Our housing market is broken. But landlords and developers are not the ones to blame – they are simply following the rules and incentives created by our dysfunctional planning system.
Politicians from all parties are vowing to improve living standards for lower income households, but unless this issue is addressed they will fail.
The recently published white paper, Fixing our broken housing market, correctly diagnoses the problem of insufficient supply, but abjectly fails to address the overwhelming cause of the crisis: overly-restrictive planning. Demand for housing is not being met because the green belt prevents us from building out whilst anti-density rules prevent us from building up.
Contrary to popular belief, the green belt is not an environmental designation. Much of it is neither aesthetically pleasing nor accessible to the general public. Indeed the most important land use in green belts is intensive arable farming which has negative net environmental benefits. Britain’s towns and cities are in fact far greener than green belts.
Declassification of green belt land should be prioritised by the next government. A good start would be adopting Professor Paul Cheshire’s suggestion to declassify from the green belt any land within 800 metres of a railway station.
It should also amend national policy to prevent councils from refusing permission for buildings on account of their height if the proposed building is no more than two storeys taller than the neighbours, with the exception of conservation areas.
As to the requirements to reflect the character, accessibility and infrastructure of an area, they already serve as a pretext to object to development and these grounds ought to be substantially weakened. Obstructing development on the grounds that the proposals do not reflect the lower density, shorter building-height of an area or government services (such as transport, education or health services) has played a huge part in creating the housing crisis.
Provision of these services should be adjusted according to the demand – we are better off bearing the cost of additional services than the cost of a housing crisis. If transport and other services cannot be provided to a given standard, then buyers and tenants will reflect that in the prices and rents they are prepared to pay.
Finally, the burden of stamp duty should be dramatically reduced by halving the rates and/or doubling the thresholds. Stamp duty is a drag on economic activity; an obstacle to economic activity and mobility; and is less helpful to the Treasury as a source of revenue than might initially appear. It has no place in a modern tax system.