“Yes to New Homes” – time to cure the housing deficit disease

Housing completions by tenureWe used to be good at housebuilding. As the economy recovered after the Second World War, house building in England grew to reach a peak of around 352,000 in 1968. That level of housebuilding seems inconceivable now.

The ugly truth is that we have not been building enough houses to cope with our growing population and shrinking household sizes since the late 1970s. We need something like 250,000 new homes a year, yet we are barely building more than 100,000.

It is unrealistic to expect the private sector to boost its production by 150,000 dwellings a year in the short term, and it has never built much more than 200,000 houses a year. Modern day politicians often seen to forget that during the housing boom years of the 1960s, two fifths of housing in England was built by councils or housing associations.

One obvious solution the government currently chooses to ignore is to boost house building by local councils. By allowing councils to borrow to invest, this could increase house building by more than 15,000 dwellings a year. This will be 15,000 households a year that would not otherwise be living in decent housing. They will also be built quickly. Private sector developers are sitting on planning permissions for 400,000 houses, something the public never sector would never do.

Difficulties in gaining planning permission, the green belt and all sorts of other restrictions are blamed for the lack of housing. Yet it isn’t that hard for developers to get planning permission – 83% of major housing applications are approved. The figure would be higher if developers came forward with better schemes that paid more attention to local planning guidance and constraints.

We should not though deny that nimbyism plays a role in refusal of applications, especially in rural areas where the wealthy retired too often oppose small developments of affordable housing. The government’s extension of permitted development rights to allow agricultural buildings will not help here. Most conversions are likely to be snapped up by commuters, second homes owners and retired people. If anything, this will increase nimbyism while doing nothing to provide decent housing for those that work in the countryside.

There is too much emphasis on making housing purchase affordable. Yes, most people would like to own their own home. But at the moment we can’t even meet basic needs for housing, let alone build enough to drive house prices down. In this situation, the priority has to be for decent homes at rents people can afford.

Councils also need to plan for more housing. A recent series of reports by Turley Associates on five of the English regions suggests that councils are planning for at least 160,000 homes fewer than are required over the next five years.

If the housing crisis was a disease, we would have a national crusade to cure it. We would be squabbling less over the details and working harder to get the cures rolled out. Everyone would be playing their part rather than expecting someone else to solve the problem.

Yes to Homes” organised by the National Housing Federation is a good start and is gathering momentum. I for one support it. So does Lib Dem president Tim Farron. Will you?

* Andy Boddington is a Lib Dem living in Shropshire, and a former editor for Lib Dem Voice

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32 Comments

  • The “ugly truth” actually being an ugly partial-truth. There are approximately 700,000 empty homes in England alone, many boarded up, many deliberately kept empty by owners, many victims of the ill-concieved Pathfinder scheme, many left behind by central government’s apparent view that areas outside London and the Home Counties are barren wastelands and subsequent failure to balance employment . Getting just half of these back into circulation would blow away the problem at a stroke, without eliciting a peep from the nimbys and no impact on our depleting green belts. So why do we see such inertia from many councils, who have the power to take over long-term empty properties and bring them back into use for the public good?

  • Nice graph. How many houses were demolished though? What was the net figure for the increase in housing stock? I’m guessing the annual rate of demolition was higher over 40 years ago when ‘slum’ clearances were much more common.

    LVT would help sort out those empty homes and the land-banks, but seeing as that is never going to happen then we need greater powers for local authorities to take into possession vacant properties and possibly a selective planning land tax where land is taxed in between plans being approved and the properties (and land) being sold (although this is something I’ve just thought up off the top of my head so is probably full of holes) – there needs to be some form of financial punishment for people holding on to land and not developing it. Unfortunately this government has been busy doing the exact opposite by making it harder for councils to sort out empty properties (see https://www.gov.uk/government/news/pickles-acts-to-protect-the-rights-of-homeowners ) and introducing the help-to-sell scheme which already seems to be inflating property prices. That’s the problem – every party talks about the need for new houses but then achieves very little in the way of building them, but does plenty to keep property prices high by inventing crazy schemes.

  • In answer to my own question – demolition rates peaked at around 80,000 per annum in the late 60s according to http://www.ice.org.uk/ice_web_portal/media/events/housing-and-sustainability.pdf

  • Peter Davies 6th Sep '13 - 1:16pm

    The 83% planning approval rate does not mean that the process is easy. The more difficult it is the fewer developers put forward plans unlikely to be passed.

  • David Allen 6th Sep '13 - 1:33pm

    Andy Boddington suggests that we need to return to postwar house building rates of around 250,000 per year. But that was when we were replacing what the bombs destroyed and, as Steve points out, the slums we demolished.

    Throughout the more recent boom years, the rate has been a more sober 150,000. Granted, it has now dropped to around 100,000. There is a case for seeking to get back to the 150,000. It isn’t so clear why, if that was what occurred when money was plentiful and mortgages were being pushed down people’s throats, we should now want to go any higher than that.

    If there is real demand in the market, why are developers sitting on 400,000 planning approvals when they could be building?

    Perhaps the unmet demand is that from the poor, who have no market clout. But if that’s so, we need to target affordable housing, not seek an unrealistic expansion of executive housing sprawl.

  • David White 6th Sep '13 - 1:34pm

    Oh yes, I agree with almost all of Andy Boddington’s article. I also agree with the comment from Julia.

    There is a desperate need for more social and/or genuinely affordable housing, everywhere but particularly in London and the south-east of England.

    It is no good relying on the speculative builders to assuage the housing drought. The truth is that, unlike during the inter-war years and during Harold Macmiilan’s period as Minister of Health, private construction companies don’t ‘speculate’ with their bricks and mortar and show homes. They buy land, apply for planning permissions, do nothing until the government guarantees mortgages.

    There is no reluctance by almost all councils to accept suitable applications. Before returning to Hull, I was a (twice-elected) councillor. My favourite committee was Planning & Highways, of which I rose through the ranks to become chairman.

    Very rarely did we object to any new-build proposals. Indeed, inter alia, I recall a 400+ pdf proposal for more than 400 new homes on Green Belt land.

    That is but one reason why I am always suspicious when Mr Pickles and/or builders complain about the reluctance of councils to approve planning applications.

    It is also the case that hundreds of thousands of potentially viable homes are left empty, ‘many boarded up…kept empty by owners’. That is a disgrace which requires compulsory purchase orders.

    There are other suggestions and observations which I could make, but I shall await more comments. – Where are the comments? Do so few LDV readers care about the acute and chronic housing crisis?

  • Lots I agree with here, but to nitpick: The fact that 83% of planning applications are approved just means that applicants are pretty good at judging what will get through the planning process. It would need to be almost 100% to be an indicator that councils want to grant more planning permission than is currently being applied for.

    Our democratically-agreed Decent Homes For All policy is to build 300,000 per year. As this article points out, private developers can’t be relied upon for more than 150,000 per year, which means the other 150,000 per year must be funded by government, but the Coalition is only funding 38,000 per year. We therefore need to commit to quadrupling the Affordable Homes Programme, and target their construction in the most unaffordable parts of the UK, which are generally in the South and the East of England.

  • Simon McGrath 6th Sep '13 - 1:47pm

    @Julia “many left behind by central government’s apparent view that areas outside London and the Home Counties are barren wastelands and subsequent failure to balance employment ”

    Do you have some magical means by which the Government can ‘balance emplpyment’?

  • Simon McGrath 6th Sep '13 - 1:49pm

    @Duncan how do you plan to pay for an additonal 112,000 homes a year ?

  • Dominic Curran 6th Sep '13 - 1:51pm

    @ Julia

    The problem with those 700k empty homes is that they are generally in places where people don’t want to live – a clue as to why they’re empty. That’s why London has the lowest number of empty homes since the 1970s – because need and land values (for which read market demand) has brought them back into use.

    Areas with high levels of unemployment will tend to have high rates of empty homes, as people leave to find work. Let’s say all the people in housing need went to live in those empty homes in Liverpool Stoke, Bolton etc, what would they do then when they realised there weren’t the jobs to support a sustainable life?
    Empty Homes are a numerically neat but practically crude and insufficient solution to our problem.

  • @Dominic Curran
    “The problem with those 700k empty homes is that they are generally in places where people don’t want to live –”

    They are in places that businesses don’t want to locate. People would love to move back to Liverpool if there were jobs there.

  • Dominic Curran 6th Sep '13 - 2:00pm

    @ David Allen
    “If there is real demand in the market, why are developers sitting on 400,000 planning approvals when they could be building?”

    I’m going to give two slightly contradictory answers to your question.

    First, developers with permisison to build, say, a site of 800 homes, won’t have the capcity to build them all in one go. it’ll be a phased development, so although they have permisison for 800, they’llbe built over a period of time. Secondly, they’ll also not want to build all at the same go as this will depress the prices in the area and mean that they make less money.

  • “@Duncan how do you plan to pay for an additonal 112,000 homes a year ?”

    Borrow money, compulsory purchase some land at just above agricultural prices so the sold prices can undercut local prices, build houses, reduce unemployment, increase tax receipts, sell houses, make profit, reduce deficit.

    “Do you have some magical means by which the Government can ‘balance emplpyment’?”

    Well, we could stop spending the vast majority of infrastructure spending in London and the south-east and actually spread it around the country: http://www.ippr.org/images/media/files/publication/2013/06/still-on-the-wrong-track_June2013_10933.pdf

  • Bill le Breton 6th Sep '13 - 2:24pm

    Let’s start my removing central government from London. Media City, Salford, shows how successful that can be. Peel’s plans for the Mersey would make a suitable home for the departments and their staff – fantastic waterside corridor between the Atlantic and Manchester. Great schools, great universities. Completely re-orientating the country. None of those hot sultry days spent commuting either. Excellent work/life balance and quality of life.

    Electronic voting and virtual committee meetings would enable MPs and Peers to spend more time in their constituencies. But they could have some hot desks and hotel rooms (used at the weekend’s for football fans.) I believe it is now called agile working, in the Health Service.

    And all those neo-liberals earning their crust in the Westminster village market wouldn’t have to put up with all that government spending underpinning the value of their homes and life styles. Let’s put government where its appreciated.

  • David Allen 6th Sep '13 - 2:33pm

    Dominic,

    Yes, clearly building an estate takes time, so a nil backlog of planning approvals is not realistic. I’m less convinced that developers usually build deliberately slowly. An estate that is going to be a half-built wasteland for years will not sell. So the builder frequently gets on with it, once started, and gets out of his new owners’ hair as soon as he can.

    The backlog, according to Andy Boddington’s figures, equates to about 4 years’ worth of building at current rates. It doesn’t look like desperate market demand to me. Nor does the amount of unsold second-hand property around.

    By contrast the demand is there – from all those poor people crammed into bedsits in back streets – but they have no market power so they go un-noticed.

  • Dominic Curran 6th Sep '13 - 3:38pm

    David,

    You’re right about where the demand is. It’s also about lending – there a many who could afford the mortgage payments on a home but can’t build up the 25% deposit needed to access affordable mortgage finance, not least because rents have gone up so much.

    I don’t think land-banking is the problem many say it is, though. The GLA commissioned a report last year looking at the barriers to housing delivery, and, although it was focused on London, it did estimate that, of the nearly 200,000 permisisons in London, only between 30-70,000 could be described as being land banked in the commonly understood sense of the term. Not insignificant, but not the issue many think it is, either.

    As fior half built wastelands, well, yes, they don’t sell. But phased devlopments do sell very well, if thwey’re well priced and designed. You’d be amazed at what people will put up with if they think they’ve got a bargain.

  • Dominic Curran 6th Sep '13 - 3:40pm

    @ Steve
    “They are in places that businesses don’t want to locate. People would love to move back to Liverpool if there were jobs there.”

    Let’s assume they would – how do you ensure that there are jobs there? I’d love to see regional growth spread more evenly in the UK, but has that nut ever been cracked?

  • Peter Davies 6th Sep '13 - 3:53pm

    “of the nearly 200,000 permisisons in London, only between 30-70,000 could be described as being land banked in the commonly understood sense of the term” but there is also land for which permission has yet to be applied for which could be so described.

  • @Simon McGrath, I’d borrow it. Quadrupling the size of the Affordable Homes programme would mean an extra £4bn of public debt per year. You get an asset on the other side of the balance sheet that will earn some (below market) rental income and will in the long run lower the cost of Housing Benefit, so it would be a canny investment.

    The party is committed to investing far more than this on HS2. Ipsos-Mori’s polling last month found housing was raised as a major issue by 5 times more people than transport. Whatever the rights or wrongs over HS2, the public want us to be investing in housing much more than transport.

  • Dominic Curran 6th Sep '13 - 4:45pm

    @ Peter Davies
    “…but there is also land for which permission has yet to be applied for which could be so described.”

    Such as?

  • Andy Boddington 6th Sep '13 - 5:30pm

    @Steve
    “How many houses were demolished?” – which you later answer is around 80,000 a year in the 1960s.
    My point is not about total stock, but building rates. We could build 250-300K houses a year then. That’s quite something. We can’t do it now.

    @David Allen, @Steve and others
    The household growth rate between 2011 and 2012 is estimated to be 220,526 every year.

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/190229/Stats_Release_2011FINALDRAFTv3.pdf

    Given that many people currently live in overcrowded and unsatisfactory conditions, we will need 250,000 dwellings a year to catch up and keep up. I cannot see that 150,000 homes a year is enough.

    That said, I think the 300,000 a year in “Decent Homes for All” at September 2012 Conference is too high. It is also somewhat in cloud cuckoo land in terms of being achievable.

  • @Andy Boddington
    I wasn’t disagreeing that building lots of homes would be good. I also made no reference to overall housing stock. I was just pointing out that it would be more meaningful to take into consideration how many homes are being demolished at the same time. Without that information, we don’t know the rate of growth of the housing stock and how it compares historically. Part of the reason we were able to build so many back then was because of the space created by the demolition of large areas of cities. Think of all those tower blocks going up in the areas that used to be back-to-back terraces.

  • David Allen 6th Sep '13 - 6:55pm

    Andy Boddington,

    Thanks for your figures. Following the links in that paper, it looks as if projections for household growth have been fairly close to 200,000 per year for the last 20 years, albeit the latest figures show a slight rise. I’m not sure therefore why housebuilding was closer to only 150,000 per year throughout the boom years. Why didn’t market signals then drive up the rate of housebuilding, given that with rapidly rising prices, builders must have seen rising profits?

    Perhaps it’s that, of the 200,000 extra households per year, only a proportion had enough resources to enter the housing market. Whereas the poor, once council house building came to an end, lost out and got crammed into flats, HMOs, etc.

    Perhaps you’re right that 150,000 is too low – provided things are changed in a way that actually solves the affordable housing problem. Not the way that simply gives developers a licence to make more money, building more executive housing on green fields, while unattractive brownfield sites are left alone.

    A confession – When I used to be a Lib Dem councilor, we backed the Nimbies. We did that because it was what our electorate wanted of us (hey, the listening Party, you know?), and because we didn’t see any clear rationale for the opposite point of view. Nimbies will shout loud if they think they are sacrificing nature and the countryside to unnecessary profit driven development. They will see over-ambitious housing targets and loud-mouthed lobbyists for the developers as evidence that they are right about all that. They may go quieter if faced with plans for affordable housing that is seen to be needed, and which isn’t planned on an excessive scale.

  • Eddie Sammon 6th Sep '13 - 8:17pm

    The key to our housing problem is not to build 250,000 homes per year, destroying part of the countryside and contributing to climate change in the process.

    It also wasn’t fair of you to paint “wealthy” retired people as selfish individuals who don’t want affordable housing built. Where is the evidence that most people complaining about affordable housing being built are wealthy and retired?

    The main cause of the housing problem is population growth, and although I want a world with free movement of people, the current levels of immigration are not sustainable. The only thing that will reduce long term immigration is to reduce global and European inequality/poverty. I think we are making good progress towards this.

    Regards

  • Helen Dudden 7th Sep '13 - 9:43am

    Yes, with the increased mobility within countries we do have a problem.

    I feel in Bath that the forced to sell attitude, is not fair to those concerned. It does not apply to empty factories or schools this should be again fairly done.

    Until a healthy attitude to house building, and the empty properties is resolved, and the fact we cant house the world, then we continue to have problems.

    Bedroom tax, is a cruel thing to be doing when there are not enough properties to go round.

  • Michael Ingle 7th Sep '13 - 9:45am

    I think it is unrealistic to expect that the supply of new houses can be significantly expanded without allowing building on greenbelt areas. The 400,000 outstanding planning permissions we constantly read about only cover around three years’ building by private developers, which is hardly a gigantic reserve (and no I am not employed by or a shareholder in a building company). Enormous numbers of houses were built during the 1920s and 1930s in areas around London – whole suburbs like Enfield came into existence and most of their present day residents are happy to live in the three bedroom terraced and semi-detached houses that were built then. The demand for houses exists mainly in the London area and that is where we should be building new houses. Meanwhile, modest terraced houses in areas of London that used to be considered inexpensive now cost upwards of £800,000. Imagine the mortgages that people must take out to afford such houses. This simply cannot go on – we must loosen planning restrictions further so that more houses can be built inside the M25.

  • I suspect that the current government is dominated by people who are ideologically opposed to ‘social housing’, and the recent support for mortgages up to the astronomical sum of £600,000 suggests a disinterest in poorer people trying to get an indpendent roof over their heads. Supply must be increasedto match demand, or prices will rise and rise – giving a completely illusory notion of ‘growth’. Rising housing prices are not a good sign, but an illusion.

  • A “Yes to New Homes” is not a cure “the housing deficit disease”. To tackle the disease we need to address it’s root cause namely too many people wanting houses, which is a direct consequence of uncontrolled population growth.
    If Andy and others who have commented here, are so sure that “Yes to New Homes” is a cure then please provide the projections to show when the UK will no longer have a “housing deficit”.

  • Helen Dudden 8th Sep '13 - 10:22am

    We also house those from other countries, but in return the same would not happen.

    If you went to Spain would you have social housing? or any other EU country. This obviously includes other areas of the world.

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