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Boris Johnson wants a housing boom. Here’s how to spark it

How can the government rapidly mobilise housing developments to get the economy back on track? Graeme Cooke and Pat Hayes have some solutions

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Photo: Alamy
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Boris Johnson wants a housing boom. Here’s how to spark it #ukhousing

“The simple message to landowners and developers with a planning consent should be: we will help you build out your projects quickly, but if you don’t, we will build them out for you instead and take a fair share of the financial upside” #ukhousing

“The real challenge now is that there are thousands of consented sites around the country that, without state intervention, will not be built out as recession hits”

As the COVID-19 crisis moves into a new phase, the government is increasingly focused on the virus’ deep economic impact.

In recent weeks, the prime minister has announced new infrastructure spending, the chancellor has launched a jobs package and ministers are signalling major planning reforms are on their way.

The government is absolutely right to be adopting an activist stance, including taking advantage of historically low borrowing costs.

However, an extension of permitted development rights is not the priority, as it risks an expansion of poor quality housing, and the capital investment pledged so far falls far short of Boris Johnson’s heralded Rooseveltian New Deal.

More importantly, the government’s attempt to kick-start an economic recovery in our current situation has one important weakness: time.

Housing, transport, energy and other infrastructure projects take years to mobilise, but we face a jobs crisis now. The overwhelming focus must therefore be to rapidly mobilise developments that already have planning permission.

Analysis by the Local Government Association published earlier this year found that in the past decade, more than one million homes that received planning consent still did not get built.

Without intervention, construction on a very large proportion of such sites simply will not happen as we head into a recession, meaning job losses and reduced capacity in a crucial sector of the economy.


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Shifting this dynamic will require bold action from the government.

The simple message from the state to landowners and developers with planning consent should be: we will help you build out your projects quickly, but if you don’t, we will build them out for you instead and take a fair share of the financial upside for doing so.

The government should pursue inclusive growth. It should create a special, emergency ‘accelerated homes, infrastructure and jobs order’, lasting for the next two years, under which the following arrangements would apply.

First, it should offer very low interest, long-term loans to landowners and developers with consented – or nearly consented – schemes. In return, it would get strict commitments on rapid build out, a high proportion of social and affordable homes, and the recruitment and training of the unemployed.

This would address the major challenge of accessing development finance in highly uncertain market conditions.

“The simple message from the state to landowners and developers with a planning consent should be: we will help you build out your projects quickly, but if you don’t, we will build them out for you and take a fair share of the financial upside”

Second, the government should mandate that any consented scheme with more than 50 homes should have to provide 50% social and affordable housing. It should also provide local authorities with significant grants so that they can then purchase those newly built homes.

This would provide developers with finance and a guaranteed buyer, encouraging them to build out. It would also very quickly create potentially tens of thousands of social and affordable homes, by flipping a sizeable chunk of planned new homes from the uncertain private sales market to the subsidised rental sector, where there is massive unmet demand.

Where councils did not want to acquire the homes built in their area, housing associations could access the grant to buy them.

Retaining the Help to Buy scheme during the downturn for new build homes would also help, too.

The government should establish similar deals in other areas of infrastructure – transport, industrial space, energy – to assure developers about return on investment, which would encourage them to hire workers and put shovels in the ground, while skewing the outcome towards greater public benefit.

With these two measures in place to deal with finance and demand, there would be powerful incentives for landowners and developers to accelerate economic activity and create jobs as we go into recession, rather than the market-driven outcome of stalled construction and land banking.

However, if this does not happen and a consented scheme had not been meaningfully started within (say) 12 or 18 months of receiving planning approval, these emergency arrangements should enable the government to step in further and assume control of the scheme, building it out directly by appointing a contractor and overseeing construction.

The purpose would be to speed up economic activity and generate employment, not alter ownership rights.

However, to protect public investment and not disincentivise the landowner or developer from starting construction, the government’s contribution should be recouped through a direct capital receipt on sale or an ongoing revenue return from a rental product.

In effect, the state would be procuring contractors and development, managing the build out, before transferring the scheme back to the landowner, minus fees and construction costs (plus a small share of the development profit).

This role could either be undertaken by local authorities (where they have the capability) or it could be overseen by an agency such as Homes England.

Interventions on this scale would clearly require major investment. However, there is a strong economic and moral case for this, given the scale of the coming recession, historically low borrowing costs, and the pressing need for new homes and better infrastructure.

Moreover, the government has signalled a welcome intention to act boldly and decisively, and this proposal is about how to design an intervention that would deliver the government’s desired result while recouping the investment over time.

An objection might be that this plan might discourage landowners and developers from bringing new schemes to planning during the emergency period, thereby causing the very problem it is trying to solve.

However, if access to cheap finance and guaranteed buyers were also available for new schemes that received planning consent within the set timeframe, there would be a strong incentive to bring them forward. This could be combined with a temporary cut in the lifetime of a planning consent to force rapid build out, rather than relying on the state construction backstop for such newly-consented schemes.

The approach outlined here is informed by the kinds of interventionist strategies we have been developing in Barking & Dagenham in recent years to address the market failures that have held our borough back.

The council established Be First as a wholly-owned regeneration company to directly build out council-owned sites on its behalf.

Last year, 20% of all the new affordable homes built by councils across London were started in Barking & Dagenham.

Over the next few years, Be First will build more than 3,000 new homes in the borough, 75% of which will be affordable, with a large chunk at council-equivalent rents.

“The real challenge now is that there are thousands of consented sites around the country that, without state intervention, will not be built out as recession hits”

Supported by Be First, the council is also intervening to accelerate local development sites in private ownership, by offering development finance and purchasing completed rental homes, where this brings forward construction and increases the proportion of social and affordable housing.

We could scale up this model with government backing – and there is no reason it could not be extended across the rest of the country.

The government recently asked local government for ‘shovel-ready’ capital projects and we are ready to deliver any that ministers are prepared to fund.

We are entering extremely choppy economic waters and kick-starting the economy before a COVID-19 vaccine is available will require bold and innovative interventions.

Rather than focusing on a time-consuming upheaval of the planning system, the real challenge now is that there are thousands of consented sites around the country that, without state intervention, will not be built out as recession hits.

By harnessing the state’s unique ability to reshape the default market outcomes, we can generate jobs, stimulate economic activity, and meet the massive unmet demand for social and affordable housing.

Graeme Cooke, director of inclusive growth at the London Borough of Barking and Dagenham, and Pat Hayes, managing director of Be First, the council’s regeneration company.