By Dr Jacob Salder
Lecturer in Entrepreneurship and Organisation, Birmingham Business School
Housing availability, housing affordability, and access to housing and the housing market have been a critical issue for many people in the UK in recent years. Seeking to resolve these issues has therefore become a priority for successive UK governments. The success of policy and regulation here does however display a fairly patchy record, an ongoing decline in affordability of housing for purchase or rent and the failure to build to planned demand are just two of the enduring issues.
The proposition of a new Planning and Infrastructure Reform Bill in today’s King’s Speech will therefore likely be met with a mix of enthusiasm and scepticism. Mantra’s of ‘getting Britain building’ and acknowledgement of successive failures in the housing market to meet the needs of citizens and communities are welcome. But we have heard this all before to some extent.
Perhaps the principal diversion here from the previous government, and particularly the agenda set out in the 2010 opening of parliament, is the relationship which will exist between central government and local authorities as the custodians of the planning process. Back in 2010, the onus was on forms of decentralisation and the devolution of “greater powers to councils and…local communities…over housing and planning decisions”.
To this extent, regardless the tangential commitment to devolution around local growth plans to Metro Mayors and Combined Authorities, the emphasis is on a recentralisation of control around housing. This is perhaps a recognition of the inadequacy, in outcome at least, of more nudge-based incentives for house building, such as offering a new home bonus to LAs in a time of organisational austerity and funding reduction.
The intent is therefore clear: central government will be taking a more active role in holding LAs to account around housing developments in their areas. How such a role actually addresses the failures of the British housing market is however unclear. It would be rather unfair to criticise the new government on speculation around the content of a bill which has yet to be published. I would therefore instead set out a number of questions it should look to address alongside that of construction.
How will the proposed planning reform be resourced?
The first here will be the resourcing to supplement proposed planning reform. I’m slightly bias here as a former urban planner, but it seems that the planning function of the state has come under undue scrutiny and targeting for the failures of the housing (and wider development) market. The planner in these contexts is by nature a mediator, seeking to accommodate multiple interests – developers, politicians, communities – in the agreement of any applications. The larger the application the more contentious the impact and wider the interests.
This creates a complex process to navigate. But at the same time, as demands on the LA planning function have grown, its budget declined by an estimated 55% between 2010 and 2018. Such cuts have inevitable impacts on capacity, regardless of the ongoing fetish successive governments have for efficiency savings in public service. ‘Getting Britain Building’ will require support and investment in the capacities of such functions, a capacity which should not be seen as outside the remit of the accompanying sustainable development bill and its proposed investment in skills and new technology.
What about issues within specific regional or localised housing markets?
Second is how this centralisation will seek to address the issues within specific regional or localised housing markets. Availability and affordability are context dependent, both in terms of the demographic but more importantly the location; were it not, I would be sunning myself permanently in Five Ways in Brighton rather than being exiled to the perpetually damp Derbyshire Peaks. Overheated markets are always challenging, but the solutions required for London will be distinct from those for St Ives. Questions of setting targets and identifying demand here needs to be accompanied by locally-distinctive plans for addressing local needs.
This question of local needs also must look at some form of protection – dare I say it, regulation – which will increase the likelihood of development and need being synonymous. Simply building and allowing units to enter an open market is a constituent part of the current problem. The notion of protectionism and market interference is always unpopular, but this may be the lesser evil compared to the ongoing financialisation and securitisation of housing which creates a distinctly feudalist system in certain parts of the country as it separates need from demand.
How to solve the problem of affordability
Next would be some form of recognition that the problem of affordability is not singularly linked to the failure to build. It is also linked to these questions of financialisation and securitisation. This may require a presumption for different forms of development – such as community based ventures which progress development in line with localised need, thus safeguarding the development from forms of external speculation. It may also require some review of the financial models and products available. But alongside this, the reintroduction and application of tools such as Empty Development Management Orders through effectively resourced local planning functions able to brandish consequences may be part of the solution.
Supporting first-time buyers
Finally, and linked to the financialisation argument, is the potential for supporting first-time buyers, particularly those from lower income groups, with further measures for entering the ownership market. Several schemes have been run by successive governments, to varying degrees of success, but certain exclusion criteria such as restrictions on the value of the purchase in a dysfunctionally-inflating market limit their validity (for example, the failure to index link the £250k price limit on the Help-to-Buy ISA cost me around £3000). As one of the most significant barriers to many first-time buyers is acquiring a deposit, which can take many years to save, some intervention to reintroduce guarantees in lieu of deposit, to offer low-cost or interest free loans, or encourage 100% loan-to-value products may be necessary.
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The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.