The UK needs more homes to live in. Many more, every year, than are being built. On this there is now political consensus at the national level. Both Labour and Conservative politicians are trying to convince voters that their national leadership would deliver new homes.
But new housing is often hard to stomach for existing residents near to proposed sites. To correct the endemic, systemic failures of the housing market to deliver ample quantities of affordable homes will disrupt a lot of vested interests. This makes most politicians squirm. It can seem simply too difficult, which leads to tinkering and posturing at the edges rather than engaging with structural issues, which play out differently in different local geographies. New settlements should be part of the solution, but let’s not get distracted.
Housing is often seen as a social issue. It is more than that. The City Growth Commission has received overwhelming evidence on the importance of housing in supporting cities to reach their economic growth potential. Cities need to accommodate workers on a range of income levels: they need homes for executives, nurses and cleaners.
The UK has had unique and increasing volatility in the housing market, reflected in boom-bust cycles for house prices, and land prices. This fuels uncertainty and speculation, neither of which are helpful to productively employing economic assets or making investments. As David Harvey reminded the RSA last month, the recent global economic crisis was triggered by a housing finance crisis.
Rising prices relative to incomes over the last three decades indicate that we’re not just hungry for new homes, in many cities in the UK we are chronically malnourished. Indeed two-thirds of voters would like to see house prices stable or falling, and Planning Minister Nick Boles MP recently said “we want all housing to be more affordable…within reach of working people on ordinary budgets”.
Last week the City Growth Commission hosted a roundtable of over 30 experts in housing. Under the Chatham House rule we heard evidence that most urban authorities are under-estimating demand and coordinating poorly with one another to ensure enough sites are designated for development.
We’re not in a position to finalise policy recommendations, but we’re chewing over the following ideas.
Below we outline a three-course menu so that politicians and their constituents can stomach more homes, allowing cities to grow in response to the unmet demand evident in historically high prices in many cities.
Appetiser – stimulating the public appetite for housing
Looking for votes? Check the sofa bed. Every month the number of adults aged 20-34 living with their parents grows by 15,000. Household overcrowding is rising; young couples are “hutching up”. Developers want to bring younger voices to the debate: they are often absent from local consultations on plans for their area and proposals for new housing. Young people and those who don’t yet own homes are more likely to say yes to homes.
The right type of housing. The UK has a proud heritage of housing architecture. Many argue that objection to new housing is often objection to the way new housing looks, feels and functions. Create Streets is a campaign to do just that. New visualisation tools such as mobile augmented reality are already available to help the public appreciate and influence the shape and appearance of what’s being built next door.
Linking housing to public services investment. Objection to growing the local population often comes down to worries about getting a seat on the bus to work and a place at the local primary school. The government could be more strategic, coordinating its many departments and agencies to make linked local investments in health, education and transport which benefit whole districts where new housing is both planned and evidently delivering. Infrastructure agreements in the UK through instruments like Community Infrastructure Levy are currently technocratic and bureaucratic. In the US community groups can be signees to Community Benefits Agreements, making them legally enforceable without involving politicians or government officers.
Mains – meaty policy changes to deliver more homes
Planning reform: England is the only developed economy without a zoning system. In most countries, planning documents will specify the type and size of building that is permissible within a zone. The planning application is then more of a formality; proposed buildings must be within the specifications. One challenge of getting the public to be positive and pro-active about planning documents is that in England plans only go as far as identifying a site’s preferred land use (often called an “allocation”); the public can’t visualise what proposed development would look like. Last month’s keynote speech from former housing minister Mark Prisk MP at The RSA called for an exploration of reforms to the use class order, the rules which limit permitted use under each planning permission. Zoning can add certainty and could at least be piloted (for example in the Mayor of London’s proposed housing zones) considering the context: we need 5 million new homes in the next 20 years, but 45% of English authorities currently haven’t even got an up to date plan in place.
Tax reform: with an estimated £5.2 trillion of value already invested in the homes we have, housing serves a secondary role as a savings fund for millions of people. It is the main means by which wealth is transferred between generations. Council tax is “absurdly” calculated based on estimated value of homes in 1991. At some point revaluation is inevitable and controversial; we should do it as part of a package of tax reforms which considers issues of inheritance, paying for social care, and new local tax and spend powers. The London Finance Commission recommended cities should retain property-related taxes generated locally. Current incentives like the New Homes Bonus have added up to less than 1% of Council expenditure and is funded mainly by redistributing core funding. Such reforms also represent a good time to reconsider the tax incentives for local authorities to allocate more land for housing and engage resources including public land and housing associations.
Garden Cities: a side dish. New settlements have the potential to deliver infrastructure funded through a development corporation buying land at agricultural prices and then selling land with planning permission to build. But they are difficult to get right, and often lack the scale to have their own economic dynamism. 279 contestants entered the Wolfson Prize to develop a Garden City which is “visionary, economically viable and popular”.
Dessert – the icing on the cake
Green Belt swaps and empty homes. The creation of Green Belts around major English cities in the 1950s was a huge success against its original objective to constrain the sprawl of cities. It has meant that in the last 60 years, population growth of 12 million has been accommodated through greater density in existing city footprints, or beyond the Green Belt – including in new towns such as Milton Keynes. The Green Belt is cherished by those who live in and near it: the amenity and certainty it provides also secures property values at the fringes of major cities. It is therefore, generally, politically untouchable, and notably its policy justification is now self-serving: maintaining its own “openness and permanence”.
More ambitious authorities are already looking to implement strategic “swaps”. Some of the Green Belt is unattractive but well-serviced by infrastructure. Local communities may be inclined to support new housing on scruffy corners of the Green Belt in exchange for new protections for green fields where the public enjoys access and realises environmental value. Meanwhile 216,000 homes have been empty for over 6 months – although many are in areas of weak demand. Bringing them to market is hard complex work which the RSA has helped support in Leeds. Why not incentivise community groups to do this? Local authorities could tie popular planning policies like Green Belt restrictions to achieving re-occupation of empty homes. As with policy areas like migration, ultimately the public need to own the trade-offs.
Extended metaphor alert!
What emerged on Friday in the heat of discussion was a cold truth: attempts to reform housing, planning and development will be dismissed by political leaders as too difficult, unless new development is made more popular. There is no silver bullet (is there ever?). In building the homes we need, it will take a comprehensive menu of policy dishes; a buffet designed for a range of interests. But the public will need to be on side with the solutions to realise their own appetite, rather than force-fed such change. At the moment, our ‘a la carte’ housing policy has under-performed, and the limited set menu prescribed by political parties fails to be sufficiently sensitive the local tastes and requirements, which vary hugely in different parts of the country.
Despite banging fists on the table, all parties are failing to invest the political capital in reforms necessary to achieve their own housing targets. The costs of such failure are borne not just by younger generations and the poor, but by everyone who has a stake in seeing cities grow, prosper and fulfil their potential.
Jonathan Schifferes is research lead for the City Growth Commission hosted at the RSA (@jschifferes)
This blog was originally posted on the website of the City Growth Commission.