Friday, 27 February 2015

Report: planning reforms will not help housing

The government’s ‘timid’ planning reform will not solve the housing crisis, according to a report published today.

The Institute of Economic Affairs has said not enough is being done to reduce the extraordinarily high cost of housing in Britain. It said that housing affordability measures show housing to be unaffordable in every single one of the 33 regions in the UK.

The report, Abundance of land, shortage of housing, said empirical evidence from around the world shows that planning restrictions are the key determinant of housing costs, and criticised the government’s new planning reforms for not doing enough to incentivise growth.

Only a thorough liberalisation of the planning system can address the affordability crisis, it said.

The national planning policy framework, which was published last month, aims to simplify the planning system to allow communities decide what development they want in their local area. But it came under fire from environmental campaigners who said it would lead to widespread development on the green belt.

The IEA said the government must resist vested interests lobbying against planning reform to help those struggling to afford to buy a home, and that the combination of a restrictive planning system and an over-centralised tax system should be addressed so that local residents obtain the advantages of development.

Currently, housing affordability measures show housing to be unaffordable in every single one of the 33 regions in the UK.

Philip Booth, editorial director at the Institute of Economic Affairs, said: ‘If the government wants cheaper housing, it needs to have the courage to change the system so that development benefits local people, who currently only face the costs. For too long, vested interests and nimbyism have dominated our planning system, tweaking it won’t change this. It’s time for fundamental reform.’

Readers' comments (7)

  • In one exercise I worked out that it would cost less than £60,000 to build a 3 bed detached home to code 4 using the same techniques employed by a mobile home manufacturer. A week and a half in the factory and a week on site, new home habitable in no time at all. The costs dropped with economy of scale.

    Then I worked out how much it costs to get from the site survey through to the planning consent, and of course the cost of the land...

    Let's hope Wales comes up with something better than the neutered English regime.

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  • Mr Owen - spot on - is it council planners to blame for setting out impractical standards and dragging their heels - the answer is in their hands - the new government is trying to liberalise planning, incentivise homes, planning bonus, etc - the question is how long will it take to break local prejudices against development?

    As you say £60K is more than enough to build a standardised home with assembly line methods - the rest is land and planning.

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  • Nicole M

    But don't forget that many council planners would be happy to see more homes built. The policies that they follow are heavily influenced by councillors, who are influenced by their constituents. In other words it is unfair to pin all the blame on council planners when in reality it is the general public who are opposed to housebuilding anywhere near them. 70% of households own their own homes and most don't want any more development near to them.

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  • EVERYONE blames the planners but they don't make the law! Stick to the brutal truth - houseowners do not mind devlopment until its next to them then all hell breaks loose using fair means or foul to stop it. Then the landowners only want to make profit someone else should pay all the infrastructure costs. So 12 weeks planning time 2 weeks to build is achievable if everyone is realistic.

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  • Surprise surprise as a free market thinktank bemoans the planning system.

    "The IEA, styles itself the UK's pre-eminent free-market think-tank. Its mission is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems."

    The main barrier to housing supply right now is lack of effective demand, as there is insufficient finance available for mortgage lending. You could double or triple the amount of consented land tomorrow and it would have no effect whatsoever on overall construction rates. Meanwhile, the land revaluation would probably send a few housebuilders bust while further denting the balance sheets of many banks, making mortgage lending even more difficult.

    I am fed up with autistic free-market economists coming out with simple-minded reports like this about the planning system. I would much prefer it if a heterodox economist such as Ha-Joon Chang took a look at this issue.

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  • On the sidelines

    Some of the banks because of their incompetence some of the housebuilders, who sit on their landbanks and everyone (who want housing but not next to them) else are to blame.....including me

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  • If getting planning consent for sites is the problem why are there numerous spade ready sites with consent in place in my area while developers seek to get their hands on green belt sites and are skewing our LDF to do so. Getting planning consent isn't the problem, developers are simply seeking to manipulate the market to maximise their margins. They have land banked numerous brownfield sites to help them towards this objective.

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