Inside out
Licensed premises
Recent revelations in The Guardian and elsewhere about people living in sheds and a walk-in freezer (a phenomenon that is bound to increase as the housing crisis deepens) are building up pressure on the government to regulate the private rented sector.
The government is resistant to any notion of added regulation, fearing that it will drive landlords out of the rental market: “Over-regulation would reduce the number of properties to rent and wouldn’t help tenants or landlords” says the CLG. The government seems to believe that existing voluntary schemes are sufficient. They are not, and the clamour for regulation is bound to increase as further revelations about the seedy recesses of the private rental sector emerge.
Trade bodies within the sector want regulation, tenants want it and the public will increasingly want it when they see the scale of the problem. Last November I wrote here that we are creating a housing underclass and that we would see more of this kind of thing in the future. As Hannah Fearn in The Guardian points out, “money always follows a market”. The raising of the room rate to 35 and other changes to the benefits system are bound to increase the pressure on the lower reaches of the private rented sector. My prediction is that an individual will shortly emerge to replace Peter Rachman in public mythology as the slum landlord of our times.
The key requirement is that any system of regulation or licensing should be simple, subtle, supported by both tenants and a majority of landlords and easy to administer. It should not penalise the vast majority of good landlords for the sake of a few rogue elements. I was lying awake in the night and it came to me that local authorities already operate a number of licensing schemes that are simple, easy to understand, self-funding and have widespread public support. The system for licensed premises is an example.
It is illegal to sell alcohol in this country without a licence. You need both a personal licence and a premises licence that have to be displayed prominently in the property. The individual licensee has to be of good character. In England there are around 166,000 licensed premises and fees range from £100 to £635 for a new application and between £70 and £350 for the annual renewal of the licence. The beauty of this system is its simplicity. Everyone understands the notion of licensed premises and licences are usually renewed without any fuss. It is only where there have been complaints from neighbours or the police that licensing authorities will consider non-renewal of a licence to drive out the rogue elements. Is there any reason why the same principles could not be applied to the rental market?
Imagine a similar scheme applied to the private rented sector. The licensee would either be the landlord or a reputable letting agent who would be required to meet basic requirements relating to decent standards, deposits, safety and tenancy management. An annual fee of £100 (a mere £2 a week on the rent) would yield an income of around £400 million across England. That’s an average of over £1 million for every local authority – enough to fund a significant team of licensing and enforcement staff. Every self-contained let property would have to display a licence and tenants would have the comfort of protection under the scheme. As with licensed premises, the vast majority of licensing activity would focus on rogue landlords, following up complaints from neighbours and others, whilst the vast majority of properties would see their licences renewed annually without any fuss. Of course, it could lead to a slight reduction in the number of properties available across the country as sheds and other illegal and unsatisfactory premises were driven out of the sector, but that is a good thing surely? Conversely, it could also attract new landlords who were attracted by the simplicity and reliability of the scheme.
I can’t see any flaws with this system. Can you?
London must grow
The true scale of London’s housing crisis was revealed by last week’s “social cleansing” story. Inside Housing’s Jules Birch and Steve Hilditch’s Red Brick covered the topic admirably, and I don’t intend to rehearse the issues here, but it’s important to note that the story was not just about Newham. Most London boroughs are looking to export people from the capital because of the shortage of affordable homes and the expense or non-availabilty of private lettings.
Paul Bayliss, leader of the Labour group at Derby City Council hit the nail on the head when he said: “The solution for London is simple. The city needs more affordable homes.” He’s right of course, yet the deeper problem for London is not just a shortage of affordable housing but a shortage of housing per se, across all tenures and types. But even if London experienced a housing boom over the next decade it could still not build the homes it needs for the simple reason that it has run out of space.
Let me explain. According to the Office for National Statistics the capital’s population is set to grow from eight million now to over ten million by 2032. That means London will need to build at least 800,000 homes over the next two decades to cope with population growth – even more if it is to make good past under- supply. That means up to 40,000 new homes will be required every year for twenty years. Yet London is only building around 18,000 a year at present, and the HCA’s affordable rent programme will only provide 5,000 a year between now and 2015. What’s more, London has fewer than 4,000 hectares of brownfied land - barely enough for 120,000 homes. At the same time, 350,000 households are on London’s waiting lists and the vast majority of young Londoners simply cannot afford to buy a decent place to live. This all adds up to a housing crisis that can only get worse.
So the maths simply do not stack up. The truth is that London will never build the number of homes it needs unless it can expand upwards or outwards. Given that the days of high-rise residential blocks are in the past, and the fact that London has seen a startling increase in densification over the past twenty years it seems the only solution is outward growth. Yet our capital, in many senses the capital of the world, is confined within an outdated and artificial boundary - the green belt - which was put in place over 50 years ago and has no relevance to its current global status.
Again, let’s look at the facts. The 33 London boroughs cover 158,000 hectares but they are surrounded by an inviolate green belt of 479,500 hectares. But a further 35,000 hectares of green belt lie within the boroughs – 22 percent of London’s total area. Beyond the London boroughs, but within the M25, there is a further 75,000 hectares of land, of which about two thirds is green belt. So within the M25 there are at least 85,000 hectares of developable green belt land - that’s enough for over 2 million homes! Of course I am not suggesting that all of this should be built upon, but much of it is either low-grade agricultural land, or occupied by low priority uses such as golf courses and pony paddocks, with little or no aesthetic value and no access for the general public. You only have to drive around the M25 to understand that this land has no other purpose than to hem London within its post-war boundaries and you have to ask yourself, what is the point of preserving this land when London’s needs are so acute? Even if 50 percent of it was built upon it would provide over a million new homes, easily enough to accommodate London’s needs over the next twenty years. Across the UK, most towns and cities expand to the edge of their surrounding bypasses and ring roads. Why should London be any different?
Not only would this growth help to re-balance London’s dysfunctional housing market but it could provide hundreds of thousands of affordable homes. It would also allow London to think more creatively about its present shape and the quality of its environment. No longer would development be crammed into the capital at ever increasing densities. Green lungs could be pushed right into the heart of the city (imagine being able to walk or cycle from the centre of London to Epping Forest or the North Downs), brownfield sites could be turned into open spaces, allotments or city farms. The artificial and out-of-date distinction between town and country could be subsumed into a new garden city vision, where the country could be brought into the city. It would also give London the elbow room it needs to put in place a range of measures that would help to “green” the capital. For example, to create a proper network of cycle lanes so that the number of journeys made by bike could be increased from the present abysmal figure of 5 percent of all journeys towards Copenhagen’s 50 percent. Air pollution could be eased. A policy of outward growth could literally allow Londoners a breath of fresh air.
None of the candidates for Mayor has raised the issue of London’s boundaries and outward growth in their manifestos. They all appear to accept that London is a fixed entity, forever frozen within its decades-old boundaries. Boris Johnson even makes a specific pledge to protect the green belt. Yet cities grow and any credible candidate for Mayor should have a vision of how London will look twenty or fifty years from now. In my view, the only solution to London’s growing housing crisis is for the capital to push out towards the M25. If London wants to house, rather than export, its population there needs to be a public debate about growth and a recognition that the green belt is literally strangling our capital.
To the lighthouse
This blog is always keen to explore the quirky back alleyways and recesses of the housing world so, as I was down there at the weekend, I thought I would write about King’s Cross and its famous Lighthouse.
For nearly ten years in the 1980s I worked for Camden Council in King’s Cross. Back then it was an area notorious for prostitution, drugs and a general air of dereliction. It was a place to pass through rather than linger in. Hang around too long and you would inevitably be offered drugs or “business”. Every afternoon, from my office on the civic floor of the Town Hall, I watched the same street-drinking man having a pee in the portico of Sir George Gilbert Scott’s glorious but semi-derelict St Pancras hotel. It seemed somehow symbolic of the area’s decline. For a while I “managed” the notorious Hillview estate – 230 flats in a series of tenement blocks with internal courtyards built by the East End Dwelling Company in 1897. There were stone-clad coppers on the stairwells and baths in the kitchens. You could have filmed a Victorian melodrama there without changing a thing. Kenneth Williams grew up in one of the blocks and made this film about his childhood. By the time I got there it was occupied by squatters and short-lifers and had been dubbed “Punk City” by the tabloid press on account of the drugs and prostitution that blighted the neighbourhhod. I once attended the eviction of a one-bed flat where we found five men and three women in residence, every inch of the floors covered in dirty mattresses. Interesting times.
Looking down over this scene of dereliction and decay, at the junction of Pentonville Road and Gray’s Inn Road, was the King’s Cross Lighthouse. It is a London landmark but no one seems to know its history or purpose. It has the appearance of a small helter skelter, but this seems improbable. One theory has it that it was an oyster establishment, as they used lighthouses as a symbol of their trade. For several years the building was squatted. One day some of the occupants got down into the basement and found themselves in a series of tunnels that suddenly opened out onto a tube platform.
But now King’s Cross is being transformed. For anyone who is a keen student of housing history and urban regeneration I recommend a thirty-minute stroll around the area. The St Pancras Hotel, saved from demolition in the early seventies by John Betjeman and other campaigners, has been re-born as a mix of million pound lofts and a five star hotel. Behind it is the Eurostar terminal with a lovely statue of Betjeman on the concourse gazing up at the iron roof. Kings’ Cross station also has a magnificent new concourse. Hillview estate has been wonderfully restored by Community Housing Association and the surrounding estates are clean, safe and well managed. The area behind the station is now a huge building site where the gaps between the network of nineteenth century railways and canals are being filled in. The Guardian and St Martin’s School of Art are based there already and the quirky German gymnasium (once the head office of Circle 33) has been restored. But history seeps from the ground here. Queen Boadicea is supposedly buried under platform 9. Thomas Hardy was employed to disinter human remains from Old St Pancras churchyard, where The Beatles were also photographed by Don McCullin. Mary Shelley and Sir John Soane are buried here, the latter’s tomb being the inspiration for Gilbert Scott’s iconic red telephone boxes. The ash heap that dominates Dickens’s Our Mutual Friend was located nearby. Many scenes from The Ladykillers were filmed in the cobbled streets behind King’s Cross. Sadly, most of these and the historic tenement buildings, like Culross Buildings and Stanley Buildings (where The Pogues lived) have been largely swept away. But local people, led by the indefatigable King’s Cross Railway Lands Group (formed twenty-five years ago and still going strong) have been fighting for years to retain some community benefits for the area, including affordable housing, and to prevent the area being swamped with offices.
Five years from now King’s Cross could become one of the most vibrant and diverse quarters of London, and the Lighthouse, which very nearly fell down, will continue to dominate the view eastwards, for it is finally being restored to its former glory, along with an Armadillo roof behind it. Perhaps one day someone will reveal its original purpose, although I prefer to let the mystery be.
Laughter is the best medicine
The UK is getting older. By 2035 the number of people aged 85 and over will hit 3.6 million, two and a half times the number in 2010. By that date 23 percent of us will be over 65. This has massive implications for pensions and the amount of resources that will be available to support elderly people in their homes. Basically, we will need to provide more and better housing and health care with fewer resources.
One tool that can be used in the battle to reduce health and care costs and keep the elderly young at heart is …comedy. Yes, comedy. There is plenty of evidence to show that laughter reduces pain because it releases chemicals that act as a natural painkiller. Laughter also produces psychological and physiological effects on the body that are comparable to the health benefits of aerobic exercise. A good belly laugh can also help to reduce stress and anxiety. In short, a laugh a day keeps the doctor away.
Groups like Silver Comedy have responded to these findings by offering bespoke comedy packages to housing providers. In this project, reported in The Guardian, they arranged for “The Queen” to visit a dementia day care centre in Brent. Her visit went down a storm. I should declare an interest, because I have known one of Silver Comedy’s Directors George Baddeley for years, but I think they may be on to something. As our population ages, giving elderly residents a good laugh may be a cost effective way of increasing the sum of human happiness in sheltered and extra care schemes, and may help to save on care and medical bills in the longer run. Comedy sessions also bring people together in a really positive way. Sharing laughter and mutual enjoyment can help to counteract loneliness - and loneliness is a big problem for older people. We all know that old age has the potential to be a dispiriting and painful experience. But the ability to face ageing and our eventual death with a laugh and a chuckle (“Always Look on the Bright side of Life”) is something we should all aim for.
Planning - it's time to act
Will the new National Planning Policy Framework be a developers’ charter or a NIMBY wet dream? I think the answer to that question depends very much upon how we as a sector respond to it. Back in February former housing Minister John Healey described us as the most introverted sector he had ever come across. I think he is absolutely right. But the new planning framework gives us a fantastic opportunity to put our heads above the parapet and make the case for housing. It could represent the best chance in a generation to build significant numbers of new homes, but this will only happen if the housing and development industry engages fully with the planning process.
There are three key aspects of the NPPF which give me grounds for optimism.
Firstly, the plan’s the thing. The new framework is plan-led and local plans must make an objective assessment of future development needs, including housing. Where plans are silent, absent or out of date then the presumption in favour of sustainable development takes effect. Local authorities will have twelve months to get their plans in order. If we fail to engage with the local planning process then we deserve to fail.
Secondly, the NPPF calls for a significant boost to housing supply. Local authorities must plan to meet “the full, objectively assessed needs for market and affordable housing in the housing market area” and to provide an annually updated list of developable sites that provide the required housing for the first five years, with an additional buffer of 5 percent (20 percent for poor performers). They must also identity a supply of sites for years six to fifteen. Local authorities will be required to draw up a housing delivery plan and they must take account of migration and demographic change. The plan must include details of the size, type and tenure of homes to be provided in each location. Affordable housing must be provided on site “unless off-site provision or a financial contribution of broadly equivalent value.” This provides plenty of ammunition to ensure that housing needs are properly accounted for in Local Plans. Every housing provider should be keeping a close watch on their key local authority partners and they should prepared to challenge backward-looking authorities who fail to make proper provision. The “duty to co-operate” in the Localism Act also makes it essential that local authorities consider needs over a wider area, so decisions like those in the Stevenage/North Hertfordshire dispute should be robustly challenged. The fact that England is set to grow by 232,000 households every year for the next twenty years means that every local authority has a part to play in new provision. Local opposition cannot compete against the objective fact of population growth and rising demand, but as a sector we need to ensure this message is being heard.
The third significant element of the NPPF is the economic message about market signals, first raised by Kate Barker. The NPPF states that: “Plans should take account of market signals, such as land prices and housing affordability, and set out a clear strategy for allocating sufficient land which is suitable for development in their area, taking account of the needs of the residential and business communities.” I see this as a great opportunity for national bodies like the NHF and the CIH, as well as local authorities, to set out a proper definition of affordability. Imagine a world where planning policy dictated that an affordable average home should aim to be no more than three times the average salary in an area. This would push local authorities to release more land for housebuilding in order to restore balance to local housing markets.
Paragraphs 47 to 55 and 159 of the NPPF set out the key requirements for housing provision. I would urge everyone involved in housing strategy and supply to learn these by heart. Now is the time to make the case for housing.
Words that count
Last week’s publication of the National Planning Policy Framework left both sides in the debate claiming victory, which means either that the document was brilliantly drafted, or one side was either putting on an act or had misread the document - or both. I certainly think the final NPPF is a triumph of drafting – it seems to have pleased both sides and may end up pleasing neither - yet it seems to me that the bodies who opposed the draft NPPF, including the National Trust, the CPRE and the Daily Telegraph could hardly afford to lose face in public, given the amount of time and effort they had spent in attacking the government.
On the day that the NPPF was published I could not see a great deal of difference between the draft and the final versions. Of course there were changes of emphasis and the default yes to development had been removed but it seems to me that the final NPPF is overwhelmingly about growth, albeit sustainable growth, and that the repeated references to economic growth trump almost every other element of the policy framework, as Andy Boddington from the CPRE has manfully pointed out. I also predicted that the countryside lobby would seek to save face by claiming victory and I was right. Articles like this and this appeared over the next few days. The Daily Telegraph, (whose laughable “Hands off our Land” campaign failed to garner the support of their sceptical readers) even had the chutzpah to claim that six changes to the final NPPF had been their doing, (it was their “It’s The Sun Wot Won It” moment). It was therefore rather strange to see Simon Heffer in The Mail simultaneously taking the polar opposite view. Is the countryisde about to be concreted over or have the evil developers been sent packing? You can buy your paper and take your choice it seems.
This deliberate or unintended misreading of the new framework may come back to haunt some of these commentators. I hope it does. The NPPF’s emphasis upon economic growth is borne out by a brilliant word count of the 50-page document carried out by Mike Galloway, a Lib Dem councillor for Wolverton in Milton Keynes, who has looked at both the draft and the final document. His analysis reveals that the most frequently used words in the final NPPF are as follows:
- Plan/Plans/Planned/Planning - 689
- Development - 385
- Local - 349
- Site/Sites - 146
- Home/Homes/House/Housing - 110
- Sustainable/ Sustainability - 113
- Environment/Environmental - 96
The word ‘countryside’ appears only seven times. Overwhelmingly, these most frequently used words relate to growth, development, planning and localism. Encouragingly, the word “housing” appears almost three times more in the final document over the draft. These words speak for themselves and I truly hope that they will count for something in the future.
The sound and the fury
So after eight months of intense and often heated debate between pro-growth and anti-growth factions the revised National Planning Policy Framework was finally published this afternoon. We now have a working document that will set the tone and shape of planning policy for the foreseeable future.
It’s 47 pages plus appendices, 5 fewer than the draft, and replaces over 1,000 pages of previous planning policy including Planning Policy Guidance documents 1 – 20. As predicted, the document places a very heavy emphasis upon economic growth (a victory for George Osborne and the Treasury), balanced against social and environmental issues.
The key requirements on housing are retained. Local plans should “deliver a wide choice of high quality homes, widen opportunities for home ownership and create sustainable, inclusive and mixed communities.” Councils will have to carry out an objective strategic housing needs assessment, in partnership with other local authorities where housing markets cross boundaries, and provide the housing that is required. This includes providing for the size, type range and tenure of new homes, and proposals must take account of migration and other demographic change. Local plans will have to allocate, and update annually, a list of deliverable sites for new housing for the first five years of the plan, plus a 5 percent buffer (down from 20 percent in the draft). Authorities who have consistently failed to deliver new homes in the past will be put on the naughty step and forced to stick with the 20 percent buffer. Additional sites for years 6-10 and “where possible” for years 11-15 will also have to be identfied.
The key issues that upset some of the countryside lobby, like the National Trust and the CPRE (it must be remembered that the NFU and the Countryside Alliance supported the proposals) have been only slightly watered down, even though they are trying to spin the NPPF as a victory for their cause. The presumption in favour of sustainable development where plans are absent, silent or out of date is retained. In other words development will be presumed to be approved unless the “adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole”.
The NPPF also effectively ends the previous national brownfield-first policy, and local authorities will now be free to set their own targets, so there will longer be a national target for new homes being provided on brownfield land, something which pleases me greatly. This means that cities like Cambridge, which have been subject to unacceptable cramming on garden and brownfield land, can take a more balanced view about the future of previously developed land in the future.It is disappointing that the NPPF does not review the purpose and shape of the green belts, which do so much to cram us into the existing urban footprint at ever greater densities. But although green belts will retain their protection no new ones should be created unless there are “exceptional circumstances”. The NPPF also opens up the possibility of a new generation of Garden Cities to be built on greenfield land, including urban extensions that meet Garden City principles. This is one of Grant Shapps’s pet projects, via the Policy Exchange, and has to be welcomed by the housing sector.
Local authorities will be required to “take account” of the intrinsic value of the countryside, but I’m not sure how meaningful this is, when so many other clauses within the NPPF allow for greennfireld development. The feeling I’m getting from the Twittersphere this afternoon is that the countryside lobby is disappointed with the final document.
However, the NPPF places a huge emphasis upon localism and the local plan. In the absence of national and regional targets I’m still worried that the local planning process could end up being a NIMBY charter. If it is only the well-heeled and the well-housed who engage with their local planning authorities we could end up with plans that do not meet the needs of all the people, the housed and unhoused, the poor and the rich. That is why it is important for our local councils to engage effectively and constructively with their communities and for housing providers to get stuck into their local planning process. The ball is in our court now.
German lessons - part 2
During a recent Andrew Marr show interview, George Osborne justified his determination to change England’s planning rules by referring to the speed and efficiency of the German planning system (“…it takes a third of the time to build a warehouse in Germany than it does in Britain”).
I’ve written previously about the sense and stability of the German housing market, (a reduction on real house prices of 10 percent over the past thirty years), but in the ongoing debate about the need to regulate our private rented sector it’s also worth comparing the German system to ours. Whichever way you look at it, we come off worse.
Germany’s PRS differs from ours in several significant ways but to begin with the level of regulation is greater. Although rents vary across the country they are generally lower than ours and reflective of house prices. A landlord cannot increase the rent by more than 20 percent in a three-year period and tenants have a high level of security. Leases usually have no end point and landlords can only evict if there has been a serious breach of the contract. To reclaim the property for any other reason they would need to prove a ‘legitimate interest’, for example they would have to provide credible proof that they or a close family member wanted to move in. Where properties are sold, sitting tenants retain their protection. This level of security allows stable communities to develop, in contrast to the “churn” that our sector experiences, with all its attendant neighbourhood and management problems.
Most PRS properties in Germany are owned by small landlords and they are charged a lower rate of tax on rental income and can depreciate their investment. The German PRS comprises almost 50 percent of all housing stock, rising to 90% in Berlin (a function of reunification). So Germans see private renting as a safe and reliable form of tenure and they are not desperate to become owners - partly because house prices have declined over the long term and partly because ownership is taxed as an item of consumption. As I’ve said before, this reduction in house prices is mainly a result of making more land available for housing development – more than twice as much as we do pro rata. So the Germans have managed the trick of having falling house prices and a stable, secure and attractive regulated private sector. Is there any reason why we can’t do the same?
The issue of fixed term tenancies is interesting. In the UK, many landlords are forced to grant assured shortholds because their lenders insist on it. Yet many landlords would love to let for longer terms and enjoy the benefits of lower rates of churn.
Property expert David Lawrenson told me;
“The trouble is most buy to let lenders do not currently allow their landlord borrowers to issue Assured Shorthold Tenancies with fixed terms over 12 months…actually there is no good reason from the lenders point of view why such a restriction is in place. Indeed, up to 7 year fixed term ASTs are possible.
Also, many buy to let mortgages still contain terms and conditions that do not allow landlords to let to people who are on benefits whilst other lenders do not allow their landlord borrowers to let under long lease schemes to housing associations and local authorities. Both restrictions also make little sense from the lenders point of view, because where a private landlord is investing up to 25% of the equity, the lenders risk in a repossession situation will be very small.”
As the PRS grows, the issues of regulation and longer-term security will become a hotter topic for policy makers. Ken Livingstone is making limited regulation a key element in his re-election campaign. The Association of Residential Letting Agents also favours regulation as a way of driving up standards and driving out the cowboys. What’s more, a simple local authority licensing scheme would be self-funding and cost the taxpayer nothing -selective licensing of HMOs is already working well in some cities. In seeking to improve the image and reputation of our private rented sector we could do worse than study the German system.
Garden City Blues
If you are interested in the genesis of current housing policy you could do worse than visit the Policy Exchange website.
Founded by Francis Maude and Michael Gove in 2002 Policy Exchange has become the most influential right-of-centre Think Tank. Many of the ideas in Alex Morton’s 2010 “Making Housing Affordable” report have been taken up as government policy and Morton’s latest wheeze, the revival of the Garden Cities, was enthusiastically embraced in David Cameron’s speech on planning and infrastructure yesterday.
To summarise what Cameron said:
“We need homes for people who need them, in the places they want them, while protecting our fine landscapes and preserving the greenbelt…Some people feel we’ve lost the art of creating great places with the right social and environmental infrastructure….in the last century, private and social enterprise also created places like Hampstead Garden Suburb, Letchworth and Welwyn Garden City - not perfect, but popular - green, planned, secure, with gardens, places to play and characterful houses…we urgently need to find places where we are prepared to allow significant new growth to happen. That’s why we will begin consultation later this year on how to apply the principles of garden cities to areas with high potential growth, in places people want to live.
This is encouraging news. I’ve repeatedly argued on this blog that we need to build at least 3 million homes on greenfield land over the next twenty years, and new settlements and urban extensions are the only sensible way forward. It’s interesting that Cameron referred to Hampstead Garden Suburb in his speech. Built by Dame Henrietta Barnett with Raymond Unwin as chief architect in 1906 it is a city suburb, and this raises the possibility that the garden city concept could be applied to similar city extensions
Of course the originator of the Garden City idea was Ebenezer Howard, who built Letchworth and Welwyn Garden City in 1903 and 1920 respectively. That’s why Grant Shapps is also a fan. Howard’s vision was set out in his 1898 book “Tomorrow: a Peaceful Path to Real Reform”, re-issued in 1902 as “Garden Cities of Tomorrow”. Howard’s ideal Garden City was an area of 6,000 acres, developed on cheap agricultural land, where only 1,000 acres would be built upon, housing 30,000 people at 30 to the acre. The surrounding “green belt” would contain workshops, market gardens, institutions, and power and sewage works, where the food for the town would be produced and sewage would be used to fertilise the fields. Income from rising ground rents would be used to fund a local welfare state – paying for pensions and the dole, as well as the usual municipal functions. This is a thoroughly modern and revolutionary concept, an Eco-Town Plus if you like, although like most revolutionary concepts only a part of Howard’s vision was put into practice.
But if the government is to be successful with its Garden City vision it will need to be bold and face down the countryside lobby. The eco-town fiasco proposed sites that were too small and in the wrong places. Garden cities will have to be large enough to be self-sufficient in terms of jobs and amenties. This means a population of at least 30,000 - big enough to support secondary schools, swimming pools, cinemas etc - and they will have to be remote from existing towns and cities to avoid excessive car journeys, but also well connected with public transport. Urban extensions willl need to be ambitious, well-planned suburbs that are connected to both countryside and city.
The final version of the National Planning Framework is due to be published within the next few days. It will be intersting to see if the revised national policy can put Ebenezer Howard’s modern vision into practice.
Paradise regained?
I visited the world’s most famous squat last week. Freetown Christiania is the self-governing commune close to the centre of Copenhagen that has defied the Danish government for the past forty years and become one of Denmark’s principal tourist attractions. In 1971 a group of locals invaded a deserted naval barracks, set in 34 hectares, and slowly established an alternative society with its own rules and codes, including its own currency, the Løn. Remarkably, Christiania has been granted some degree of autonomy under Danish law (the sign over one of the exits reads, "You are now entering the E.U.") and it’s now home to 1,000 people and a range of successful businesses, including a builders’ merchants, shops and cafes, and is the home of the famous Christiania cargo bike.
It’s a fascinating place to visit. The original barracks buildings are interspersed with a wide variety of eco shacks and cabins, some set around a lovely lake with woodland walks. The place is ramshackle in parts with piles of wood and gas canisters reminiscent of any squatter community and the central green zone, where the drug dealers gather, is rather intimidating, with booths selling skunk and grass staffed by skinheads and their fierce dogs. Photos are banned.
Over the past forty years right-of-centre governments have repeatedly tried to regain control of the site, whilst left-of-centre governments have tended to recognise it as an interesting social experiment.
The absence of security of tenure at Christiania has discouraged any long-term investment by residents, but that may be about to change. Although the government recently won a legal battle to confirm that they own the land Christiania has now been offered the chance to buy its land at a price of around £9 million for the barracks area and for a long lease on the remaining land for £700,000 a year. The figures are hard to confirm because the negotiations are ongoing, but this is way below the market price. The offer has been the subject of intense debate within Christiania but the commune has managed to overcome its anarchist principles (“Property is Theft”) and accept the deal. The problem they now face is raising the necessary funds. Shares are being offered worldwide although these are more like donations and will have no intrinsic value. A foundation, like a community land trust, will own the land and supervise future development, grant tenure and administer the commune.
The consequence of this historic deal is that Christiania has the opportunity to show the world an alternative form of development. Looking at the site, I estimate they could build 500 or more exemplar sustainable homes and create new businesses for growing food, recycling and energy production. Rents and service charges could fund an array of social and community programmes. It could become a self-sustaining garden city within a city. This is an exciting time to be a resident of Christiania.
The rumour mill...
Like kids waiting for Christmas, the main protagonists in the NPPF debate are displaying a mix of anxiety, excitement and apprehension as they await the publication of the final version of the document, due to be published on Budget day. The twittersphere is erupting in spasmodic bursts of bad temper between the pro and anti factions. After a long and sustained campaign for and against, the final NPPF is bound to cause upset on one side and exhiliration on the other, unless it turns out to be a classic English fudge that pleases no one.
Meanwhile, the rumours are flying. This began with Newsnight’s report on the 6th March claiming that the NPPF would be published unchanged and that Pickles had received a grilling from the pro-growth Chancellor. Osborne’s sense of urgency reminds me of Labour’s slogan from the 1945 election: “Let’s Build the Houses, Quick”. The story of an unchanged NPPF was confirmed by Inside Housing on the 8th March. But then up pops The Telegraph with a worrying story that the NPPF would be significantly modified including a re-affirmation of the brownfield-first policy and the scrapping of the requirement to identify 20 percent additional land for housebuilding in years one to five.
If so, that is a worrying development. Brownfield first has distorted land prices and caused city cramming on a dangerous scale. We need to take a more objective look at brownfield land rather than building on every scrap of it. Yesterday I took the train from Brighton to St Pancras and London is looking increasingly dense. Historic monuments like St Pauls and the Tower of London are being swallowed up in a sea of huge new buildings. The same thing is in happening in Liverpool where the UNESCO world heritage status of the Three Graces is threatened. Do we really want to destroy the heritage of our cities so that Lord Rogers and his urban task force friends can have the satisfaction of surveying the “dense polycentric city” from their country retreats?
Either way, when the final NPPF is issued you can expect an almighty row. If it really is published unchanged, the National Trust and the CPRE will no doubt be mobilising their members across the shires in ways that are as yet unthought of and the Trust’s Director General will retreat with her tail between her legs to the Master’s Lodge at Emmanuel College (worryingly close to where I live). But if the document is altered in the way that The Telegraph suggests you can expect the opponents of the NPPF to be jubilant. Toad Hall and its precious countryside will have been protected once more from the nasty urban stoats and weasels who seek to destroy its sanctity. Watch this space.
We'll need more tanks...
It’s only February and already a drought is forecast for many parts of England with farmers predicting a shortage of key crops and rising food prices as a result. Whatever your views on man-made climate change there is no doubt that our weather is changing; the eastern region, for example, has had only a quarter of its average February rainfall. But apart from the lack of rain, it’s also the case that, as a country, we are hopeless at storing and conserving our water resources. Last year I went to the Alpujarras region of southern Spain where the locals use an ingenious system of water-channels called acequias (first built by the Moors) to irrigate their terraced fields. They also have a widespread network of water tanks, both covered and open, called albergas, which allows them to harvest water during times of plenty and use it up over the hot dry summers.
By contrast, farmers in the UK store very little water. Almost all irrigation comes from local rivers and streams and this has been growing by 2 per cent annually, leading to amenity and wildlife problems in the lower reaches of watercourses. Farmers need to be encouraged to build on-farm water tanks, like the albergas system and they need to be doing it now. Of course, the NFU blames a lack of subsidy and a bureaucratic planning system for this failure to respond to changes in climate.
The housing sector also has a responsibility to think more seriously about water conservation and longer-term climate change. Do you remember the old “Brick in the Cistern” advertising campaign? We need to be getting across the message that water is as precious as air and food – encouraging tenants to use water wisely and using grey water to on their gardens. Apparently, we all use 145 litres each day, and a typical house roof could harvest 85,000 litres of rainwater each year.We also need to look more seriously at building grey water systems into new and existing homes and providing free water butts for sheds and outbuildings.
In the longer term, our response to climate change requires a clear vision and a strategy. I wrote about this five years ago in a report called “The Future is Unwritten – Looking towards 2050”, which was launched at a CIH Eastern conference (available on request!). In the future, it is likely that more people will die of heat than hypothermia, so this means “cooling” our properties using heat-absorbing and reflecting materials, and creating cooler sitting out areas, perhaps with water features. Subsidence could become a bigger problem and we could experience flash flooding and gustier winds. Our housing stock will need to be able to cope with more extreme weather, so asset management strategies need to be re-written. New homes in flood plains could incorporate undercrofts so that they can cope with rising water.
On a positive note, we can expect balmier temperatures and lower fuel bills as temperatures rise. But doing nothing is not an option. Smart housing providers will be planning for these longer-term changes. Are you?
The National Trust responds...
My last blog “Crying Wolf in the Countryside” obviously hit a raw nerve with the National Trust, because one of their Directors, Ben Cowell, has written a piece for their website objecting to my description of the Trust as “pretty clueless on housing.”
Describing me as “One of the National Trust’s fiercest critics in the debate over the NPPF” (I can live with that!) Ben argues that the Trust has a long and proud record of involvement in housing. He points out that Octavia Hill, the patron saint of housing management, was one of the National Trust’s founders and that the Trust has 2,000 tenants and is a housing developer in its own right.
I fully accept these points, although Ben omits to mention that the Trust has also built homes against fierce local opposition, notably when they developed an exclusive gated development of 200 homes at Cliveden in the green belt. What I should have said, of course, is that the Trust is “pretty clueless about housing numbers.”
Ben accepts that some homes will have to be built on greenfield land but as usual is evasive about how many should be built and where they should be built. The National Trust will not or cannot accept the fact that we will need to build at least 3 million homes on greenfield land over the next twenty years and it is this lack of honesty on the part of countryside campaigners that is the real problem with the NPPF debate.
Ben’s final point that building on only 1.3 percent of the unprotected countryside is too high a price to pay for meeting the country’s housing needs is where we part company. I think it’s a small price to pay, and well-planned developments would help us to protect and enhance the best landscapes.
His strange calculation that 3 million new homes in the countryside would require half as many roads as we have already makes no logical sense and rather proves my point about the Trust’s cluelessness. Given that we already have 22 million homes how would 3 million new homes increase the amount of land required for roads by 50 per cent?
Ben makes the valid point that Octavia Hill campaigned for open space to go alongside housing. That is why I believe a blanket brownfield-first policy is so misguided. When brownfield land becomes available in our towns and cities we need to analyse the costs and benefits of developing it. In some cases it may make more sense to return brownfield land to open space or to urban food production rather than cramming new homes onto every inch of our already dense cities. I’m sure Octavia Hill would approve of such an approach.
Steve Hilditch at the respected Red Brick blog has also joined the debate, pointing out that the NPPF contains no housing targets at regional and national level. I completely agree, and that is the greatest defect in the NPPF, but it is still a step in the right direction towards releasing the land that we need to address our housing crisis. He also makes the salient point that the National Trust is too close to the CPRE (“an organisation that does not in my view have progressive leanings”) and it is interesting to note that the NT and the CPRE have worked almost hand in glove on the anti-NPPF campaign, Of course the Trust’s Director General is a former head of the CPRE and I understand several senior CPRE staff came with her. But the Trust may come to regret this lack of independence as I sense a growing unease among some Trust members about the elitism and politicisation of their anti-NPPF campaign, as indicated by the comment from disillusioned Trust member Lorna underneath Ben’s blog.
In the meantime, we await the publication of the revised NPPF, due out very shortly. You can expect the debate to heat up considerably from publication day onwards.
Crying wolf in the countryside
It seems the National Trust and the Campaign to Protect Rural England are becoming desperate. Over the past six months they’ve run a brilliant scaremongering campaign against the draft National Planning Policy Framework, claiming that the government is putting the entire countryside at risk of development. But on Monday they issued a report claiming that, in fact, the opposite is true and that the NPPF will have very little impact upon growth and new development. Confused? Read on.
The draft NPPF was launched last July and was met with a barrage of opposition from groups like the National Trust and the CPRE - although it’s interesting that the people who actually live and work in the countryside, like the NFU and the Countryside Alliance, support the NPPF. They know that the countryside has to be a living, working place where development is essential for its long-term prosperity.
The re-drafted NPPF is out shortly, and everyone in the housing world should be hoping that three of its core principles are retained. First, a plan-led approach – where local authorities set out the housing and other needs of their district and allocate the land to meet them, whilst preserving the best landscapes. Second, a presumption in favour of sustainable development where land is allocated for a specific purpose, or where plans are silent. Third, no return to a blanket brownfield-first policy, which did so much damage to some of our urban areas.
The government, to their credit, believes that the planning system acts a brake on growth and fails to deliver the homes we need at a price we can afford. That is certainly the view of most credible commentators on land use and planning.
But this latest report commissioned by the National Trust/CPRE (and written by an economics outfit called Vivid), takes the opposite view. As an exercise in evasion, dissembling and obfuscation it’s hard to beat and makes for an hilarious read, since both organisations appear to have moved from a position where the entire countryside is at risk of being “concreted over” to a position where none of it is now at risk! Or at least in the “short term”. The report aims to prove its point by bringing in all manner of non-economic issues, but its basic headline is that planning reform won’t boost growth. I can only guess that this bizarre volte face is based on their view that the NPPF is a Treasury-led document and that if the economic arguments are undermined then the whole document will fall.
Yet the National Trust/CPRE have always put forward the firm view that planning controls do not act as a barrier to economic growth, so it is axiomatic, by their lights, that any change to the planning rules won’t affect growth. This report is therefore internally incoherent and a pointless commission! Not only that, but its conclusions are refuted by a plethora of more credible reports, notably Kate Barker’s 2004 and 2006 reports on housing affordability and land use, and a series of reports from the LSE’s Spatial Economics Research Centre, which all show that our planning system hinders economic growth, raises house prices and increases market volatility. Who would you rather believe in this debate?
So this really is desperate stuff on the part of the National Trust and CPRE. The problem with scaremongering is that it can come back to hit you in the face. Like the boy who cried wolf, people stop believing you after a while. I’ve consistently argued in these blogs (and the CPRE, at least, seem to accept this), that we need to build at least 5 million homes over the next 20 years to cope with population grown. No more than 2 million can be built on brownfield sites (and I think the CPRE accepts that as well), which leaves 3 million to be built beyond the existing urban footprint, either on well-planned urban extensions or new settlements. But this is where the National Trust and the CPRE fall silent (actually the Trust is pretty clueless on housing issues). Rather than engaging in a rational grown-up debate about how and where we should build these new homes, and protect the best countryside into the bargain, they rely on scaremongering or emotive terms like “sprawl” and “concreting over the countryside” to make their arguments. It’s like a child sticking its fingers in its ears and screaming. No sensible local authority, with a sensible local plan in place, is planning to create sprawl or “concrete over the countryside”. What’s more even if three million homes were built on greenfield land this would take up only about two thirds of one percent of the existing countryside, or just 1.3 percent of the unprotected countryside.
The National Trust and the CPRE really should re-think their tactics. After all, we all know what happened to the boy who cried wolf.
To the Editor of The Times
There’s an old football chant that goes: “And if, you know, your history, it’s enough to make your heart go woooooaahh…..”
For people who work in housing I think it’s always rewarding to look back at the historical record and to remind ourselves of the awful living conditions that people endured in the not so distant past. At a time when the social housing sector is under attack it is also helpful to reflect upon the immense improvements that social housing providers have made to the lives of millions of people.
I wrote about Charles Dickens last week, and came across this extraordinary letter sent to the editor of The Times newspaper. It was signed by 54 people living in a slum in St Giles, London, on the site where Centre Point now stands.
Amazingly, The Times published the letter on July 5th 1849 under the headline “A Sanitary Remonstrance”. The spelling is as in the original.
THE EDITUR OF THE TIMES PAPER
Sur, — May we beg and beseech your proteckshion and power. We are Sur, as it may be, livin in a Wilderniss, so far as the rest of London knows anything of us, or as the rich and great people care about. We live in muck and filth. We aint got no priviz, no dust bins, no drains, no water-splies, and no drain or suer in the hole place. The Suer Company, in Greek St., Soho Square, all great, rich and powerfool men, take no notice watsomdever of our complaints. The Stenche of a Gully-hole is disgustin. We all of us suffer, and numbers are ill, and if the Colera comes Lord help us.
Some gentlemans comed yesterday, and we thought they was comishioners from the Suer Company, but they was complaining of the noosance and stenche our lanes and corts was to them in New Oxforde Strect. They was much surprized to see the seller in No. 12, Carrier St., in our lane, where a child was dyin from fever, and would not believe that Sixty persons sleep in it every night. This here seller you couldent swing a cat in, and the rent is five shillings a week; but theare are greate many sich deare sellars. Sur, we hope you will let us have our complaints put into your hinfluenshall paper, and make these landlords of our houses and these comishioners (the friends we spose of the landlords) make our houses decent for Christions to live in. Preaye Sir com and see us, for we are living like piggs, and it aint faire we shoulde be so ill treted.
We are your respeckfull servents in Church Lane, Carrier St., and the other corts. Teusday, Juley 3, 1849.
Signed by John Scott, Emen Scott, Joseph Crosbie, Hanna Crosbie, Edward Copeman, Richard Harmer, John Barnes, and 47 others
I don’t think I need to add anything to that. It speaks for itself. What became of these “corts” and their residents I do not know.
Charles Dickens and housing
So it’s happy Birthday to Charles Dickens who was born 200 years ago today in Portsmouth. Throughout his life he defended and championed the poor, the disabled and the down-trodden. But apart from being England’s greatest novelist he was also passionate about housing and sanitary reform. “In all my writings, I hope I have taken every available opportunity to showing the want of sanitary improvements in the neglected dwellings of the poor”, he wrote in 1849.
Many of his books contain passionate indictments of housing conditions, like this passage from “Sketches by Boz” (1836), his first published work.
“Wretched houses with broken windows patched with rags and paper: every room let out to a different family, and in many instances to two or even three - fruit and ‘sweet-stuff’ manufacturers in the cellars, barbers and red-herring vendors in the front parlours, cobblers in the back; a bird-fancier in the first floor, three families on the second, starvation in the attics, Irishmen in the passage, a ‘musician’ in the front kitchen, and a charwoman and five hungry children in the back one - filth everywhere - a gutter before the houses and a drain behind - clothes drying and slops emptying, from the windows; girls of fourteen or fifteen, with matted hair, walking about barefoot, and in white great-coats, almost their only covering; boys of all ages, in coats of all sizes and no coats at all; men and women, in every variety of scanty and dirty apparel, lounging, scolding, drinking, smoking, squabbling, fighting, and swearing.”
Household Words, the magazine that Dickens edited between 1850 and 1859 contained regular features on housing and sanitation and he lambasted the authorities about the conditions that working people had to endure. He condemned slum landlords and he advised England’s wealthiest woman, Angela Burdett-Coutts (of Coutts Bank) on the model flats she was building in Columbia Square in the East End.
Less well known is the fact that Dickens set up and ran a home for “fallen women” (i.e. prostitutes) in Shepherd’s Bush. With Coutts’s support, he supervised every aspect of finding, setting up and running “Urania Cottage” in Lime Grove. It provided a home for more than a hundred women over a twelve year period and they were fed, educated and then shipped off to the colonies to start a new life. (Whether this was related to Dickens’ guilt at using prostitutes himself is a matter for speculation.)
Claire Tomalin’s recent biography really captures his restless genius – he would go on daily 12-mile walks and often spend the whole night walking around London or Paris. He was above all a London writer, documenting the shifting life of the capital – a city that increased in population from 1.4 million to 3.2 million between 1815 and 1860. In his lifetime Dickens was read by millions of people around the world. Thousands would queue for the monthly serialisations of his novels to learn with shock and disbelief about the death of Little Nell or Paul Dombey. He opened the eyes of the middle and upper classes to the wretched lives of the poor and he had a major influence upon the housing and sanitary reforms that improved the lives of millions of people in Victorian Britain. For that alone we should celebrate his bicentenary today.
'The end of social housing' (cont…)
Do you remember this iconic Inside Housing front-page headline on the 29th October 2010, announcing the launch of the government’s “affordable rent programme?
Continuing on the same theme, I don’t like to say I told you so, but the news that the overall benefit cap could force housing associations in the south-east to stop building “affordable” family homes came as no surprise to me.
In July last year I wrote this about the affordable rents’ programme:
“Our sector appears to have swallowed the affordable rent canard hook, line and sinker. Admittedly it is the only game in town, but are some associations really so desperate for growth at all costs that they are willing to sell themselves for a few extra units? …. There is a danger that housing providers are about to fall into a trap that will further stigmatise the sector, similar to the trap we fell into thirty years’ ago when we complied with a purist needs-based approach to allocations, shutting the door upon large sections of the working working-class and causing the sector to become residualised.”
The way that the overall benefits cap works is that income comes first and rent comes last. So, according to figures provided by the CIH, an out-of-work family with 4 children will receive JSA, child benefit, child credits and council tax benefit of £397 a week, leaving just £103 a week for the rent to keep them within the £500 overall cap. I can’t imagine many housing associations in the south east being able to provide an 80 percent of market rent “affordable” 3-bed property, let alone a 4-bed, for £103 a week or less. A family in this situation paying more than £103 a week in rent will therefore have two choices – either they use their income to top up their rent (thus making themselves even poorer), or they move to cheaper accommodation.
I must say, I’m surprised that the Equality and Human Rights Commission hasn’t taken up this issue. The fact that the cap blatantly discriminates against larger families must surely have some race or equalities implications, I would have thought?
But this conundrum is just part of a wider squeeze on social housing. We seem to be only belatedly waking up to the fact that this government views our sector with disdain. It’s great that several prominent chief executives have recently gone public with a robust rebuttal of Grant Shapps’s characterization of the “lazy consensus” and the “injustice” that we are apparently responsible for. But where were they, and our representative bodies, in 2008 when Policy Exchange published this report, or in 2010 when the Centre for Social Justice published this? Everything that is now happening to social housing can be traced back to the thinking contained in these reports, and others like it. Collectively, I think we have failed to respond with enough muscle to these changes. I hate to say it, but if we had reacted to these reforms with even a fraction of the campaigning zeal that the National Trust has deployed in response to the National Planning Policy Framework we would not be where we are now!
The truth is that we have walked into a trap and it’s hard to know what the answer is. Does anyone seriously believe that the affordable rents’ programme is going to be replaced in 2015 with social rents set at 50 or 60 per cent of market rents? If not, where does that leave us and our mission to help the people in the greatest housing need?
It’s hard to predict how the social housing sector will look ten years from now as a result of these changes. I think it could go in two directions, depending on whether we go on developing or not. It’s quite clear to me that the affordable rent programme is a potential poverty street for many of our traditional customers. Therefore if providers carry on building new homes and converting voids to “affordable” rents we could be forced up-market, providing homes that are only genuinely affordable to people on middle incomes, leaving the poorest to fend for themselves, and failing to provide any family homes across much of the south east. But if we stop building, we will be left with a shrinking sector that will start to look increasingly like the USA model of social housing – residualised, stigmatised and catering only for the poorest and most vulnerable. Either way, we are, if you will excuse the pun, in a bit of a pickle!
The president has a problem
Apparently Newt Gingrich is planning to change his surname to Estament in a last-ditch bid to appeal to Bible belt voters, although this may still be too modern for some of them.
Jokes like this, the “Google problem” of Rick Santorum and Mitt Romney’s tax secrets have been the only things to enliven a fairly lacklustre election race, but whoever the Republicans choose to face Barack Obama the state of the US housing market could well be a key election issue this Autumn.
I was struck by this last night when watching Channel 4 News. A UPS truck driver was shown in his Miami Beach condo – he’d bought it for $500,000 at the height of the boom, and it’s now worth $190,000. For him, the Presidential candidates’ housing policies will be an election deal-breaker. Half of all homeowners in Florida are now below water (in negative equity) and last week Burt Reynolds dropped the price of his Florida mansion from £9 million to $4 million.
The housing crisis in the USA is on a different scale to ours. Out of 88 million homeowners in the States, around 14 million are facing eviction, in mortgage arrears or in negative equity. 11 million mortgages are under water. Since the sub-prime bubble burst over 3 million homes have been repossessed and house prices continue to fall. Las Vegas is the eviction capital of America - last August, 70 percent of home sales were of repossessed properties or properties where owners were fleeing from mortgage debt.
As a result, the owner occupied sector in the USA has shrunk from 73 percent to 66 percent of the total stock and the rental sector has grown. Homeowners have lost $7 trillion in housing equity.
President Obama responded to the housing crisis with programmes to help people in negative equity. His foreclosure prevention programme, known as HAMP, aimed to lower borrowers’ mortgage payments to no more than 31% of monthly income, but only 910,000 homeowners have been helped so far, well below the target of 4 million. Other programmes designed to engineer lower interest rates have been similarly unsuccessful. In last week’s State of the Union speech, Obama announced new legislation that would allow homeowners to save around $3,000 a year in mortgage costs, to be funded by a tax on the largest banks.
Some commentators see a fall in house prices as a success story in the long term. It will make properties cheaper to buy and put more money into people’s pockets to boost the economy, whereas a rise in prices sucks money out of the economy. The same argument applies in the UK. In the long term negative equity always disappears, either through death, inflation, evictions or sales. And let’s not forget that Obama did not create the housing crisis - it was a Bush creation.
But a recent Gallup poll showed that 58% of Americans want the government to prevent foreclosures, (whereas 34% prefer the housing market resolve its problems on its own), although there is clear partisan divide, with 76% of Democrats and 61% of independents supporting government action and 64% of Republicans opposing it. So Obama’s housing policy, as he gears up for this Autumn’s election, will need to steer a careful path to appeal to both sides of the divide without alienating either.
German Lessons
Do you fancy a one-bed apartment in Berlin for £35,000 or a four- bed detached house in the Rhineland for £51,000?
In many parts of Germany house prices are a fraction of their UK equivalents – in fact, German house prices have decreased in real terms by 10 percent over the past thirty years, whereas UK house prices have increased by a staggering 233 percent in real terms over the same period. Yet German salaries are equal to or higher than ours. As a consequence Germans have more cash to spend on consumer goods and a higher standard of living, and they save twice as much as us, which means more capital for industry and commerce. Is it any surprise that the German economy is consistently out-performing ours?
There are a number of reasons for the disparity between the German and UK housing markets. Firstly, German home ownership is just over 40 percent compared to our 65 percent (there are stark regional variations – in Berlin 90 percent of all homes are privately rented) and the Germans do not worship ownership in the way we do. Not only is it more difficult to get mortgage finance (20 percent deposits are a typical requirement) but the private rented sector offers high quality, secure, affordable and plentiful accommodation so there are fewer incentives to buy. You can rent an 85 square metre property for less than £500 per month in Berlin or for around £360 per month in Leipzig. There is also tight rent control and unlimited contracts are common, so that tenants, if they give notice, can stay put for the long-term. Deposits must be repaid with interest on moving out.
In addition, Germany’s tax regime is not very favourable for property owners. There is a property transfer tax and an annual land tax. But the German housebuilding industry is also more diverse than ours with more prefabraction and more self-builders. The German constitution includes an explicit “right-to-build’’ clause, so that owners can build on their property or land without permission so long as it conforms with local codes.
But the biggest advantage of the German system is that they actively encourage new housing supply and release about twice as much land for housing as we do. German local authorities receive grants based on an accurate assessment of residents, so there is an incentive to develop new homes. The Cologne Institute for Economic Research calculated that in 2010 there were 50 hectares of new housing development land per 100,000 population in Germany but only 15 hectares in the UK. That means the Germans are building three times as many new homes as us pro-rata even though our population growth is greater than theirs. This means that German housing supply is elastic and can respond quickly to rising demand - hence their stable house prices, whereas in the UK our restrictive planning laws and tight green belts do not allow developers to respond to increased demand, so our supply is inelastic. More demand combined with a fixed supply of homes means steep price rises, volatility, and boom and bust.
For me, in the ongoing debate over our deepening housing crisis and the National Planning Policy Framework there are two stand-out lessons from the German experience. One, we are failing to release enough land for housing and this is causing volatility and unsustainable bubbles within our housing market that cause damage to our people and our economy. Two, a high quality, affordable, private rented sector benefits from regulation and rent control.
(Thanks to Andreas SchulzeBäing and ImmobilienScout for assistance with this article)
Select committee #fail
Countryside campaigners were delighted when the House of Commons’ Local Government Select Committee released its report on the National Planning Policy Framework late last year. After months of impressive campaigning by the National Trust and other groups, the Committee’s call for a re-write of the draft document was seen as a partial victory for the anti-development lobby.
But one aspect of the committee’s findings made me almost fall off my chair and raises questions about the competence of the Committee to reach an objective view on planning reform.
Paragraph 12 of the report reads: “We received much anecdotal evidence as to whether the planning system is currently an obstacle to growth or whether other factors are more important in slowing the economy and curtailing the level of house building… We found no conclusive research, however, that planning policy or guidance is a particular constraint on economic development.”
Now, either the witnesses who attended on behalf of the housing industry were stunningly poor at getting the economic arguments across, or the Committee is guilty of an egregious level of ignorance about planning, housing and the wider economy. Or both.
Let’s start with Kate Barker’s original report on housing supply from 2004 which contains stacks of evidence to explain that our dysfunctional housing market causes economic instability. Here are just three quotes: 1) “A weak supply of housing contributes to macroeconomic instability and hinders labour market flexibility, constraining economic growth.” 2) “Weak responsiveness of housing supply and the volatile behaviour of our housing market poses risks to economic stability and overall economic welfare.” 3) “Better housing supply could also play a part in reducing economic volatility. Most major cycles in the UK economy over the past 30 years have been associated with instability in the housing market.”
Kate Barker’s follow-up report on the planning system (2006) is even more explicit: “…further action needs to be taken to deliver an efficient planning system, by reducing delays, addressing unnecessary complexity and increasing certainty. Unnecessary delays have a number of hidden economic costs in addition to direct financial costs… In economic terms, 69 per cent of firms are dissatisfied with progress made by local planning authorities in improving their planning system…”
Given that both reports were commissioned by Gordon Brown I find it impossible to believe that the Select Committee was not made aware of their contents.
Then there is the work carried out by the LSE’s Spatial and Economnc Research Centre. Two quotes: 1)“SERC research also shows that planning restrictions increase housing market volatility.” 2) “There is evidence that planning negatively affects productivity”
Or the Centre for Cities: “The UK’s housing problem has become an economic problem (and) prevents our most successful cities from expanding, shuts people out from job opportunities and stifles national economic growth.”
More recently Savills revealed a widening gap between the housing haves and have-nots, with the under 35s owning just 5% of the nation’s housing equity and a growing gulf between the regions. If that is not a recipe for social unrest and economic malaise I don’t know what is.
I could go on. The point is there have been dozens of reports over the past twenty years setting out how our dysfunctional housing market, which is the spawn of a dysfunctional planning system, harms economic and social wellbeing.
If the esteemed members of the Local Government Select committee have been unable to discover or recognise these simple truths, and to join up the dots between the housing market, economic malaise and the planning system then heaven help our parliamentary system.
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