How to fix the broken housing market...
9 October 2017
BROKEN MARKET OR BROKEN PLANNING?
Theresa May has said the Government will "support the most ambitious councils" and housing associations to overturn the decline in social housing; and followed this up with a most plaintive picture: “Whether you rent or buy, everyone needs the security of a place to call home but too many ordinary working families are stuck on council waiting lists, facing unaffordable rents and struggling to save for that first deposit”.
And then: a big commitment: “That’s why we will fix the broken housing market and support local authorities and housing associations to build a new generation of council homes right across the country”.
Why of course, you may think, you’re reporting elements from the PM’s speech at conference last week. Indeed, she asserted that she intended to devote her premiership to to fixing the "broken" housing market; and that the Government would spend £2bn on a "new generation" of council houses and affordable homes for rent.
Yet we’re not: the first two paragraphs are from May this year. Only the third relates to conference speech. So why, five months down the line, is the language the same and seemingly nothing has changed?
Well: for starters, she was a bit busy in June not losing the General Election and since then has resembled something of a Pushmi-Pullyu in respect of the Brexit negotiations and her need to keep the disparate bands of Remainers and Leavers within Government in check.
And, although the housing white paper, Fixing our Broken Housing Market (see: it’s those fix, broken words again), was published in February and then subject to consultation; one supposes she, first, waited to know that the Government was still the Government and then, second, having had something of a bruising since the election, delayed action for wanting something ‘new’ to announce to cheer the faithful.
Yet, as is poor Mrs May’s lot in general it seems, no-one is happy. Initial criticism revolves around the funding only representing 25,000 new homes total – and only 5,000 per annum, when we need 200,000+. Then on the vagueness of how much funding would be for new council housing and how much to promote ‘affordable’ stock.
(The hope is that the 25,000 new homes might translate into up to another 60,000 if the initiative unlocks another £3bn in private and public investment).
A different kind of naysayer, on the other hand think, the sums at issue are irrelevant, as it’s the wrong measure applied in the wrong way. For instance, the free market think tank the Institute for Economic Affairs asserts that we have too much social stock, and too many tenants as it is; and wants the Government to focus on removing supply-side obstacles to house building, such as unnecessary and onerous planning regulations.
Which is interesting, because this links right back to February and the white paper, when planning was a thorny topic.
Among the raft of proposals put forward in the paper was the suggestion that planning authorities would be allowed to increase fees by 20% – and possibly by a further 20% after that – if they ploughed the additional funds acquired into resourcing their departments.
While we might have expected house builders to protest at this additional financial burden, the reaction was quite the opposite. Brian Berry, Chief Executive of the Federation of Master Builders (FMB) which represents many of the smaller players in the housing sector said that the increase in planning fees was “one of the biggest game changers” of the whole white paper.
Often the Government seeks to lay the blame for insufficient new homes at the door of large developers, accusing them of sitting on their landbanks until the price is right, but the builders themselves point the finger straight back at the Government. It’s the planning system, not the housing market that’s broken, they say.
And what did the PM say about planning in her conference speech: not much. The closest it came was in this passage: “Our Housing White Paper set out plans to (ensure) councils release more land for housing, and giving them new powers to ensure that developers actually build homes once they’re given planning permission to do so….
And let me say one more thing. I want to send the clearest possible message to our house builders. We, the Government, will make sure the land is available. We’ll make sure our young people have the skills you need. In return, you must do your duty to Britain and build the homes our country needs”.
So still blaming the builders but, according to them, the proposal to reduce the time allowed between planning approval and start on site from three to two years misses the point: it is under-resourced planning departments that are slowing things down.
There’s a big difference between obtaining outline permission and getting to detailed permission, which is required before construction can start, and that can take at least one year and sometimes two.
The results of consultation on the paper are still awaited, and the plans for planning are thus still in the wind. But there’s a feeling that not only did the PM’s speech not go far enough – or anywhere – in addressing some root issues, but also neither did the housing white paper.
Without wholesale changes to the planning system, all the money, all the inspiration of the “British dream”, all the tweaks proposed won’t create the step-change that we so desperately need to get building at the volumes we need again.