Housing: Where’s the Plan?. Kate BarkerЧитать онлайн книгу.
unless they are very carefully formulated, will choke off the desired increase in the supply of private rental property. Elsewhere in the EU, controls have not stifled supply, but this is because the controls often fail to keep rents much below market levels. A concerted resort to rent control, then, would simply be an attempt to fight the market by reducing the price of something that other policies have rendered in short supply. It is unlikely to succeed. Changes to encourage longer secure tenancies, or to control rent increases, might achieve a better balance between protecting tenants and retaining an adequate incentive for landlords.
Myth 4London and the South East are too congested, so we need to build more houses in the North and fewer in the South East
It is sometimes argued that people need to move to where the housing is, but it makes much more sense for housing to be built where people want to live and work. If governments really want to tilt the economic geography of the UK from south to north, then improved skills and transport links, the movement of government offices out of London and the creation of new cultural centres all need to come before building new housing. Most experts argue that housing supply should be focused on urban labour markets. Alain Bertaud has pointed out that once cities are thought of in this way, transport issues come to the fore.8 The alternative – restricting housing development in exactly the places where people want to live, and where settling would improve their welfare – is perverse.
Regional policy (and its costs and benefits) is a vast topic and it cannot be tackled here,9 but the balance of evidence suggests that, despite considerable expenditure, little success has come from efforts to regenerate declining cities.
It is also unfortunate that better data on rents in the UK is not available. The Office for National Statistics has introduced a recently developed rental series into a new measure of inflation, but at the time of writing this series was being reviewed. Rental data is important for measuring inflation, and for indicating the trend in housing affordability.
Homes where people want to live
At any time different towns and regions will experience very different housing pressures. During the recovery from the financial crisis, London’s international status has driven up house prices there. But cities such as Stoke-on-Trent, where the housing market was still being regenerated in the late 2000s, have seen a far slower return to upward price pressure.
Spatial policy has recently moved backwards. In 2010, the coalition government ended regional planning, choosing instead to focus on local planning (through ‘local enterprise partnerships’), making it difficult to develop a coherent approach to regional spatial questions. This is a pity both from a development point of view and from an environmental one. Issues of water scarcity, or of biodiversity, are often best considered over quite wide geographical areas, and these debates cannot now easily take place.10
Summary
All governments surely want to see the population decently housed, and yet major housing issues are still not being tackled in a systematic way. Politicians find it hard to resist introducing short-term policies that seem to support the popular desire for home ownership, directing subsidy towards those who are nearly able to afford to buy a house, but this is not the best use of taxpayers’ money in the housing market.
Economists tend to prefer policies that level the playing field between home ownership and renting, but they are not easy to implement. Policy towards the private rented sector is itself confused: it aims to limit rent rises and to encourage more investment, but these are conflicting aims.
The fundamental issue is that a house is inevitably both an investment asset and a provider of housing services. If declining supply relative to demand is likely to result in a long-term trend of rising prices, it will be a major incentive for buying a home.
The UK has experienced a long-run undersupply of housing relative to demand, which rises because of higher incomes and a growing population. (Demand is not the same as ‘need’: the latter would imply we all lived in houses that just met government-determined space and bedroom allowances.) The recent financial crisis has been followed by a sharp fall in supply, but the shake-out of smaller developers and the loss of construction skills means that just getting back to the level of new housing supply delivered in the mid 2000s may take several more years.
On top of this, foreign buying is distorting the market in key cities (especially London), the tax system could be better structured to encourage housing supply, and there is a basic question as to how much housing is compatible with environmental concerns: both for the UK as a whole and for particular areas.
All these complex and interrelated questions need to be viewed through a clearer policy lens. The rest of this book seeks to do just that, focusing chiefly on private housing. Social housing deserves its own book.
Chapter 2
Post-war planning and housing policy
Successive governments have wanted to ensure that all households have a dwelling of a decent standard and, through good planning, that these homes are in pleasant places. Unfortunately, the objectives of those devising and implementing planning regulations have not always been the same as the objectives of those concerned about housing market outcomes, and this has often resulted in frustration between different arms of government at both national and local levels.
This is not the story of planning in the UK as a whole: policies in Scotland and Northern Ireland (and in Wales since 1998) have increasingly diverged from those in England as a result of devolution. This means that much of the following discussion is about England (although some of the quoted figures are UK-wide ones). Devolving planning complicates policy, since some measures (particularly taxes) have remained national and can rub up against the devolved administrations’ housing and planning policies.
A little history helps in understanding today’s housing situation, so I give a brief description below of the key planning acts and other regulations, the major changes in the taxation of development and housing, and the shifts in policy towards social and other ‘affordable’ housing. By detailing some of the relevant history, I give examples of how successive policies have often had unintended consequences because of a failure to anticipate how the market would respond and/or because the impact of economic and credit cycles has been ignored.
The 1950s and 1960s: post-war reconstruction11
The most important year in our planning history is 1947, when the Town and Country Planning Act effectively nationalized development rights in England and Wales.12 From that time on, most developments of any size have required an application for planning permission. This Act also introduced the plan-led system, meaning that decisions on planning applications needed to be made in accordance with the local plan unless there were specific reasons not to do so (these are called material considerations, an example being a shortage of school places). Despite many modifications, in principle these two key features still hold sway in England.
The concept of the green belt was also formalized in 1947 as a means to contain urban sprawl. Only London had a green belt initially, but in 1955 Duncan Sandys, then minister for housing, encouraged all local authorities to establish their own green belts.
At first this regime was positive for new housing supply. During the 1950s and 1960s the number of dwellings completed each year in the UK reached a historically high level, peaking at 426,000 in 1968. Local authorities were building on a very large scale for social renting, and there was also a growing supply from housing associations. Social rent completions in the UK averaged over 190,000 per year in the 1950s, and over 160,000 in the 1960s. Private completions rose from just 90,000 a year in the 1950s to almost 200,000 in the 1960s.13 But demolition of unfit housing was also taking place, so overall figures for additions to the stock were less impressive: while total completions ran at around 280,000 in the 1950s, the stock rose by only 250,000 annually; in the 1960s, completions averaged about 360,000 but the annual increase in stock averaged just 263,000.
Nevertheless, the annual increases in the number of homes were far greater than they have been in the most recent two decades. In the 1990s fewer than 35,000 social rental homes were built annually, and in the 2000s this dropped below 25,000 before picking up to over 30,000 again by the