It's clear that Andrew George, Liberal Democrat MP for St Ives again after nine years, has little time for the idea that if only developers weren't encumbered by the planning laws they would flood the market with so many new houses that prices would come down.
He writes for the Cornish Voice newspaper:
Having tracked the way the housing market works in places like Cornwall over recent decades, it seems clear that development tracks house price inflation and slows when the market stagnates.
Higher housebuilding targets are reflected in higher hope values land adjoining every community around Cornwall; land value speculators sit on those sites until planning permission granted enables a maximisation of development value and undermines the viability of affordable developments suitable to meet local need.
Cornwall doesn’t have a major problem with NIMBYs resisting development. Cornwall has been the one of the fastest growing places in the United Kingdom – nearly trebling its housing stock in the last 60 years – and yet the housing problems of local people have got worse.
Housebuilding targets are a means to an end. The intended purpose is to meet housing need. Yet, in Cornwall, this is one of the best examples of how that policy completely fails.
The late Ian Jack explained why it fails in the London Review of Books five years ago, with a little help from Oliver Letwin:
A report in the Times last year showed that out of more than 1.7 million applications for residential planning permission granted between 2006 and 2014, fewer than half had been completed after three years. According to the Local Government Association in 2016, councils consistently approved more than 80 per cent of major residential planning applications; but the difference between the number of houses being approved and those actually being built was almost 500,000 – ‘and this gap is increasing.’
The hardly radical figure of Oliver Letwin identified the real brake on house-building when he published the interim conclusions to his inquiry into low completion rates last year. What governed the numbers, he decided, was the absorption rate – "the rate at which newly constructed homes can be sold into (or are believed by the house-builder to be able to be sold successfully into) the local market without materially disturbing the market price".
For ‘materially disturbing’ read ‘lowering’: to protect profits, developers are sitting on land that has been given planning permission. ‘Efficiency’ in this instance is a concept confined to the shareholder.
All of which means that the Lib Dems' emphasis on building social housing - seen in the motion passed at last year's autumn conference but less evident in this year's manifesto - must be taken on by the government if they are to fulfil their ambitions.
I should add that everyone I talk to who knows about housing says there is an endemic shortage of the relevant skilled labour in Britain. This too must be tackled by government if its housing policies are to succeed.
1 comment:
I agree that the programme will probably fail but the reasons are even more complicated than that, mainly because of the interdependencies.
The rate of absorption also critically depends on local job markets and mortgage terms. The Government don't have much influence on the latter and efforts to tamper with the latter by subsidising buyers simply drives prices up. The Barker Report on Housing Supply is 20 years old but provides an analysis that is still relevant.
The issue of land banks is not merely about profit for housebuilders but about survival. Running out of oven-ready sites is an existential problem in a country with a planning system as slow as ours.
The supply of affordable housing will be assisted by Reeves' effort to make the rent trajectory more predicatable. But this has been tried before and many will recall George Osborn's reneging on his policy on this. It would also really be helped if Labour would make a real legal and logistical effort to enable land to be bought at a price nearer to its existing use value rather than a pumped up version of its value for housing.
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