limited. Despite our good work, we can’t even build enough council homes to replace the ones we continue to lose from right-to-buy.

In short, only the private sector is going to get us out of this housing crisis. While affordable housing programmes have institutionalised support, across the political spectrum market-rate builds are viewed with suspicion. This suspicion leads to a widespread lack of public support for market-rate builds and in my view, this in turn leads to councillors having a pre-disposition to be swayed by NIMBY-campaigns.

In part three of this series, I’ll explain that if we don’t accept this reality, and take a new approach to development, the housing crisis will never be beaten. We need to build a new consensus — one that agrees that a lack of supply (+ building in the wrong places) is causing our housing crisis and that we need market-rate developments at large scales that we cannot deliver without reform.

This is option two, and the only one left.

Leo Gibbons-Plowright

Leo is a Labour and Co-Op Party Councillor for Forest Hill in Lewisham.

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Tags Affordable Rent, Council housing, disinformation, keyworker, NIMBY, Planning, planning reform, social homes, Social housing, YIMBY

Blog Post

How does planning perpetuate generational inequality?

Post author By Leo Gibbons-Plowright
Post date February 6, 2021
7 Comments on How does planning perpetuate generational inequality?

Credit: Ewa Horaczko London Photographer

In part one of this three part blog contribution we hear from inside the tent to what extent our planning system is truly representative and democratic. Or whether hyper-local Not-In-My-Back-Yard (NIMBY) opposition perpetuates the generational inequality we should all oppose.

It was early in the evening when I realised things were not going as I had planned. You could cut the tension with a knife. I started to tot-up how I thought the votes would go; for, for, against, against, don’t know, I…don’t know.

I swivel my chair to turn away from the public gallery. There’s nothing worse than catching the eye of someone giving you the stare. ‘These people must hate me’, I think to myself, ‘they must think we are faceless droids, nodding through applications without a care in the world’.

But tonight we’re not nodding through an application, we’re on the verge of blocking 63 new homes.

I am sitting in Lewisham Council’s planning committee. On a usual night, I would sit in faint bemusement as colleagues act out a charade — we ask for clarification, we look again at that the cross-sections, we offer apologetic looks to objectors and we firmly ask our officers to make sure all planning conditions are enforced. It is a charade because we know the application is policy compliant before the night begins. The material grounds for refusal may be as flimsy as renters’ rights, but “we’re gathered here tonight” because 5 or more people have complained about an application’s impact on their backyard. After the usual impassioned rant on immaterial considerations or a pained lament to our hands being tied, councillor’s will grant planning permission.

But tonight, is different. This application has not only generated considerable opposition, but the application itself has (potentially) solid grounds for refusal. I can see my colleagues getting tetchy. Objectors have been and gone, and as usual, a scatter-gun approach has been utilised. Locked and loaded, we’ve been pummelled with round after round of complaints: this area can’t take any more homes (it can), this will increase parking pressure (most occupants won’t own a car), this site can’t accommodate this many homes (it can). However, two complaints gain traction.

The development would replace an underutilized plot of land — specifically, a scruffy-looking light industrial estate, and replace it with 63 good quality homes, 20 of which are affordable (14 social, 4 shared-ownership) and a much-needed increase in new business space (an 110% uplift). While it was argued that the application would improve biodiversity across the site, the redevelopment would mean the felling of 38 trees. Moreover, some nearby social housing blocks would experience overlooking from the new flats. At the closest pinch point, the buildings would be 3.8m away from each other, rising to 7.2m away at its furthest. It was acknowledged that for a small number of neighbours, they would no longer be looking out onto trees but at a ‘green wall’ on the side of new flats.

To me, the choice was clear about the actions we needed to take for the greater good. Over the next 20 years, London will need to build a million new homes. It is a steep task, and that will only be made possible if politicians are brave enough to be straight with the public about our need to densify and be able to communicate the trade-offs we all need to make.

It is hard to express in words the pain our housing crisis causes, walk down any street in London and you’ll be surrounded by lives touched by it. Most councillors have seen the worst cases, the homeless families trapped for years in bedsit ‘temporary accommodation’, or the damp-infested, unlicensed HMOs we occasionally investigate. But our housing crisis touches even those who are from the outside, ‘comfortable’ — families with steady employment who know that they’re one Discretionary Housing Payment delay away from losing their home; the key workers who can no longer afford to live near their place of work, and the young professionals locked out of homeownership for life — all are transient, cycling through extortionate and insecure properties, priced out of neighbourhoods they briefly called home, simply existing, in a private rented sector not fit for purpose.

The site of this application was an urban setting, and if London is to densify as needed, we will need to accept properties overlooking each other. While a few flats would have their amenity impacted, were we really going to act for the few and not the many? If we were to block this, how long would site stay underutilised, undeveloped and unviable? Years at least.

And while we heard from the developer who told us about the quality of the design, the urban greening and green wall. And while officers mentioned our housing targets as they authoritatively flicked through their slides. We never heard from those for whom those targets aren’t just numbers, but chance in life, a future. We never do.

I’ve never once had a homeless family attend a planning committee. I sometimes wonder whether any private renter has ever spoken against an application at one of my committees? It takes time to get involved in the planning system, read papers, submit responses and attend the committee. It means we hear from the time-rich.

Our case-by-case discretionary planning system encourages people to get involved in the planning process only when a case directly affects them. The system encourages decisions to be based on a hyper-localised impact assessment, based on feedback from a relatively small number of people whose amenity will be negatively impacted. The system allows councillors to be swayed by localised concerns in the febrile heat of a civic hall. In essence, the system offers the ideal conditions for Not-In-My-Back-Yard (NIMBY) voices to be successful.

For, for, against, against, for..I think.. oh no, they’re going to vote against!

Several councillors are pushing hard on the loss of trees and objectors saw their opportunity. They brought up our climate emergency declaration and opined that these majestic trees — not accessible and at the back of an industrial estate, were essential oxygen masks for the area. The fact that old light industrial units were being replaced by energy-efficient new homes and business space was overlooked. More importantly, the fact that densification near transport hubs (like this site) is an important mechanic in encouraging a model shift to more sustainable transport methods, thus improving air quality and lowering carbon emissions long-term, was overlooked.

Again, the bigger picture was being missed and this isn’t a failure of individual councillors, but something embedded into the design of our planning system.

Another colleague rose up and said he’d vote against. Gulp, that’s another. For, for, against, against, against. He couldn’t let these homes be built due to its impact on the nearby social housing tenants. He’d listened to the homeowners who said they were not speaking for themselves, but on behalf of others, those less fortunate than themselves and who were hit hardest by this development.

16 new social homes were not going to be built because a few existing social tenants would now look at a wall of a block, rather than some trees. Again, this is a product of a system that gives councillors selective feedback. We only hear from those set to lose from any given scheme and never those set to gain.

In the end, I moved to support the officer’s recommendation for approval and the application was granted planning permission via a deciding vote by the Chair. But I was left reeling from what I saw, and my anger would only grow as I read about far larger policy-compliant schemes, being blocked by councillors across London.

In writing this piece, I hope to show how and why applications that comply with a local plan can be rejected by your local councillors. I hope to give people an insight into how our planning system’s much-vaunted democracy, tilts the system unfairly towards the well-to-do and perpetuates generational inequality. Despite facing huge housing pressure, we face a system that provides fertile ground for hyper-local opposition to block developments.

When drafting our local plan, comments from my colleagues often take a broader view, looking at the needs of our borough as a whole. The need for economic growth, densification and regeneration, and the need to tackle housing need and combat gentrification by building more is accepted. These things are then balanced and traded off against ensuring good design, protecting unique heritage, and ensuring manageable density for the area’s infrastructure.

Moving away from our ‘one-shot’ approach to planning engagement is good for democracy. By ‘front-loading’ or ‘up-streaming’ planning consultations, we can help achieve a more representative and democratic planning process. Less time-rich demographics can provide feedback at a single point when it is necessary. All in all, it will mean that planners and politicians will get a more holistic view when drafting their local plans, in an environment that offers them the space to see the bigger picture.

Moreover, the proposed move to a rules-based planning system and away from a discretion-based system is positive. It will mean evenings like I’ve described above, will become a thing of the past.

Defenders of the status quo remind us that almost 9 in 10 residential planning applications are granted permission at committee-stage. However, this is a form of survivorship bias, ignoring the countless applications for new homes that were never submitted because the risks of being rejected by planning officer or councillors are too great. The issues in our symptom run far deeper than those outlined here. In fact, councillors directly blocking new homes is only the tip of the iceberg.

Leo Gibbons-Plowright

Leo is a Labour and Co-Op Party Councillor for Forest Hill in Lewisham.

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Tags consultation, democracy, Planning, planning application, planning committee, representation

Blog Post

When it comes to building homes – planning isn’t the problem

Post author By Phil Glanville
Post date January 20, 2021
1 Comment on When it comes to building homes – planning isn’t the problem

As we enter 2021 there is no doubt that Britain is facing a housing crisis ─ a crisis of supply, demand, affordability and quality. Sadly, like an unwelcome ghost at the feast, all the Government seemed to be offering us last Christmas is reheated policy ideas, gone-off planning reform, regifted funding and a long hangover after a decade of austerity and welfare cuts.

In Hackney, where I am the Labour & Co-operative directly elected Mayor, house prices have risen by 71% in the last five years. Nationally, homelessness temporary accommodation (TA) placements have risen by 71% since 2010 and 80% of those in TA in Hackney are now estimated to be in work. And ‘permitted development rights’ have allowed landlords to turn former office blocks into homes without planning permission, leading to poor quality, rabbit-hutch homes ─ too often leading to private profit from the homelessness crisis.

It is a multifaceted crisis that the Tories think will be solved very simply ─ by reforming the planning system. Their latest White Paper, entitled Planning for the Future, sets out proposals to supposedly help increase the number of homes built every year, but will end up causing longer-term problems. Recently announced (and welcome) changes to the proposed new planning formula for house building will not undo the damage the rest of the proposals could bring about.

First, the proposals suggest scrapping local planning policies currently co-produced between councils and their communities. Local Plans and policies will be replaced by ‘national guidance’ that often just sets out the bare minimum level of standards that local people have rightly come to expect from developments ─ standards on affordability, sustainability and infrastructure.

Next, the Tories want to create a simpler zoning system, designating areas across England into three new categories: ‘growth’, ‘renewal’ and ‘protection’ areas. Importantly, ‘growth’ areas will give developers automatic planning permission to build, so long as they meet the national standards. Imagine the current permitted development rights on steroids.

These proposals are severely undemocratic ─ they will transfer power and responsibility away from local councils to Ministers and Whitehall Civil Servants, who will be able to set standards and zones in areas they have no knowledge of.

Automatic planning permission will mean local communities and councils will lose the one opportunity they have to assess and comment on developments in their areas. The scrapping of Local Plans will also mean local people will lose the chance to shape policy in their areas. This also risks that policies like Hackney’s new Child Friendly Places SPD or our commitments to green infrastructure and genuinely affordable workspace could be sidelined.

On infrastructure, the Government is suggesting ‘streamlining’ the current developer taxes into a single ‘Infrastructure Levy’. At the same time, the Government will introduce a mandatory 20% target for their new ‘affordable First Homes’, which is really just homes subsidised market-rate homes. This will hamper the already difficult negotiations the councils have to go through to push developers to provide genuinely affordable homes.

The Government also wants to implement the principles of biodiversity net-gain in the planning system, as well as a ‘biodiversity credits’ system to tax developers where they fail to meet net-gain targets. It’s a sound principle, but at the moment the credits will be paid straight to central government, and not the communities which will be impacted by the development.

At the same time, if councils lose the lever of our current planning system ─ being able to set local biodiversity policies and assess developments before they are built ─ it is unclear how the Government expects to achieve their principles. The risk is developers in ‘growth’ areas will use credits as a quick ‘get out of jail free’ card to simply pay a tax without contributing to nature recovery or biodiversity conservation which local people could benefit from. As I recently said in Parliament these conflicting policy objectives hardly feel joined up.

We know how important local green infrastructure is to local communities, particularly to those without a private outdoor space. If we didn’t, the coronavirus pandemic provided a valuable reminder. We also know the current planning system is better at achieving green space than no system at all ─ just 3.5% of new homes created through permitted development rights included access to private outdoor space, compared with 23.1% of homes delivered via planning permission.

And lastly there is the idea that these plans will increase supply; the Tory narrative is that really, it is a cumbersome planning process that is stopping homes being built. Well, in Hackney, 90% of residential planning applications submitted to the Council have been approved since 2010, but 25% of them have not been built. That is over 2,000 approved homes in Hackney that have not been built by developers, who are instead sitting on land in the Borough.

So at every turn, these plans will fail. They will not increase supply; they will reduce the amount of affordable housing; they will water down design and quality standards; and they will not tackle the biggest area of demand ─ social housing. Any planning authority, Labour or Conservative controlled, will tell you that when it comes to building homes, planning isn’t the problem.

Clearly, the private market alone will not meet the Tories ambition to see 300,000 homes built a year by the middle of this decade. This will be compounded by the economic shocks of coronavirus and Brexit. Ideology stops the Tories from seeing the clear practical contribution that large scale countercycle investment in green, social rented homes could bring across the UK and to communities like Hackney.

Building council homes is a pro-industry response. All the lessons from the previous recessions show that without council house-building, we will see a contraction of the construction industry, fewer small businesses, deskilled and unemployed workers and reduced competition ─ all resulting in fewer homes of all tenures being built.

Labour knows that when the market isn’t delivering for people, the Government must step in. Labour councils know that what we really need is a new generation of ‘Homes Fit for Heroes’.

The council-house building agenda in this country started after the First World War to house returning soldiers in affordable and high-quality homes, and we only marked that anniversary last year. Now we need homes fit for our heroes on the frontline of fighting the war against coronavirus.

The planning reforms might yet be another Dominic Cummings pet project that, now he has ungraciously left the building, may be dropped or watered down. But the Labour movement can’t take the chance of these proposals getting rushed through a Tory-majority Parliament.

If we believe in building genuinely affordable homes, with decent standards and built in sustainable communities that get a real say on development in their areas, the Labour movement must unite again to fight against these plans at every step of the way ─ and then fight for a return to mass council house building again.

Mayor Philip Glanville

Since 2016 Philip has been the Labour and Cooperative directly elected Mayor of Hackney, the borough’s second directly elected Mayor. He was re-elected in May 2018.

He was previously a councillor in Hoxton for ten years, and spent three years as Cabinet Member for Housing.

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Tags hackney, Labour, permitted development, Planning

Blog Post

Busting the housing supply shortage ‘myth’

Post author By Christopher Worrall
Post date August 24, 2020
4 Comments on 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 Mul heirn 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.

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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Tags house prices, housing shortage, Housing supply myth, land, Land for the Many, mortgage, Planning, price responsiveness, supply

Blog Post

Progressive planning changes are needed not whole-scale reform

Post author By Shama Tatler
Post date August 3, 2020
1 Comment on Progressive planning changes are needed not whole-scale reform

The anticipated planning reforms will be the biggest changes to the planning system seen for some time – a complete overhaul. Planning isn’t perfect, but nor is it beyond repair. If government are serious about housing delivery, they’d be talking about sensible improvements not whole-scale reforms. Instead they seem intent on riding roughshod over local people and all too willing to put private profit ahead of what our neighbourhoods actually need. So if it were up to me, what would I be doing? There’s plenty to do, but these are three things I’d start with.

Firstly, the housing delivery test. A small but technical change could really push developers sitting on land with permission to actually focus on delivery. The Local Government Association estimate that nearly 9 out 10 applications are approved and in the last decade alone nearly a million homes have not been built despite permissions being granted. The Housing Delivery Test measures the number homes delivered against the number of homes required. Where delivery of housing has fallen below the housing requirement, councils can be penalised.

The main issue is the fact that Councils, unless they are their own schemes, do not deliver planning permissions – they are totally reliant on the market/ developers/ registered providers. Developers may seek to restrict delivery in order to maintain profit levels; landowners may gain permission and land bank rather than actually deliver; and registered providers are also heavily dependent on state funding streams. Crucially, events such as cyclical changes to the economy, and currently Covid-19, can significantly affect delivery which councils have no control over.

So a solution? Give local authorities the power to rescind permissions or more radical still take the build over themselves, if possible using better compulsory purchase orders if development does not begin within a year. Not a huge change but certainly could stop land-banking and start delivering housing and infrastructure.

Secondly, permitted development (PD). It has morphed into a policy that will cause more harm to a locality than actually result in good quality homes and a Government report has concluded the same. Aside from the fact there have been numerous cases of horrendous office to residential conversions and no obligations to affordable housing, PD has resulted in the displacement of valuable business and employment in many areas because the residential return far exceeds the commercial. The new permitted development rights could actually see high streets decline even further. Something that goes against what the Government are seeking to do.

I am not suggesting residential conversions can’t take place in high streets but it needs to be in a planned process that takes in to account the local economy and secures quality and space standards. In Brent we have introduced an Article 4 direction in growth areas to stop office to residential conversions and are now seeking to expand that for the whole borough. My solution would be to give councils the ability to opt in to PD with guaranteed quality of housing, rather than a blanket nationwide policy. It needs to be locally led and part of a solution to address local housing, infrastructure and economic needs.

Thirdly, public sector land should be developed in partnership with local councils not developers. Currently, many public sector bodies have housing targets and often go to developers to deliver those numbers. This results in public sector land being sold, as well as not delivering 100% affordable housing due to ‘unviable’ financial viability assessments.

A simple solution is to legislate that public sector organisations give councils first right of refusal on land to deliver housing or enter in some sort of partnership. Councils can borrow again to build housing and combined with grants, schemes can be delivered with higher numbers of affordable and social homes on all public sector land.

Essentially, these solutions are small but significant and are certainly not only thing we need to do. Fix what is currently not working in the system, give councils the freedoms and powers to maximise affordability, infrastructure and support for local economies. Covid has changed so much and it now time to take decisive action to support councils properly in housing and infrastructure delivery. It is now time to enable councils to lead the housing market, not be hampered by it.

Shama Tatler

Councillor Shama Tatler is the Cabinet Member for Regeneration, Property and Planning at the London Borough of Brent. She was elected to represent the Labour Party in Fryent Ward in May 2014 and has been a Cabinet Member since Dec 2016.

She is running for the Labour Party NEC and her reasons for running can be found here. Shama also sits on the LGA City Regions Board and the West London Economic Prosperity Board.

Visit her website below: http://www.shamatatler.com/

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Tags council, financial viability, Housing, housing delivery test, permitted development, Planning, public sector land

Blog Post

We cannot borrow our way out of the housing crisis: mortgage credit is part of the problem

Post author By Chloe Timperley
Post date July 29, 2020
2 Comments on We cannot borrow our way out of the housing crisis: mortgage credit is part of the problem

We cannot borrow our way out of the housing crisis: mortgage credit is part of the problem

One of the key issues highlighted in my new book about ‘Generation Rent’ is how mortgage lending drives the UK housing crisis. I am far from the first person to point this out: my understanding of the problem is drawn from the research of the think tank Positive Money, IIPP economist Josh Ryan-Collins, property cycles expert Philip J Anderson, and many others.

But no-one in government seems to be taking it seriously. As a result, a dangerous policy proposal in the 2019 Conservative manifesto has gone largely unchallenged: the promise to support the mortgage industry in delivering long-term low fixed-rate mortgages for first-time buyers, which will ‘slash the cost of deposits’. This may sound like an enticing idea, but in practice it will only pour more petrol on the fire.

The truth about where mortgages come from

When you take out a mortgage, the lender conjures new money into existence. The money doesn’t come from other customers’ savings accounts, nor does it come from bank ‘reserves’: it is created from nothing.

The main constraint on mortgage eligibility is the borrower’s ability to repay the debt. Effectively, a mortgage is a large withdrawal from The Bank of Future You. And while you can typically only borrow 90%-95% of the property value, this does little to keep mortgage borrowing in check, as property prices can rise in response to expanding mortgage credit and vice versa.

When property and mortgages collide

When cheap and readily-available mortgage credit meets residential property, house prices shoot up. This is because the supply of land, which accounts for about 70% of the value of a home, is fixed. No market can produce new land in response to the demand for housing created by expanding mortgage credit. And you cannot take out a mortgage against a home that hasn’t been built yet.

So, what you get is an ever-expanding supply of money chasing after a finite amount of property. Maybe we should think of it this way: rather than house prices going up, the value of money itself has been systematically trashed relative to the value of property.

What if we pour new money into new homes instead?

This was the rationale behind the government’s Help to Buy Equity Loan scheme, which was reserved for new-builds only. The idea was that, because the new loans would be used to increase the housing supply, the scheme wouldn’t lead to house price inflation.

But since the scheme was rolled out via huge private housebuilders, these companies were able to control the supply of housing by hoovering up as much land as possible and drip-feeding their (often shoddy) new-builds onto the property market at a slow enough rate to keep sale prices artificially high. In consequence, housebuilders’ profits have swelled, and Which? recently reported a trend of Help to Buy homes falling in value, despite rising local house prices. Most worryingly of all, Help to Buy mortgage arrears are running at six times the ordinary rate.

A culture of land speculation entrenches the issue

Maybe the land-credit feedback cycle would be dampened if it were possible to take out a mortgage to fund a self-build property. But to acquire land, you normally have to satisfy a landowner’s price expectations (claiming vacant or unregistered land in this country is almost impossible). These expectations are likely to have been warped by the speculative nature of the land market.

Most landowners know that, under current rules, a piece of agricultural land can become around 92 times more valuable with a grant of planning permission for residential buildings. If the seller doesn’t like the price on offer, they can withhold their land indefinitely with no consequences.

A whole ‘land promotion’ side-industry has sprung up to enable speculators to share in the planning uplift, using legal mechanisms like ‘option agreements’ and ‘promotion agreements’ to reduce risk and increase profits. As a result, land is scarce and acquiring it is both costly and difficult, despite the fact that only around 6% of UK land mass is actually built on.

Why planning reform won’t solve the problem

Perhaps because land speculation is so rampant in Britain, the planning system is currently painted as the big bad wolf of the housing crisis amongst conservative thinkers. There is a belief that the land market will magically start behaving like any other free market if we scrap the 1947 Town and Country Planning Act. But for all its flaws, the planning system is not the fundamental issue here, even if there is a genuine case for planning reform.

In Victorian Britain, slum housing, rising rents and overcrowding plagued the Capital and other areas of rapid economic growth. This had nothing to do with rules and regulations (which were next to non-existent), and everything to do with the power that comes with land monopoly. The poor got poorer and the landed got richer: ‘twas ever thus.

We need to keep talking about land and credit

The only way to permanently stop the price of property ballooning out of all proportion is to tax the land beneath it. A land value tax could replace council tax (a ‘highly regressive’ policy that falls hardest on the least well-off), business rates and Stamp Duty Land Tax, and would disincentivise land speculation. It could raise much-needed revenue for public services hit by austerity cutbacks. Or it could even be redistributed in the form of a ‘citizen’s dividend’ or Universal Basic Income.

This idea has garnered support from across the political spectrum, but has traditionally been opposed by governments beholden to wealthy landowners and a predominantly homeowning public. So, since it may take some time to get the electorate to come round to the idea of a land value tax, a more urgent and politically possible course of action would be to reform the land acquisition process, so that local authorities can afford to build genuinely affordable social housing at scale.

In addition, the Right to Buy policy must be scrapped immediately to stem the loss of social housing – especially given that nearly half of the homes sold are ending up in the private rented sector and contributing to the soaring cost of housing benefit. The shortage of genuinely low-cost homes is acute; the number of people stuck on social housing waiting lists stands at well over 1 million.

For too long, spiralling house prices have been dismissed as an inevitable force of nature, or the product of too little housebuilding, or too much immigration – even though research from the Bank of England has concluded that the quadrupling of house prices over the last 40 years is ‘more than accounted for’ by falling interest rates. It may be dry, knotty and difficult to fit into a soundbite. But until we increase public understanding of the land and credit feedback cycle, the housing debate will only keep going around in circles.

Chloe Timperley

Author of “Generation Rent: Why You Can’t Buy a Home (Or Even Rent a Good One)”. ORDER: http://bit.ly/2AX2LhE

Chloe’s professional background is in financial planning, which involves analysing pensions and investments. This led her to delve into how the financial sector sits at the heart of Britain’s housing crisis. During her research, Chloe went undercover at landlord events, spoke to MPs and activists, and joined a tenants’ union.

She also listened to the stories of scores of tenants who — like her — remain stuck against their wishes in the private rented sector.

Now, she wants to shift the housing debate away from simple narratives of supply vs. demand, and towards the underlying mechanisms that drive our dysfunctional land and housing markets.

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Tags credit, generation rent, land, land speculation, mortgage, Planning, Private rented sector

Blog Post

Westferry highlights everything wrong with planning

Post author By Rachel Blake
Post date July 15, 2020
1 Comment on Westferry highlights everything wrong with planning

I’ll always remember the moment on 14 January 2020, I heard that Robert Jenrick had approved Richard Desmond’s application for Westferry Printworks: 1,524 new homes with only 21% affordable housing. The news came through on my way into work, preparing for the Full Council meeting that very night, that would adopt our new Local Plan ‘Managing Growth and Sharing the Benefits’ and a new Community Infrastructure Levy schedule. As soon as the decision was announced, the importance of the timing could not have been clearer.

The publication of the decision that day, saved the developer £30-50 million and took that funding away from the residents of Tower Hamlets who, through the democratically led Local Plan process, had established infrastructure needs for the area: primary schools, health centres, community centres and green space and more.

At the heart of this very long and complicated story are 2 basic questions which still need answers.

First why did the Secretary of State approve the application against his own inspector’s and officials in his own department’s advice?

Secondly why did he approve the application the day before the development would have been eligible for £30-50 million infrastructure payment?

The decision had been a long time coming. After Boris Johnson, then Mayor of London, approved the first application in 2016, the developer chose to almost double the size of the scheme in a further application. Before the local Strategic Development Committee had a chance to make a decision, the applicant ‘appealed against non-determination’ arguably a tactic to avoid local decision making.

During a parliamentary debate on the matter, Tory MPs fell over themselves to suggest that the fault in the process lay with Tower Hamlets Council – how painfully ironic that the delay was in part due to negotiations over the level of affordable housing.

In Tower Hamlets, we had been working on our new Local Plan for over 3 years (much of that time was spent waiting for the Government’s Planning Inspector to schedule our inspection – a required part of the process). At its heart the Planning System – established in the Town and Country Planning Act 1947 – was designed to democratise the use of land and give people a say in the development which comes forward.

Through months of consultation, we listened and heard our community want to see more genuinely affordable homes and confidence that new development brings with it the schools, GP surgeries, public transport and shared space needed to support a thriving community.

The most concerning responses to the consultation were those which said residents did not feel connected to new development and that residents could never afford live in new homes. And so, Tower Hamlets Council established a vision: ‘Managing Growth and Sharing the Benefits’- introducing new policy on genuinely affordable rents, access to open space, health impact assessments and more.

The same night that we approved our Local Plan, Tower Hamlets Full Council set a new Community Infrastructure Levy. This was a progressive policy meaning developers had to pay their fair share to invest in infrastructure. The new levy established the Westferry Printwork sites as eligible for a Community Infrastructure Levy payment.

For years, the owners of Westferry Printworks had benefitted from not having to pay this Levy on the grounds that the complexities of the site would make development ‘unviable’ if the payment was required. Thanks to the careful evidence gathering and analysis from officers, Tower Hamlets Council successfully argued that this was not the case and so the site became ‘liable’.

Amongst the deeply depressing and some frankly embarrassing contributions from Tory MPs in the debate last month, it was the hollow arguments on housing supply that really grated. The suggestion that in some way, Jenrick was doing us a favour by allowing such inappropriate development to take place would be laughable if the consequences of his actions were not so serious.

Tower Hamlets has a track record of approving high levels of housing and office development, is consistently home to the highest levels of affordable housing development by housing associations and has one of London’s most ambitious Council home building programmes.

The Secretary of State and his cheerleaders really were grasping at straws to suggest that this development was making a contribution to housing in Tower Hamlets – Desmond already had a planning consent that he refused to build out and the vast majority of homes provided in this development would have been way out of reach for most of the UK, let alone residents of Tower Hamlets.

As a proud representative of Tower Hamlets, it hurt to hear our community attacked and undermined in the House of Commons by Conservative MPs who were reading lines from a script. After several weekends of revelations in the papers, Jenrick had tried to dodge scrutiny and when he finally had to face the music it was lazy to trot out lines about a ‘rotten borough’ which are out of date or blame the Mayor of London.

This was pure deflection and tribal politics.

I invite everyone of them who tribally stayed ‘on message’ in the chamber to come and sit with me or any of my Councillor colleagues in our surgeries where we listen to and work with our constituents who desperately need a new home and action on health inequalities.

The suggestion that Jenrick made this decision in the interest of overcrowded and homeless families is grossly insulting, at best. I hope that they will think on their positions and consider whether they are prepared to stand by their statements in the weeks and months to come which I expect – through the Select Committee and the next decision taken by a different Minister – will reveal further irregularities

This whole saga reminds us just how much needs to change about housing and planning in the UK. For communities to accept and welcome new development, they have to have confidence in the planning system. The ‘viability assessment’ process should be taken out of the regulations.

The Mayor of London Sadiq Khan has made great progress in London with the ‘35% threshold’ process but many other councils still report viability assessments and the regulations which allow developers to vary their affordable housing contributions as a huge barrier to securing sustainable development. Local Authorities still need more effective powers to intervene when sites are not being developed.

The Secretary of State’s decision on Westferry Printworks casts a long shadow over the Government’s new proposals for ‘cutting red tape’ and encouraging ‘permitted development rights’ which give communities very little say over levels of affordable housing their high streets and neighbourhoods

The Westferry decision highlighted everything that is wrong with planning. But let’s try to make it a moment to galvanise us all to work towards delivering the homes, offices, community buildings and public open spaces that residents need.

Rachel Blake

Rachel is the Deputy Mayor for the London Borough of Tower Hamlets. She was elected to represent the Labour Party for Bow East Ward in May 2014 and appointed to Cabinet in July 2015.

Rachel has held Cabinet Member roles for Regeneration, Planning, and Air Quality. Rachel is now the Cabinet Member for Adults, Health and Well-being.

She has previously been called in as an expert witness to the Housing, Communities and Local Government Committee on its inquiry into the long-term delivery of social and affordable rented housing.

Tags local plan, Planning, Richard Desmond, Tower Hamlets, Westferry, Westferry Printworks

Blog Post

Another classic case of do as I say and not as I do

Post author By Mike Amesbury
Post date June 10, 2020

Planning has been in the news for all the wrong reasons over the last two weeks, shining a spotlight on the lack of transparency, the influence of vested interests, and the undermining of local decision-making.

As the new Shadow Minister for Housing and Planning it is my job to hold the government to account, to scrutinise and challenge their work. I’m not here to oppose for opposition’s sake, but to try and push the government into the right place, especially in this current Covid-19 crisis. However, if the process of opposition exposes something fundamentally wrong, then the gloves come off. Fair play is a fundamental British value and we cannot have one rule for a privileged few and another for everyone else. The Jenrick affair, coming hot on the heels of the Cummings scandal, is a classic case of “do as I say not as I do”.

The facts are clear. The Housing Secretary Robert Jenrick gave the go-ahead to a contentious redevelopment project in the Isle of Dogs just weeks after he sat next to Richard Desmond, the developer behind the scheme, at a Conservative party fundraising dinner just before the December General Election. Mr Jenrick has admitted that the application was a topic of conversation that night.

In January, the Housing Secretary approved the planning application for the redevelopment of Westferry Printworks in London’s Docklands, despite advice from his department’s Planning Inspectorate and Tower Hamlets Council that the proposals did not contain sufficient affordable housing. The decision by Mr Jenrick to approve the planning application by Northern & Shell on January 14 came just one day before an increase in the Community Infrastructure Levy was due to be imposed by the council at a cost of £40m to Mr Desmond’s company.

Is the timeline of these events merely a coincidence? Because of Mr Jenrick’s refusal to provide Ministry documents about his decision, we don’t know the answer. It’s vital that papers on Mr Jenrick’s decision-making are now made public. The public need to know that government Ministers are not abusing their power to do favours for billionaire friends and Tory Party donors. Mr Desmond’s company, Northern & Shell, the former owner of the Daily Express and Daily Star newspapers, gave the Tory party £10,000 in 2017.

In an astonishing development, after being taken to court by the local authority, Mr Jenrick accepted that his approval of Northern & Shell’s planning application for the Westferry Printworks was unlawful. In March, Tower Hamlets took legal action against Mr Jenrick’s decision, arguing that the timing of his decision appeared to show bias towards Mr Desmond. Indeed, the former leader of the Conservative Group in Tower Hamlets resigned from the party over the affair.

After the court ordered Mr Jenrick’s department to release the documents, the housing secretary accepted his approval of Northern & Shell’s planning application had been “unlawful by reason of apparent bias” – an act which allowed him to avoid disclosing documents surrounding his decision.

This is not acceptable, and certainly not the end of the matter. Not only has the Secretary of State acted unlawfully but he has contradicted the Nolan Principles and further eroded trust in the planning process. I have now written to the Cabinet Secretary requesting that he investigate this matter.

I await a response.

Mike Amesbury

Mike Amesbury is the Member of Parliament for Weaver Vale in Cheshire. He was first elected in June 2017 and is currently the Shadow Minister of Housing, Communities and Local Government.

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Tags Jenrick, Nolan Principles, Planning, Tower Hamlets, Westferry Printworks