Solving the UK Housing Crisis – it’s Simple but not Simplistic

Solving the Housing Crisis

Whilst we are waiting for the Government’s Housing White Paper to be published I thought I would repeat, with a bit of an update, what I said over 2 years ago and have repeated in other places over the last few years.

I believe that although there is no single, magic bullet, solution to the housing crisis (despite many commentators and politicians coming forward with these single issue ‘solutions’) the solutions are actually quite simple. Therefore I thought I would jot down a few of my thoughts on how the housing crisis can be solved, although it must be stressed that it will take a long time to get back to any sort of equilibrium but this makes it more important that we make a start immediately.

I am not going to fill this note with figures and charts – the figures are out there and I haven’t the time to repeat them here. I will also write, as far as possible, in broad outlines rather than write a dissertation: there is more thinking and detail behind each of the following sections on how to make them work.

Increase Development by the Public Sector:

The UK has not built enough homes for over 30 years since ‘we’ stopped funding the development of Council Homes. The private sector has not substantially increased its annual output of homes over these years – there has, of course, been fluctuations over economic cycles but the private sectors hasn’t stepped in to fill the gap left by the public sector withdrawing from the market, thus destroying any theory that increased public sector house-building crowds out the private sector.

The experiment of leaving everything to the private sector has failed; it has been given long enough to prove or disprove the theory and the latter has triumphed. So, we have to bring back the public sector into the direct funding and development of new (and refurbished) homes. Lack of skills and capacity in Local Authorities will be raised as a reason for why this cannot be done, and in a short note like this I will not respond to this in detail (and there are responses), but will just say that if we are to solve the housing crisis will have to build up this capacity – it will take time, we are likely to have to start off slowly but we must make a start. If we are serious about building more homes we must get away from the prejudice of thinking that the public sector can only be bad and the private sector can only be right.

Switch subsidy from rents to building:

Some say that there is not the money available to fund more directly delivered public sector homes. I disagree: or rather I say that this is only true due to political prejudice.

Currently we are spending something like 95% of a very big sum each year on the subsidising of rents and only 5% on subsidising building of new supply – 30 or 40 years ago we spent the 95% of a smaller sum on building new supply and only 5% on subsidising rents. We have got to return to subsidising the building of new supply and to stop subsidising rents – the latter is never ending, and much of it goes into the pockets of private landlords thus subsidising the already wealthy instead of the needy.

Perhaps it is this continued welfare payment to the private sector which motivates some to say that we can’t afford to build more homes – it is not in their interest to increase supply and so reduce rents.

I mentioned ‘need’ above – we must also get back to public housing being for everyone in more balanced communities, not only for the ‘needy’.

The Planning System, and Making More Land and Sites Available:

The Planning System is complex and it takes far too long to get large developments through the planning process. The work required is so expensive that only relatively few, very large, developers can afford to have vast sums of money tied up doing this work before they can build and sell a single home. I believe we still need to have a plan based system, with room for flexibility where unexpected opportunities arise (after all, the successful Eden Project was dealt with as a departure from the local plan).

In theory, the point of the Local Development Plan process is to have the vast majority of the work already done so that developers don’t have to, but we must provide Local Planning Authorities with the financial, staff and capacity resources to go to the necessary level of detail, and maintain these resources over a long and guaranteed period.

Local Planning Authorities also have to be given the resources to identify, plan for, fund/finance and co-ordinate the delivery of the necessary infrastructure which enables the growth to happen (and which helps to get buy-in and support from their local community). These Planning Authorities also need to have the resources to take on those rich developers who decide that they will ignore the local plan and get their planning consent by out-gunning the Planners by the threat of court action and the threat of damages.

In addition, the Local Planning Authorities may need to over-identify and over-allocate sites in order to remove to some extent local monopolies from those who are fortunate to own those sites which have been allocated. However, this is not really viable where lots of new infrastructure is required to unlock, or respond to, development – but it can and must be done where there is spare infrastructure capacity.

We also need local plans and policies to be focussed on ‘Place-Making’ to help ensure that developers don’t maximise the value of every site regardless of what is best to make a place which works for people and complies with good urban design principles: and surely this is what the Planing System is for anyway?

In some areas Local Planning Authorities need to reduce planning uncertainty by working up master-plans and frameworks, design guides and creating Simplified Planning Zones. It will be seen to what extent Permission in Principle delivers this – but what I don’t like is the fact that central Government is imposing this across the board in circumstances which they determine rather than the Local Planning Authority.

We also need to get the support of the general public for development – this means giving them the confidence that all of the supporting infrastructure will be in place early on; that the new development will improve their lives rather than making them worse, and even giving them something closer to what they want – houses, rather than giving them flats in high-rise developments?

More Developers and Access to Land:

We need to have more housing developers, especially small and medium sized ones but one of the things which holds them back is access to land with planning consent.

Therefore Local Authorities (or some other body if Central Government doesn’t really want democratic localism) need to acquire sites (by CPO if necessary and in some cases by preference, so the increase in land values can be obtained for the public good and used to supply the necessary infrastructure); draw up a master-plan framework and set of design policies and guides which are loose but detailed enough to ensure that if a small developer does x,y, and z they automatically get the OK to build; and make serviced sites available in medium, small and micro sized plots.

Local Authorities need to have the funds to put in the infrastructure which is required to unlock development sites.

Small developers include self-builders and custom builders, and resources may need to be made available to build up a system where aspiring home owners; small builders; off-site manufactures; local firms of architects and designers can be brought together.

It must also be understood that small developers cannot handle large scale, high rise, developments but they can deal with houses.

To ease the cash-flows of developers Local Authorities (or Development Corporations) need to make the sites/plots available on building licences until developments are completed. The public sector also needs to retain ownership of the freeholds (in Holland local authorities own much of the developable land and hardly ever dispose of the freeholds, – just like the Duke of Westminster). Quite often we are pointed to Holland, Germany and Scandinavia as exemplars of how to build more, high quality, homes and places but it seems ‘we’ don’t want to borrow any of their methods.

New Towns, Garden Cities, Eco-Towns and Sustainable Communities Growth Areas:

We also need some of these but to do so we require all of the resources mentioned above. In some places there will be the need to set up Development Corporations which can concentrate exclusively on planning, delivering and creating sustainable communities. They need to acquire sites by CPO and at existing land values, and to keep the increase in land values in order to fund infrastructure.

All of what I have mentioned above about making sites and plots available to small developers and self-builders also applies here. Whoever is in charge also has to remember that they are trying to create a total-place, so jobs, the environment, and the local economy also have to be fully integrated – it is not only about homes.

Balancing the National Economy:

At a larger scale we do need to plan for and provide an economy which works for everyone in all parts of the country. Only in this way will the pressure on London be reduced to a more sensible level. Some people will always want to come to London but we have to make it easier for ambitious people to be successful everywhere and anywhere in the country, and for less ambitious people to still have a decent life – we really do need a much better standard for ‘ordinary’.

Don’t over complicate things

The Government and some ‘experts’ keep coming forward with initiatives and ideas to speed up housing delivery which tend to be focussed on a single issue but in practice just complicate things.

I don’t think we can simplify things to a single ‘magic bullet’ but it looks like the simplest way to build more homes and bring the prices down, so that ordinary people can afford them, is to re-introduce ‘Council’ housing on a scale large enough to provide real competition to the private sector developers. This will also require properly affordable rents and long-term security of tenure”. It also requires occupation by choice rather than based on need.

This isn’t a fully detailed plan or manifesto, but rather a short outline of the few big things which we need to do if we really want to supply more homes which people can afford, in places they want to live. I do have the more detailed thinking of ‘how’ to build on the ‘what’. It isn’t very complicated but is more than doing one thing and expecting this to solve the problem.

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The Failure of Neoliberal Globalisation and how globalisation could save us.

I am not a fan of Jim O’Neill (the man who ‘invented’ BRIC), for reasons I won’t go into here, but I recommend that you listen to this programme on BBC Radio 4 ‘Fixing Globalisation’ – link here:

http://www.bbc.co.uk/programmes/b086s822#play

In this Jim has his eyes opened to the point that it is Neoliberal Globalisation which is the problem not globalisation itself.

It is Neoliberal Globalisation, focused on benefiting the rentiers and the financial systems which is failing and giving an interconnected world a bad name. The programme highlights that where globalisation is working better for most ‘ordinary’ people it is in countries which have refused to implement the neoliberal model.

In the programme Jim seems to have recently woken up to the issues and problems with Globalisation which I have been talking about for more than 30 years – even before I worked in economic, environmental, social and physical regeneration and sustainable growth.

Anyway, the programme is well worth listening to.

But what has this big picture stuff to do with the Regeneration and Sustainable Growth of cities, towns and places in the UK? Well, it is because it is easier to make a difference locally if we have a better (and sensible) national and world economy within which to work. We need to have not just ‘Places which Work for People’ but a world (and economic system) which works for everyone.

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Business Rates Revaluation and its Effects on Rents

I have been surprised that I have seen no-one from the property development and investment industries talk about, or even mention in passing, the effect of the Business Rate Revaluation on the rents they can charge for commercial premises.

Everything else being equal, if the cost of running a business goes up because of increased Business Rates, businesses can’t afford to pay as much in rents.

In the short-term there isn’t much most businesses can do about this. But when the time comes for lease renewals or rent revaluations it could be that tenants push for no or low increases. New lettings may even achieve lower rents than is currently the case.

Along with this comes a whole range of possibilities and scenarios for the commercial property and development industries, and even the economy at large. Yet, I have heard no-one talking about this – until a few days ago.

Derwent London’s Chief Executive, John Burns has said that an average rise in business rates in London of 10% will increase pressure on tenants, saying “we will have to see how it goes”.

I think this “we will have to see how it goes” is the first recognition that the Business Rates revaluation will affect the rents which can be charged and made to stick, and thus development values.

I think this is good – it is better that the tax payer gets the money to spend on infrastructure and services than the landowners get this free, unearned gift. The only thing missing is the removal of the Business Rates Cap, where the total amount raised is capped and only uprated by the rate of inflation– we don’t cap the amount which we raise from income tax and change the rate charged accordingly, so why do this with business rates? There is a lot we could do with this additional tax income.

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Business Rate Revaluation and Effect on Rents

I have been surprised that I have seen no-one from the property development and investment industries talk about, or even mention in passing, the effect of the Business Rate Revaluation on the rents they can charge for commercial premises.

Everything else being equal, if the cost of running a business goes up because of increased Business Rates, businesses can’t afford to pay as much in rents.

In the short-term there isn’t much most businesses can do about this. But when the time comes for lease renewals or rent revaluations it could be that tenants push for no or low increases. New lettings may even achieve lower rents than is currently the case.

Along with this comes a whole range of possibilities and scenarios for the commercial property and development industries, and even the economy at large. Yet, I have heard no one talking about this – until today.

Derwent London’s Chief Executive, John Burns has today said that an average rise in business rates in London of 10% will increase pressure on tenants, saying “we will have to see how it goes”.

I think this “we will have to see how it goes” is the first recognition that the Business Rates Revaluation will affect the rents which can be charged and made to stick, and thus development values.

I think this is good – it is better that the tax payer gets the money to spend on infrastructure and services than the landowners get this free, unearned gift. The only thing missing is the removal of the Business Rates Cap, where the total amount raised is capped and only uprated by the rate of inflation– we don’t cap the amount which we raise from income tax and change the rate charged accordingly, so why do this with business rates? There is lots we could do with this additional tax income.

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Making Places which Work for People – by involving the people

If we leave the development and regeneration of cities to only one form of capital (economic) we will get a one dimensional city which only works for one section of society.

I recommend an article by Philippa Nicole Barr of Macquarie University as a good read about how we need to bring together all forms of capital: social; cultural; intellectural; political; and natural; in order to balance the effects of economic capital so as to make ‘Places Which Work For People’ – all people.

I give a taste by quoting a paragraph here:

“The redevelopment of existing communities and the construction of new urban areas is frequently funded by private companies looking to make a high return on investment. This is achieved by high-value sales or rental rates. But without regulation, these processes create conditions that exclude or disempower poorer people within cities; for example, by limiting access to public spaces or making rent and home ownership unaffordable. One recent study revealed that, compared to other groups of people, poorer renters move more frequently into disadvantaged areas, each time experiencing a decline in their living standards”.

Link to the full article:

https://theconversation.com/heres-how-to-give-people-a-greater-say-in-their-cities-62672?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20October%2011%202016%20-%205779&utm_content=Latest%20from%20The%20Conversation%20for%20October%2011%202016%20-%205779+CID_926dacc321f58c95e4e3aefadfa7e3e5&utm_source=campaign_monitor_uk&utm_term=Heres%20how%20to%20give%20people%20a%20greater%20say%20in%20their%20cities

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Entrepreneurial Development Model for Town Centres

I have been saying for some time now that many of the UK’s struggling town centres and high streets will not be improved or regenerated via the traditional property development model. Instead, in order to improve, they need to use the Entrepreneurial Model.

So, it is interesting to see that some Local Authorities have decided to buy (or a looking in to buying) high street properties and shopping centres. However, to make a success of this ownership these local councils will need to employ a different sort of manager to those they are used to recruiting, and they can’t depend on property agents to make a success of it for them.

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What has Hip Hop music to do with urban regeneration?

What has Hip Hop music and gang culture to do with Urban Regeneration and Urban Planning?

On Friday I watched the BBC4 programme ‘Rubble Kings’ which told the story of how gang culture in parts of New York came out of the damage done to inner-cities by top-down urban planning and de-industrialisation, and how eventually gang leaders decided that other gangs were not the problem; and instead of fighting each other they needed to fight ‘the man’ by coming together, and to re-build their areas from the bottom-up instead of taking what the top-down was willing to ‘give’ them. Part of this community rebuilding came from Hip Hop music and the music scene.

I recommend you view it – there isn’t much Hip Hop music in it as the programme is really about regeneration rather than music.

Link is here: http://www.bbc.co.uk/iplayer/episode/b07vxmxw/rubble-kings?suggid=b07vxmxw

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