What we want is economic growth….. but not house building

Gilian MacIinnesRecently I have spent a lot of time listening to people talk about economic growth – how welcome it would be and how they would like to encourage it. The country certainly needs it and most councillors I hear from want to promote it. If you asked communities if they would like the council to help boost their economy I am sure they would say yes.

This is why I want to SHOUT very loudly – “How can you expect the economy to grow when you are anti housing development?”

With a population that is rapidly ageing occupying the existing housing stock and a continuing failure to build housing – where are the workers in the economy going to live? With mum and dad forever?

The majority of people are resistant to change. So leadership is needed to show them the connections between economic growth and housing. And they have to be reassured that there are not only negative impacts for them and their families.

Public misconceptions

In an IPSO Mori survey 63 per cent thought more than a quarter of land in England was developed (it is actually 10 per cent). And 66 per cent strongly agreed or tended to agree that they would support new development if it meant that enough affordable homes were provided for local residents In another poll for the BPF 61 per cent strongly agreed or tended to agree that they “would support new development if it helped to create jobs by attracting people and business to the area”.

We should be making policies and communicating the issues to communities in a way that will help them accept housing development. When are we going to see on telly, read in the tabloids and hear our leaders and those in positions of power saying: “We have a very serious national housing shortage that is thwarting economic growth and harming the lives of millions of people. We think that a huge house building programme should be supported by all – this is a national priority”.

The Government may say that this has been addressed by the National Planning Policy Framework (NPPF) and the Localism Act. These may go some way to achieving new housing but when many communities, and councils, still think that localism is about saying ‘no’ to development, how long will it take? Plan making will not take place overnight, with authorities having to objectively assess their need and comply with the duty to co-operate.

Viability versus infrastructure

If you listen to the house builders and developers, they say the developments can’t afford to pay for mitigation, affordable housing, or the Community Infrastructure Levy (CIL). One of the reasons given is that in parts of the country landowners will not lower their land price to a realistic level for the current market. Therefore, according to house builders, most of the country’s housing sites are underwater in terms of viability.

Savills have been tasked by the volume house builders to object to each CIL examination. Recently in Bristol they said that there should be a zero rate for all residential developments above 15 units – making no contribution to infrastructure in the city. And the RICS draft guidance on viability for planners shows that they believe the only negotiable element to bring a scheme into viability is mitigation and community elements (s106 planning obligations, affordable housing and CIL).

Therefore, if this attitude prevails development would fail to balance the economy, environment and social dimensions in the NPPF. Communities will become increasingly resistant to development and the anti-housing pressure on councillors to resist development will resultingly increase.

What needs to happen

If we want to grow the economy and meet the housing and economic needs of millions of young, working-age people, we have to build houses in the places where the demand and employment opportunities are. To make housing development acceptable to communities we need to ensure that there is affordable housing for local people and that it is properly supported by infrastructure.

This will not be adequately achieved in most of the country through the planning system where:

  • the price of land remains unrealistically high
  • there is no public funding
  • CIL and/ or s106 is not set at a level to achieve the infrastructure and affordable housing for the developments, or development strategy and remain viable.

If Savills or the RICS approaches to CIL and plan making prevail it may not be achieved at all.

Strong leadership will be required to achieve housing development that both satisfies the community and is viable. This will require actions or mechanisms that take the land price to a level where development can meet its infrastructure and social costs. Or Government takes away from the planning system the burden of providing social housing and infrastructure to support development, and develops an alternative funding mechanism. It will also require a change of attitude from the volume house builders to the community and their needs.

The time may come when we do have real leadership on the urgent need for housing but it seems so unpopular with communities – in a short term political world – when will that happen?

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7 thoughts on “What we want is economic growth….. but not house building

  1. Another thought to add to GilMac’s points:
    In an authority suffering (in my view) from this disconnect between wanting economic development but much more ambivalent to new housing development, a councillor explained to me his rationale: the problem with growing the housing supply was that the value of the existing houses would fall – and that would jeopardise the overall prosperity of the area.
    I wonder how much this kind of rudimentary self interested economics is also pushing against Councils being strong enough to identify more new sustainable opportunities for housing development to create a bit of competition to influence land prices.

  2. Good points from Gilian and somegardener above.

    We’ve got to have a really clear response to these councillors who think that building houses will jeopardise the overall prosperity of the area. To my mind, it is as follows.

    1. It’s morally wrong. Holding back housebuilding in order to drive up prices is analogous to hoarding grain in warehouses, hoping to drive up the price of bread.

    2. It is self defeating, even to the house owner. Even if the Councillor does not mind seeing others impoverished, then pointing out his/her self interest might help. Hoarding permissions like this may make some householders feel wealthier in the short term. But

    a) their gains are illusory. When they sell their house they will presumably need then to buy another expensive one. (Net gain: zero).

    b) the long run it will impoverish everyone – including householders – because this behaviour makes the economy less efficient and so less productive.

    We need planning. We shouldn’t have a free for all. But planning is not about defending monopoly pricing power. The balance between the housing haves and have nots needs recalibrating. We’ve got the tools to make this argument – and it works.

    The takeaway for the Councillor: hoarding permissions to drive up prices is morally wrong. It penalises one group (housing market entrants). It is also self-defeating for all of us. Your house price gains are illusory, because you always need a house. But your losses are real, because you are part of a wider economy which is impoverished.

    Really boiling it down: hoarding permissions is the opposite of making an area more prosperous.

  3. A local builder won an appeal to build on a greenfield site. The same builder is now applying to have a time extension on a different site, because he has not yet started work within the time limit under which planning permission was granted. Certainly in this case, the problem is not the lack of land on which to build, but the lack of willingness to build. We are guessing that the problem may be financial. When he does build, the houses that this builder constructs usually cost at least double what the average local couple can get a mortgage for, and he has a track record of ignoring quotas for affordable housing, not paying S106 moneys etc. This is simply one of a number of unpalatable events in the recent past. This type of thing builds up local resentment and opposition to the point where it becomes entrenched, rather than rational. More local control might well result in more development, because people would feel less threatened. It also removes much of the incentive to working on a local development plan, if the feeling persists that an unelected individual from Bristol can come in and over-rule the decisions of a locally elected planning authority. I must also challenge the notion that development equals growth. If that were true, then Spain would now be the wealthiest country in Europe. That is not an example that we should wish to follow!

  4. I agree totally with Gillian about the need for leadership but given that a local councillor’s aim is to get re-elected, I think this may be in short supply in many of the parts of England that offer the greatest potential for growth. We had formal strategic planning structures in this country for the last 5 decades or so for this reason. The Government needs to rethink its strategy on strategic planning and re-introduce something that can deal effectively with ‘larger than local’ issues and do this as quickly as it can. It may be that they have already come to this conclusion which is why they are considering handing the big developments over to PINs! Although the Regional process wasn’t perfect, it was beginning to bring spatial planning and economic development much closer together and there is much we could learn from this experience (good and bad). The recently published book on regional planning system over the last 10 years (reviewed in Planning mag last month) should be high on the Government’s list of essential reading!

  5. I worked for the TCPA in the mid 1990s on a variety of projects to increase housing supply. Back then the debate was completely dominated by a NIMBY perspective, but that was before the crazy noughties boom in house prices. I had assumed that with the need for housing pretty much in the back yard of many of the people who benefited from the boom (ie adult children living at home) it would have got a lot easier to make the case. Apparently not.

  6. Pingback: Housing crisis – There is about to be a new government – it will be fine… | Planning Advisory Service

  7. Pingback: Crash, Bang, Wallop… is it viable? – Planning Advisory Service

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