Housing
Councils need to be given greater financial incentives to deliver land for development, so that developers can build the houses that local economies need.
One option is to replace the current planning system and top-down, target-driven approach to housing, with a land auction process that enables Local Authorities to keep a portion of the increased value from granting planning permission. This would give them a financial incentive to increase the supply of land available for development, and reinvest the gains in the local economy and community.
Reactions
Tim Leunig, LSE
Kate Barker
“Housing supply remains a crucial issue for many local economies. It’s great that Centre for Cities recognise this as one of the key issues, and is prepared to contemplate new and radical policies to resolve it. A City Region can only function well if it has the right places and homes for its communities.”
Gideon Amos OBE, Chief Executive, TCPA
“Ensuring a decent home for all in a good environment has always been a key campaign for the TCPA. Demographic changes and climate imperatives mean that addressing this and doing so sustainably has never been more important. I am delighted the Centre for Cities is now highlighting this in its manifesto along with the need to trial potential solutions.”
Have Your Say
Comment on this manifesto
How can Britain carry on building houses through the downturn? Tell us what you think
Share with colleagues
Download this manifesto
Tell us what you think
3 Responses to “Housing”
Leave a Reply
Key Facts
We’re not building enough new houses. The Government’s official advisory body (the NHPAU) estimates that England needs to build an average of 280,000 houses per year just so that our current affordability problems don’t get any worse by 2031. Over the last ten years, annual building rates have averaged less than 150,000.
In many cities, housing does not meet the needs of local workforces. Where housing growth does not keep up with increased demand, this can result in house price inflation, lower levels of disposable income, increased commutes, and increased suburbanisation. The ‘affordability ratio’ of earnings to house prices has risen rapidly, from under 4 times lower quartile earnings in 1997 to over 7 in 2007.
High housing costs can create problems for private sector businesses. Labour shortages and recruitment difficulties caused by high housing costs can make local businesses consider relocating out of a city.
Land prices are driving up the costs of house-building. The price of land zoned for residential development has fallen substantially as a result of the credit crunch, but still stands over 1000% higher than in 1982.
Join us at party conferences to debate our policy recommendations. We’ll be part of the Urban Hub at Labour, Conservative and Lib Dem conferences, running fringe panel events on transport and city jobs – further details at http://www.urban-hub.org
Comment by Centre for Cities, September 16, 2009 @ 12:38 pm
The principles identified in the Cities Manifesto are very welcome. However, the incentive to build needs to be attractive enough so that councils can take the lead in promoting carefully considered housing development. Incentives must also focus on making it more cost effective to build on brownfield sites.
The current system is problematic. As regional tiers of government are not directly accountable, it is far too easy for councillors to take an unrealistic position opposing development and blaming regional or central government. For such a councillor the dynamic of the situation means they have little say on the plans and the council doesn’t gain enough from the development. As a result it is unsurprising that many councillors simply seek to work with campaign groups against housing developments. This scenario leads to regular conflict over planning matters.
If councillors were empowered to make decisions then they would have to be pragmatic in their approach to planning. However, during the transition period from one system to another, it would be vital that councils avoid a situation where nimbyism runs rampant. Our cities need new housing and infrastructure. Councils who fail to react will find a shortage of skills in their cities and an inflation in house prices.
A strong incentive must be in place so that it is:
a) in the council’s interest to approve good development
b) residents can see they gain benefits from new development
c) the essentials such as transport improvements, waste management and energy supplies are delivered on time and on budget
The incentive principle and the empowerment of local Government is good, but it must be proven that it will deliver the houses in the locations they are needed.
Comment by Nick Webb, September 18, 2009 @ 12:29 pm
The ability for local authorities to capture some of the value from allocating land is a very good idea. There are indications that developers’ business model is shifting from majority of income from sale of development (and land factored in as a cost to a landowner) to a model of longer term land banking, with substantial revenues associated with land allocation/ planning permission. This will make it difficult to capture values, as the site may not be sold once allocation is achieved but before. However, a system by which developers are encouraged to have a long term engagement and financial stake in the infrastructure and socio-economic development of a place may also work.
Definitely there is a need to incentivise cities and towns to build more houses.
Comment by Martina Juvara, Colin Buchanan - Urban design October 16, 2009 @ 2:53 pm