A quiet, but very optimistic, cheer for the communities secretary Sajid Javid.
Many politicians use the UK’s cost of living crisis as a talking point, but Javid’s blueprint for a new housing policy – set to be fully published next week – looks like it was designed to actually start tackling it in a meaningful way. For, according to pre-released details, not only is the government intending to free up the planning system but it wants to encourage some building on the green belt too.
Renters and wannabe owners alike have experienced first-hand the dire state of the housing market. Whether it be a young professional whose recent promotion and salary boost still doesn’t free her from paying half of her disposable income on rent, or the couple whose five years worth of savings still don’t add up to a sufficient deposit, dreams of affordable rent or affordable homes seem dashed for this generation.
But calls for reform aren’t simply based on anecdotal evidence: the IEA’s Kristian Niemietz’s briefing, published last February, highlights just how damaging the UK’s interventionist (and incompetent) housing policies have been – draining the pockets of renters and new owners, not just recently, but for years.
Read more: It's time we saw some real planning reforms
For the past three decades, Britain has “had lower rates of housebuilding (relative to population size) than any similar country for which comparable data is available.” Unsurprisingly, this lack of supply has pushed house prices up by four and a half fold (post inflation) since 1970. No other country in the OECD has come close to that kind of severe price inflation. Niemietz found Britain to be “an extreme outlier” – in the very worst way.
Furthermore, the coalition government’s objective of creating more homeowners, though well-meaning, led to the implementation of policies which inadvertently pushed up house prices further.
Flooding the market with more (public) cash without any meaningful increase in housing supply has proved to be a nice subsidy for those who own their homes, but has done little for those who don’t. The homelessness charity Shelter has estimated that the Help to Buy scheme, designed by the previous government to make housing more affordable, has actually increased average house prices by over £8,000.
While Javid’s white paper isn’t necessarily the extreme “shake up” it has been advertised to be, it is refocusing the government’s objectives away from market interference and rightly towards liberalising policies that will help bring costs down across the board.
And where Javid has been particularly bold (encouraging councils to consider green belt development), he lays the groundwork for momentous change in the future, as releasing more land in the places people actually want to live will prove vital to fully solving the housing crisis. The LSE’s Paul Cheshire, for instance, has calculated that taking just a 1km ring of green belt from inside the M25 would yield enough land for a generation of building at current rates.
(Before readers get dewy-eyed for greener pastures, the green belt is not all idyllic countryside, but often useless, environmentally-costly land. As the Adam Smith Institute highlighted in 2015, 37 per cent of London’s green belt is made up of intensively-farmed agricultural land alone.)
The jury is in on the UK’s current planning restraints; the evidence against the status quo is overwhelming, and charities across the spectrum are calling for liberalisation. But with many political actors still committed to protecting the protectionists – at the cost of the masses – Javid’s policy prescriptions, including modest removal of height restrictions, seem to go just about as far as they can in the current climate.
Rumours of challenges to the paper, even within Javid’s own party, are already surfacing, but public opinion is swinging against the Nimbys. Whisper it – but radically better housing policy may just win the day.