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The Progressive Policy Think Tank

Why housing in the UK requires bricks, not blame

The Government’s recent announcement on a review of the National Policy Planning Framework has struck a more considered tone than the 2012 NPPF which marked a particularly low point in the Government’s relationship with the planning profession.   

Most pleasing is the attempt to broaden the definition of planning’s purpose beyond that of simply a driver of economic growth, with acknowledgement of planning’s social and environmental objectives.  It was also good to hear Theresa May talking robustly about the limitations of the development sector and particularly the shortcomings with the current system of delivering affordable housing, most notably, the much debated ‘economic viability assessment’.

However as is often the case, the government have chosen to frame the debate as an interplay between, on the one hand, greedy developers and on the other, local authorities who fail to release enough land for development, whilst simultaneously making too much land available in the greenbelt.  In reality, the truth is that local authorities can only deliver what their local land and property market will provide and there are many reasons as to why local housing targets are not met, including: 

Lack of land: some councils do not have sufficient land available on which to build new housing, it’s as simple as that!  This means they have to consider greenfield sites or working with neighbouring authorities who do have land under the duty to co-operate.  Unlocking greenfield sites, particularly if they are on greenbelt can take time and so too can negotiating complementary arrangements with neighbouring authorities.

Oversupply of ‘brownfield’ land: In some areas, councils have lots of land but perhaps, as a result of industrial legacy or economic change, this land is not very attractive to private investment, it isn’t ‘economically viable’ as they say in the trade.  In this scenario, planners have to work creatively to try and ‘make the market’ so as to cajole investment in the future.  They do this by improving infrastructure, cleaning up dereliction, marketing and generally helping to ‘de-risk’ the site and in doing so, kick start the market.  Many towns and cities in the North of England operate in this way combining spatial planning with economic development.  In the face of government cuts, freeing up space on greenfield land to unlock new the homes bonus, additional council tax revenue and developer benefits (generally offsite) can often be the only way to secure this finance locally.  Of course – making the market takes time to develop partnerships with developers and establish market confidence.

Too much terraced housing: Many areas of the North, for example, parts of East Lancashire, Tyneside, Liverpool and Tees Valley have large concentrations of interwar terraced housing which is generally of variable quality and lacking some of the amenities that modern consumers desire, e.g. gardens and private parking.  Often much of this stock is in the private rented sector which can mean that it is of very poor quality.   Encouraging new investment in this housing stock is very difficult and to date has generally been driven by the public sector, e.g. through Housing Market Pathfinders in latter years of Labour Government. 

Macro-economic events have a disproportionate impact: The structure of the construction market in the UK depends on a very small number of national house builders.  These national house builders have massive asset portfolios and large levels of debt ratios which require servicing and as such, depend to a very large extent on global and international economic conditions. As a developer once told me, ‘our business is about selling not building houses’.  Ultimately, developers need to sell their products (houses) in order to generate profit and keep their businesses afloat.  Any risks to their ability to sell houses, such as economic uncertainty or Brexit must be taken seriously, and the cost is that housing targets may not be met – particularly in those areas where the risk is considered to be most acute.  In times of trouble, investors will want to warehouse their investment in the safest houses, where they can be certain of a future return, for example, Cambridge or Oxford.

Whilst the review of NPPF is welcome, it feels as if the debate has not moved much further forward in five years.  In that time, the housing crisis has continued to intensify and arguably has now reached a tipping point whereby the only thing that will make a meaningful and material difference to the supply of affordable homes is the direct intervention of the public-sector capital to address failures of the market to provide.  This is already happening in some areas with local authorities making the best use of public land assets to deliver 50% affordable housing on new developments, but the challenge now is to help scale up this activity which will not only help to deliver the homes that people need but provide greater confidence to the construction market at a time of ongoing certainty in the face of Brexit.

Sarah Longlands is a Senior Research Fellow at IPPR North. She tweets at @sarahlonglands.