critical place

What changes are needed to our current model of housebuilding? A new survey aims to gather the views of local residents about housing development and the planning system.

The survey is being run by Dr. Quintin Bradley, senior lecturer in planning and housing at Leeds Beckett University. He has carried out interviews with community groups and the aim of the survey is to get the views of many more people concerned about housebuilding. 

The survey asks only a small number of questions but it leaves plenty of room for people to write their views. It asks about housing targets and housing need, the allocation of housing land and the impact of development on the environment.

Quintin says: “I hope my research will contribute to a more informed public debate on our model of housing supply and distribution. My aim is to help communities to have real influence over planning decisions”. 

Please follow this link to the survey: https://forms.gle/A37mQUGfjidws4Vy8

The accountancy regime used by planning authorities in England to provide a 5-year supply of housing land has encouraged land speculation and introduced perverse incentives for landowners and developers to reduce the supply of new homes.

In my new article for Urban Studies journal I argue that planning policies introduced by Conservative governments in England have encouraged house builders to trade land instead of building homes and have created a new industry in the sale of land with planning permission.

In 2019 local planning authorities awarded planning permission for almost 400,000 homes, more than twice as many as are being built. Almost 60 per cent of all residential planning permissions are now held by non-builders: site promoters, landowners and their agents, who sell the undeveloped land to capitalise on its uplift. The length of time taken to build-out sites has doubled, and the number of homes started by the speculative builders appears to have peaked at 135,000 a year. Every year approximately 150,000 homes with planning permission never get built.

You can read the full article here

The solution to a housing crisis of affordability is – we are told – to build more homes. 

Housing economists agree, however, that we would need to build an unprecedented number of houses to have any effect on prices in the housing market as a whole. 

We would need to build more than double the number currently being built. We would need to build more than the private house-building industry has ever built before (except for a short time back in the 1960s). 

And even if we do manage to build this unprecedented number of homes, any impact on price will depend on the house-building industry transforming itself and its supply chain so that it becomes much quicker to respond to demand – more responsive, in fact, than it has been for a very long time. And even then, any change in price would need at least ten years to take effect. And prices would not fall, they would just stop rising as steeply.

Wouldn’t it be simpler and more direct to build houses that were already affordable?

And this is where it gets interesting. Because according to the economist Kate Barker, whose 2004 report for government set the pattern for everything that has come since, in order to effect prices in the housing market, you have to build market houses.

Barker did not consider the impact on market prices of building outside the market – in other words – of building council housing or social housing.

And yet, according to the housing theorist Jim Kemeny an enhanced programme of council house building would have the effect of stabilising prices in the private housing market. In his 1995 book From Public Housing to the Social Market, Jim Kemeny studied the economic effects of council housing in the UK and the European model of cost-rental – a name that describes homes built without profit and distributed on the basis of need not ability to pay. His analysis demonstrates that a mature not-for-profit housing sector has the effect of stabilising prices in the home ownership and private rented sector.

Figure 1 is a well-known graph that illustrates what happened to the total supply of new housing when the UK council house-building programme was stopped in the 1980s. Up until the 1970s the country was building at least 100,000 really affordable homes – on top of the usual number built by the private sector – and distributing them on the basis of need.

What figure 1 also shows – and this point is not often made – is that when we were building around 100,000 council homes a year in the UK, the price of housing in the private sector remained constant and relatively low.

It was only when we stopped building mass council housing, that the price of market housing took off on its inflationary ascent and went into its cycles of boom and bust.

I don’t want to get too nostalgic here but I think we need to be clear that the housing crisis we face is one of affordability.

And when economists say housing is unaffordable because we haven’t been building enough houses – they mean market housing.

But housing is unaffordable because we haven’t been building enough affordable housing. We have not been building enough homes to meet housing need, and we have failed to ensure that everyone who needed a home got one at an affordable price. 

The solution to the housing crisis is not building more private market homes. The solution is to build and distribute homes more fairly.

Do we have a housing crisis of under-supply, or a crisis of affordability?

We seem to be confusing the two things.

The current government target of building 300,000 new homes a year depends on the assumption that increasing supply will make housing more affordable.

But what is the evidence for that?

In her review of housing supply in 2004, economist Kate Barker argued that doubling the production of private-sector house building would reduce the rate at which house prices increase. However, to bring about a real fall in house prices would require so many homes to be built it would be ‘undesirable and unachievable’.

New build is only around 1 per cent of the existing housing stock so Barker explained that any change in house prices would be very slow and require very large increases in construction. If rates of private house-building were doubled, an additional 5000 households a year would be ‘priced-in’ to homeownership .

But Kate Barker explained that there would be no effect on house prices at all unless the house-building industry became more responsive to changes in demand. It was the weak response of house building to increases in demand that Barker was asked by government to investigate.

The operation of supply and demand is measured by something economists call ‘supply elasticity’. The UK housing market is relatively unresponsive to demand, and it has an elasticity of supply rating of less than 1. 

Only if the house-building industry became much faster to respond to demand – if its elasticity of supply went up from 1 to 10 – would building more homes have any impact on house prices. And the effect on house prices would not be felt until after 10 years, when they would finally start to slow.

Barker took her figures from a report by housing economist Geoffrey Meen in 1998. Meen added that the UK housebuilding industry had never achieved the necessary levels of responsiveness. He concluded that: ‘there is no necessary reason why any increase in housing demand should be met with a corresponding increase in supply.’ Instead, he expected to see any increase in house building lead to an increase in prices to ‘choke-off excess demand’.

In February 2019 the Secretary to the UK Treasury, Liz Truss MP, one of the contenders to replace Theresa May as Prime Minister, described communities objecting to housebuilding as ‘the worst vested interest we’ve got’. Communities resisting development, she said were the main obstacle to the on-going project to liberalise and deregulate land use planning. 

The portrayal of community engagement and democratic participation in planning as an ‘obstruction’ or ‘delay’ is a common theme for a global liberal project that regards planning as an enemy of enterprise. Development rights were nationalised in the UK in 1947 and the planning system remains the last bulwark against free market forces and is therefore constantly under assault.  

What was unusual in this speech, was that Liz Truss, MP, presented communities who oppose the private speculative house building industry as the most committed supporters of planning, and of the nationalisation of development rights.

The portrayal of communities resisting development as pro-planning runs contrary to forty years of NIMBY folklore which has portrayed them as selfish and irrational in contrast to the rationality of planning and development.

In its first appearance in published research, the acronym NIMBY signalled the irrationality of objectors who acknowledged the need for development but opposed its location in their back yard. The medicalisation of community opposition into a NIMBY syndrome followed, suggesting that opposition to development was a pathological response to change.

The confabulation of research is evident in North America where the NIMBY literature quickly merged with the studies of the exclusionary effects of zoning in US suburbs, in which homeowner associations were identified as culpable in the promotion of racial segregation. The literature found a receptive hearing in the Australian suburbs where it was used to frame opposition to densification as a barrier to affordable housing development. The same tropes coloured an origins tale of UK planning where affluent rural homeowners were depicted as inequitably restricting urban housing need.

The focus of the NIMBY literature was on the hidden motives behind objections to development. The assumption was that public concerns over the environmental costs and negative impact of development could be discounted on the grounds that they disguised private selfish interests.

In financialised housing markets, interest in maintaining the value of the private home is not peculiar to individual home owners and is encouraged in policy discourse as rational action. The initial investment of homeowners comes under threat from new rounds of investment intended to capture the uplift in value created by home-makers. The possession of a material interest in an issue such as new housebuilding does not invalidate the claim to participate in planning decisions, nor does it preclude the commitment to what might be described as more principled objections, for instance on environmental grounds. Material attachments are the stuff of democracy. People participate in the democratic process because they are adversely affected by issues and care about the outcome. Again, it is worth noting that the NIMBY epithet is only applied to homeowners who are invested in the use value as well as the exchange value of housing: in place as well as property. The NIMBY caricature is never applied to buy-to-rent landlords, or those letting their second homes on Air B&B whose capital is rootless and for whom property is an investment but not a home.  

The most bizarre aspect of the NIMBY literature is its presentation of single-family homeowners as the only promoters of private property rights in the planning system. The role of landowners and developers is signally absent in the NIMBY literature. Development is presented as a public good, while the public are portrayed as representing only private concerns.

My argument in this post is that Liz Truss is right! There are particularly strong connections between communities objecting to deregulated development and those promoting an effective planning system. I would go further to say that communities objecting to development are among the last remaining defenders of an interventionist planning system. 

These campaign groups can be more accurately described as pro-planning rather than anti-development. They understand that planning is not merely a system for licensing free market development. Planning is about public ownership of development rights and about capturing the value created by development for the good of the public as a whole, and not solely for private interests. 

Opposition to housing development points to the irrationality of contemporary planning for housing:

• The fact that in some places most new homes are just converted from office blocks without the need for planning permission, with families housed on industrial estates, without play areas, or even pedestrian walkways
• The fact that housing targets now bear no relation to housing need and that almost all new housing goes to feed a bottomless demand for investment rather than for a place to call home 
• And that protected environments are being allocated for housing, not because more land is needed, but because house-builders are able to play the system to get access to the highest value land.

Against this background, communities resisting unregulated development champion democracy in planning. They argue not only that decisions on development should be debated and decided in the most democratic way, but that the outcome of those decisions, especially the value created, should be shared democratically, for the good of society.