Housing: a better way?

When BBC Question Time came to Northstowe outside Cambridge earlier this year (2024), a member of the audience posed the question “should housing developers have to make better provision for building local amenities?” recounting his experience of Northstowe, a town planned to have 10k homes where despite a population already of 4,500+ people there is no shop, no health provision, no community hub.

Rather than following the government’s political rhetoric about holding developers feet to the fire, another audience member – from nearby Cambourne – suggested that amenities promised at the planning stage be built first rather than allowed to follow later when the developer chooses, if ever.

Neither the Conservative MP, nor the Labour MP, nor the lobbyist/free market commentator on the panel was prepared to call out the fundamental contradictions in the planning system. Namely, we have a system of housing delivery which hands control to the supplier.

To expect developers and builders NOT to try to maximise their profits while avoiding costly obligations is naive in the extreme. And having ceded so much control to the building sector it is unsurprising that regulatory capture comes into play (see page 8).

In February 2024 the Competition and Markets Authority (CMA) published a study of housebuilding. The report concluded “the housebuilding market is not delivering well for consumers and has consistently failed to do so over successive decades.” No surprise there but the Authority also uncovered alleged breaches of the Competition Act by eight UK housebuilders.

IF AT FIRST YOU DON’T SUCCEED FAIL, FAIL AND FAIL AGAIN
Most observers of the housing market (and certainly all those close to the development industry) are clear that over more than a decade Govt has abjectly failed to deliver sufficient housing.

But government cannot simply command the private sector to build. Instead, a complex array of inducements and subsidies has had the perverse effect of increasing builder’s profits while doing little to increase supply and in some cases loading home buyers with unexpected outcomes. It’s madness, made more confusing by the search for scapegoats: Nimbys, the planning process, immigrants. Anything but recognising that ham fisted rigging of the market in favour of developers is the real culprit.

TAKE CONTROL
The only way of getting ahead of the game and delivering anywhere near the new government’s target of 350,000 houses per annum – and putting a home within reach of most people – is to take control of land supply and to rapidly build housing that does not carry the dead weight of landowner’s inflated profit expectations. And importantly, to leave it to local planning authorities and municipal development corporations to decide what density, type and mix of housing is needed and where.

This is not to propose wholesale nationalisation of housing, just sufficient direct control to speed up delivery and reduce costs. Granted the foregoing is a simplified explanation and is by no means an original proposal.

Many more knowledgeable minds have proposed the same or similar; but for as long as political control is fixated on a neoliberal approach nothing changes. While the market reigns supreme the divide between those that have a secure home and those that do not will grow ever wider.

SALE OF COUNCIL HOUSING
At the time of writing this newsletter Housing Secretary, Angela Rayner, had signalled abolition of the Right to Buy scheme, a cornerstone of housing policy since 1980 and which has contributed to a drastic reduction in the availability of social rent homes. Last year 10,896 homes were sold under Right to Buy, but only 3,447 were replaced, reflective of a deliberate policy to constrain councils from building council houses and the failure of the private sector to meet the need for affordable homes.

Right to Buy was a genuinely revolutionary policy, the weakness in it however, was the failure by consecutive governments of all political hues to use the proceeds to build more houses.

AFFORDABILITY: THE BIG CON
There is a confusing array of supposedly affordable ways of owning or renting a new build home. For the most part these have as their primary objective house sales. The real needs of buyers and renters come a distant second.

And then there is the politically contrived and economically illiterate ‘Help to Buy’ scheme that has inflated house prices and boosted developers’ profits while failing to deliver more homes where they are most needed.

Uttlesford’s very own economic Rottweiler, the city economist and Societe Generale economic analyst (and Widdington resident), Albert Edwards, was scathing in his assessment of Help to Buy when launched back in 2013. The Bank of England and International Monetary Fund were none too impressed either.

“I believe it is a moronic policy that stands head and shoulders above most of the stupid economic policies I have seen implemented during my 30 years in this business,” Albert said at the time, adding that the greater availability of borrowing partially backed by the British taxpayer would simply inflate house prices still further. “First-time buyers need cheaper homes, not greater availability of debt.”

The Conservatives finally saw sense and announced the end of the scheme. Yet Labour have said they will retain it. Is nobody listening or are they simply taking their instructions from the construction lobby?

As we have pointed out before, the Conservative governments of the 1950s under Macmillan were the most successful housebuilders ever. We need a new ‘Supermac’ and one who starts by repealing the 1961 Land Compensation act.

ASTONISHING HOUSING FACTOID: Nationwide, one of the UK’s biggest mortgage lenders, has a list of 2,900 new-build sites that it has closed to new lending due to factors such as location, quality of build, level of ground rent or future saleability. That is tens of thousands of homes for which people could struggle to get a mortgage.

BRIGHT IDEAS THAT GO NOWHERE: a partnership between Homes England and the Ministry of Defence (MoD), announced in 2019, was supposed to deliver as many as 10,000 new homes on vacant military land. What happened? Nothing! The scheme was quietly closed in April 2022 without a single new home being built. Adding insult to injury, earlier this year the MoD identified surplus “brownfield” land that could be used to build almost 35,000 new homes but none of that land has so far been released or sold to bring forward development.