Yahoo News Empowering councils is the best way to kick-start a housing revolution
Theresa May’s long-promised housing white paper has been pushed back so often that few would be surprised if next week’s mooted publication is postponed once more. Preoccupations with Brexit and the election of Donald Trump may account for part of the delay, but the truth is that providing ‘serious, lasting, long-term reforms’ to boost housing supply, as communities secretary Sajid Javid has promised, would be a tremendous achievement even for a government with little else on its plate.
There is an important reason why the shortage and expense of housing has been allowed to worsen for so many years: there is no easy response that will please everybody.
A knotty, complicated mess of a problem, overlaid by a tangle of competing interests, has consequently been met with a series of timid, piecemeal changes. Some of these have helped a bit, some have not, but none have been the game-changer that is required.
Net housing supply hit a post-crash high of 189,650 last year, but with at least 230,000 homes a year needed just to keep up with household formation, we are still going backwards.
Much of the emphasis under David Cameron’s premiership was on increasing the amount of land for housing released by the planning system, to the anger of many countryside campaigners.
There is still a significant proportion of local authorities who have failed to identify the required five-year land supply, and this will need addressing; but it is important to recognise that the number of homes permitted for development reached 277,000 last year – up from 179,000 in 2010. So, while local difficulties remain, on this front the big picture has greatly improved.
The question for ministers now is why, when planning permissions have been running at more than 200,000-a-year for four years, there were only 163,940 new-build completions in 2015/16.
The challenge is to ensure that those sites that are approved are translated into new homes as quickly as possible. Many of these permissions never even end up in the control of a developer, as they may have been sought by landowners for reasons other than to build homes (in order to provide security for loans, for example).
Where developers do control sites, they insist they have no incentive to landbank. But they do get locked into low build-out rates, which see them ‘drip-feed’ the local market with new homes over many years, because the very high price they have paid for the land means they cannot afford to depress market prices by flooding the market.
This means that new housing supply rarely, if ever, exerts a downward pressure on the cost of homes, and is a significant reason why house prices have risen to the extent they have.
Developers promote the idea that this gap between planning permissions and housing starts is unavoidable, and simply means councils need to bring forward ever larger amounts of land for development.
A report by the planning consultancy Nathaniel Lichfield & Partners last week said that, in the present system, delivering 300,000 homes a year over the next decade would require planning departments to gradually increase the number of permissions to 460,000 a year.
Given the strain that planning departments are already under, having borne the brunt of local government spending cuts since 2010, this would be an extraordinary challenge. It should also be unnecessary: there is no good reason why we should expect town halls to process so many applications that do not result in new homes.
There is still a requirement for more land, and there always will be as long as the population continues to expand. It is right for councils to be held to account on that, and some still need to improve. But they also need to be empowered to – where necessary – get things done
In Germany for example, a much higher proportion of planning permits (about 80 per cent) are built out. In order to approach those levels in this country, the government needs to give planners the tools to focus on those schemes that will deliver new homes, and to ensure that they are built much more quickly than they are at present.
This might mean imposing contractual obligations alongside planning permission, to be backed up by fines or even the compulsory purchase of the land when developers are in breach. It may mean empowering local authorities to commission new homes once more – which would be an ideal way of giving a new lease of life to the small builders who have been squeezed out of the system by the volume developers. It might also mean amending the law around compensation for landowners, so that they are no longer in a position to drive up the cost of developments to such an extent that these problems arise.
There is still a requirement for more land, and there always will be as long as the population continues to expand. It is right for councils to be held to account on that, and some still need to improve. But they also need to be empowered to – where necessary – get things done. Rather than requiring them simply to enable delivery by private developers, let’s give them the powers to drive that delivery and get homes built where we need them, when we need them.
Daniel Bentley is editorial director of the think tank Civitas
