Jeremy's Blog 1st March 2024: Look for Housing Policies that Work

This article by Jeremy Moody first appeared in the CAAV e-Briefing of 29th February 2024

Perhaps, as in T.S. Eliot’s words, “Humankind cannot bear very much reality” (Four Quartets). Much of our public discussion seems based on making gestures, that the wish is better than the deed, the protest more material than the answer, rather than facing the realities of our problems and tackling them, explaining the issues and applying the practical remedies.

One of the greatest challenges of our time, housing, is beset by political unwillingness to face its scale and to persuade people of what needs to be done. As the comfortable resist new development, its shortage has crept up on us for more than a generation, year by year, to the point where comparison suggests we might be 2,000,000 houses light. Prices and rents are at levels meaning a 30 year old is as likely to be with parents as in their own household; the average age of a first time buyer is in the late 30s. It is now limiting our hopes of economic growth.

For 20 years, a need for 300,000 houses a year has been quoted. Never achieved, recent assessments point to needing 380,000 or even 500,000; before considering what to do about the 1.9m dwellings expected to be at risk of annual flooding by 2050.

This week’s Competition and Markets Authority report identifies the planning system as the main culprit – unpredictable, costly, complex, protracted, unclear, inconsistent and especially burdensome on smaller builders – “a key driver of the under-delivery of housing”. We have known this but acting has been too hard – major proposals put in 2020 foundered on the backbenches.

Our politics has instead responded to the strains by tackling symptoms, not causes, with measures that may sound well but fuel demand and reduce supply. Interventions in the lettings market see owners flee new burdens, choosing to sell or offer short lets. New lettings are further reduced as tenants move less. Buyers are assisted without providing housing. The cycle gets worse.

We need not simply know that markets balance tightening supply with demand by driving up prices but can see practical demonstrations in answering shortage. These issues are not unique to the UK but, proportionately worse in Ireland, apply across the western world.
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Auckland in New Zealand substantially liberalised planning, saw more housing and rents no longer rose but fell. Relaxing policy near the centre and transport hubs allowed protection of more sensitive areas.

Now a Financial Times article (24th February) has compared Texas (liberal in planning terms) with California (restrictive). The difference sees the average price of a house in San Francisco at $1.2m but $300,000 in Houston, not because of traditional sprawl but like Auckland, by enabling density. Since 1998, Houston has allowed the replacement of one house with three, politically durable as areas can opt out. Croydon tried a similar approach in 2018, improving supply and affordability but, without opt-outs, a change of political control on an anti-development ticket saw such small developments stopped.

The Government proposes more density in major urban areas but has so bent to political pressure that some 60 councils have given up housing targets. Bypassing the planning system, permitted development rights are being changed to ease the large-scale transfer of commercial property to residential use.

Keir Starmer has been talking strongly about “bulldozing” the planning system to achieve housing and infrastructure, building on the “grey” areas of the Green Belts and pressing forward with new towns. Housing may be one policy direction that he shares with Texas Republicans. Even with such words, Labour backbenchers have resisted new development and affordable housing while Labour defeated changes to nutrient neutrality rules.

Housing is an object lesson in the consequences of protection – protecting existing homeowners is limiting new ones; protecting existing tenants denies opportunities for new ones – and so the challenge grows. If we cannot enable sufficient housing to answer public need, we will face much larger problems; the longer we hold off reality, the more it may bite us as our politics become yet more febrile, fractured and gesture-ridden.