Money alone will not fix the housing market

November 17, 2017

(A version of this article was first published by the Huffington Post.)

There are high expectations that housing will be at the top of the agenda when the Chancellor delivers the Budget next week, expectations reinforced by the Prime Minister and Communities Secretary’s interventions today.  Yet so far much of the speculation has focused on the sums. As important, if not more,  is how that money is deployed and the reforms that go with it.

Money alone will not fix the housing market. Spent badly, it could even do more harm than good by simply replacing or displacing activity currently performed by private house builders without adding to overall numbers or improving the quality of build.

Local backing for developments is more likely if they have regard to the aesthetics and impact on local infrastructure.  Good design in a style supported by local communities is the key to achieving public support for the scale of house building needed, particularly in high value areas where the supply and demand imbalance is greatest.

If there is one thing that housing needs even more than cash, it’s strong political leadership.

Government must make more direct interventions in the dysfunctional market rather than expecting it to fix itself. Sajid Javid’s threat to local authorities who aren’t up to scratch is a sign that they’re now willing to do this.

The housing market needs consistent direction, not only from Whitehall but also from all levels of government up and down the country.  Metro Mayors, combined authorities and council leaders all have a crucial role to play if we are to reach current the government targets.

We can start by accepting the true scale of the numbers required and where these new homes need to be built to really make a difference.

New government calculations, announced by Javid in September, show that we need 266,000 new homes a year, a substantial increase on the 210,000 new homes delivered over the past year.

More specifically, the new methodology which takes into account high house prices and affordability pressures, highlights that the bulk of these new homes are needed in London, its commuter belt and the wider south east.

Many of the areas where the increases are required are covered by large swathes of Green Belt, National Parks or Areas of Outstanding Natural Beauty. Over 80% of the land in the Royal Borough of Maidenhead and Windsor, which includes the Prime Minister’s own constituency, is under some kind of planning restriction.

It is hard to see how these extra homes will get built with business as usual and by avoiding difficult conversations about the Green Belt. Nobody is suggesting we do away with protections but there is an irrational overreaction to the very mention of something which is purely a planning designation.

Much of our land is still green. New analysis of land use data by Dr Alasdair Rae from the Urban Studies and Planning Department of the University of Sheffield shows that less than 9% of England is actually built on (compared with 5.9% for the UK as a whole).

Yet the basis of the planning system, which requires each local authority to look after its own patch and effectively rations land coming forward for development, is flawed.

Housing markets do not respect municipal boundaries but the current system has failed to encourage local authorities to cooperate sufficiently to meet overall need. The planning system remains reactive and cumbersome rather than visionary and dynamic.

Government must take a more active role in the land market. Combining a more hands on approach to assembling development opportunities and aligning this with plans for infrastructure in areas of strong economic growth potential and housing need, should be a priority.

Disused military bases can form the kernel of new garden towns and villages. Heyford Park, a development of over 700 homes on a former US air force base in Bicester, in Oxfordshire is good example of the possibilities.

Support for infrastructure to trigger projects in high demand areas would be money well spent. One possibility is the extension of the £2.3bn Housing Infrastructure Fund launched earlier this year.

The fund is to be used for projects such as roads, water connections, schools, doctors’ surgeries or land assembly and should support a total of 100,000 new homes. Whilst this is a modest number, the fund crucially seeks to support ambitious local authorities with an appetite for development and could use it as a spring board for more.

Aligning infrastructure and housing is easier said than done. The mechanisms through which these things are delivered in tandem are far from clear and current planning rules may act as barriers to making the most of opportunities.

Take the case of both Crossrail projects. The £15bn Elizabeth line (Crossrail 1) which is due to start running through London at the end of next year, is a good example of a project where regeneration around it came too late in the process to deliver maximum results.

Lessons have been learnt and the case for Crossrail 2, which is supported by the National Infrastructure Commission, includes plans to deliver 200,000 new homes along the line. It’s hard to see how we can reach that number without an increase to building densities and building something on the Green Belt.

Yet targeting sites on the edge of towns and cities would be more cost effective and deliver faster results.  The irony that the 2014 Wolfson Economics Prize for a new vision for Garden cities, run in partnership with Policy Exchange, was won by a plan for an urban extension should not be ignored.  The submission by urban planners URBED recognised that one of the greatest challenges would be winning over existing communities.

We need visionary leaders who will work with communities and who will be able to harness whatever funds come out of the Treasury to support as well as challenge developers and landowners.  Fixing the housing market is complex.  The prize for doing so will be electoral as well as social and economic.

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