No place called home: A look at the housing crisis in BritainReported by Metro.co.uk on Sunday, 29 April 2012 (on April 29, 2012)
*With the number of new homes being built in Britain at the lowest level for almost a century, developers are accused of hoarding land and waiting for house prices to rise. But others blame the planning system and say reforms will lead to much needed new housing. Fred Attewill investigates...*
The number of new homes being built in Britain is at the lowest level for almost a century (Picture: PA)
Britain's population is growing fast. By 2027, it is set to reach 70million but fewer homes are being built than at any time since the 1920s.The result, based on the law of supply and demand, is entirely predictable: expensive homes, ever older first-time buyers and falling levels of property ownership. But according to the Council for the Protection of Rural England (CPRE), in 2010 the large developers held land with permission to build 281,993 homes – a figure that is not disputed by the Home Builders Federation.
With just 106,050 homes built in England during 2010-11 according to the HBF, developers already hold enough land for almost three years’ supply of new homes with no further planning hoops to jump through.
But even while land banks have been amassed, development has stalled.
Kate Houghton, the CPRE’s housing expert, said: ‘The gap between the size of the land banks and the number of house completions has been growing. Completions have dropped off really significantly while land banks have grown. Why is there no building?’
Ms Houghton said the blame did not lie with Britain’s historically labyrinthine planning laws.
Instead, she said it had more to do with developers’ profit margins.
‘During 2005-06, the major house builders were buying land banks at very high prices. To balance their books, they have to get a good enough return on the prices they paid for the land.
‘As a result of house prices going up, landowners will only sell to developers at higher prices. The reason for house prices going up is much more to do with complex financial issues.’
Ms Houghton said with lenders far more cautious since the 2008 credit crunch, many people could no longer get mortgages, reducing demand and making many developments unviable.
But others point the finger at Britain’s planning system.
Dr Tim Leunig, a reader in economic history at the London School of Economics, said developers were sitting on large land banks because they were confident house prices will rise in the future as the ‘sclerotic’ planning system restricts growth. By liberalising the planning system, developers’ land banks would fall in value – immediately spurring new building.
‘Even during the boom over the last ten years, with good economic growth and high availability of finance, the number of new homes completed were not that high,’ he said. ‘Genuine planning liberalisation, so the house prices would fall in future, would lead developers to build houses as quickly as they could because their land banks would become a depreciating asset.’
He said that with just nine per cent of England currently built on, all greenfield sites – apart from protected land such as Sites of Special Scientific Interest, Areas of Outstanding Natural Beauty and National Parks – should be available for development. If a local council backed new housing in an area, land owners would auction off land for development with any money raised over the asking price handed to the council.
Dr Leunig said the alternative was a starkly divided society with average house prices in some parts of the country reaching £500,000 in current values by 2030.
‘The only people who will be able to afford houses will be those with rich parents. It would be a sad world where someone from a council estate would never be able to afford a house unless they become a hedge fund dealer.’
The new planning reforms now in place, which require local authorities to do everything possible to identify and meet housing demand, are designed to ‘significantly’ boost the number of new homes completed, according to planning expert John Rhodes who helped draw up the policy.
He said it was ‘beyond doubt’ the previous regime had constrained development and pushed up house prices.
‘The planning system has constrained development exactly where it was most needed – in the south-east,’ he said. ‘That’s why house prices have become unaffordable.
‘This is a constraint on the economy and the lives of tens of thousands of people.’
Links: Full news story
|Recent related news|
2 days ago
|Britain's poor were absolutely and relatively better off until Thatcher was elected in 1979. Since...|
2 days ago
|· As scandals mount, White House springs into damage control (Reuters)
· Glencore Xstrata chairman...|
3 days ago
|In the wake of Thatcher's passing, a fierce and valuable book charts popular culture's political...|
3 days ago
|Before descending further into hysteria about Europe, we'd do well to look to Germany. They tend to...|
3 days ago
|In the US, more than five million people have lost access to health care. In Greece, there's a 200%...|
1 week ago
|In London, there are more cranes on the skyline than in the rest of the country put together....|
1 week ago
|*¤ YESTERDAY IN GOLD & SILVER*
The gold price traded basically flat up until about noon Hong Kong...|