Posted by: Colin Wiles27/10/2011
Two days ago the BBC published “Eight radical solutions to the housing crisis”. They were:
1. Encourage the elderly out of big houses
2. Freestyle planning
3. Contain population growth
4. Force landlords to sell or let empty properties
5. Ban second homes
6. Guarantee mortgage payments (i.e. force the banks to lend)
7. Live with extended family
8. Build more council homes
It’s an interesting list, although the suggestion that “building more council homes” is seen as radical will have Harold Macmillan and Aneurin Bevan spinning in their graves!
Here is my quick take on the rest of it.
Number 1 is Stalinist and would upset middle England.
Short of re-negotiating the Treaty of Rome or introducing compulsory euthanasia Number 3 is a non-starter. Much of the projected growth in population is down to people living longer. The rest (about 44%) is due to in-migration, mostly from the European Union, which we are powerless to stop. This is the issue that most excites letter writers to the Daily Mail and Telegraph: in fact most of the comments in their pages during the NPPF debate focussed on immigration control as a way of solving all our problems, not just the housing crisis. Don’t go there.
Number 4 – fine, but local authorities already have powers to deal with long-term empty properties.
Number 5 is a non starter- most peers and MPs have second homes and they are hardly likely to vote for a ban. Introducing fiscal disincentives to second-home ownership is one option, but it could penalise the poor – what about families who’ve owned a chalet in Clacton for decades?
Number 7 is happening already (the average age of a first time buyer is 37) and is bound to get worse. It’s market-driven and not something you can legislate for.
That leaves numbers 2 and 6, which are to some extent two sides of the same coin. “Freestyle planning” is a clumsy description of the draft National Planning Policy Framework, and reflects the largely successful scaremongering anti-campaign run by the National Trust and others.
As I’ve argued before, we need to build at least 5 million homes over the next twenty years to catch up with under-supply and population growth, but this means building on little more than one per cent of the unprotected countryside of England (and remember that 45 percent of England’s land area is protected).
The price of land is a significant element in the price of any house – up to 50% or more in some areas. More land means lower land prices, means lower house prices. It’s a simple equation isn’t it?
Lower house prices will lead to a more balanced mortgage market which will allow more first-time buyers to borrow. One of the key arguments made against the NPPF has been the outstanding number of planning permissions - about 300,000.
Apart from the fact that this is not much more than a year’s supply of homes, the mortgage drought is a short-term phenomenon. Banks are building up their balance sheets after the crash and housebuilders won’t build if there is no demand, but they will start lending and building again before too long and if house prices are lower relative to incomes it means they will be able to build for and lend to more people.
That is why the NPPF is a once-in-a-generation opportunity to restore some of the balance in the housing market and, subject to some tweaking, it opens up the possibility of providing the much-needed affordable homes that we need.
So numbers 2 and 8 in the BBC list are the answer. Forget the rest. All the recent fluffy initiatives on right to buy, buy to let and under-occupation are just so much smoke and mirrors, designed to conceal the fabled elephant in the room - the fact that housebuilding is at its lowest level since 1923.
From Inside out
An independent look at the housing sector and beyond from Colin Wiles