Making house prices and rents once again affordable needs local residents to support more housing. Is there a solution so existing communities welcome new families and reverse existing residents fear of change in their neighbourhood? History has some useful lessons from the eighteenth and nineteenth centuries.
Landed estates, whether in urban or rural areas took generations to notice that beauty and popular appeal both need to be understood and carefully nurtured. Acting as long term investors, not short term traders they became wealthy by consistently following tried and tested estate management principles. The core of these principles is simple: follow the market. The clues are what re-sells well, what sort of places connect with popular appeal? Doing so works well for investors. Simply it creates wealth for the suppliers.
What went wrong in the twentieth century? The planning system was broken. Local residents see the quality of so much new housing and turn their backs. They are disillusioned and express their anger by forming local groups to oppose every project for a thousand reasons. Local councillors, who wanted the coalition government (2010/2015) to give them control of local housing housing supply found they had in fact taken over a land supply issue with a lot of pitfalls. The result was predictable. Housing supply has fallen; quality has not improved, residents are angrier than ever and their children cannot afford to buy whilst rents creep upwards. A growing number of the young are alienated as they realise they cannot have what their parents took for granted, a home of their own.
In 2012 spatial housing policy was devolved to local authorities. Councillors and residents thought they would now control where and when new housing was built. Believers in unfettered open markets expected when the first Calls for Sites went live six or seven years ago the result would bring forward the right sites at the right times. This is what markets free of intervention are supposed to do. Others with market experience knew land owners would act in their own commercial interest. Planners were left with the task of building a housing land supply policy for their local plans out of a mixed bag of good, bad and unrealistic sites. Planning controls cannot turn poorly located, badly served sites into places where people want to live. Some councils began to think the alternative was new settlements and urban extensions, which is sensible if councils have the insights on location and timing that landed estates have acquired to look far ahead. Few councils have these skills and the hard earned expertise that is needed. One local council endorsed a new community for more than 10,000 homes promoted by the owners without first undertaking a survey of their entire travel to work catchment area to confirm it was the most sustainable option.
The lesson of failure is that local plans, and planning control powers alone cannot prevent new housing which local residents dislike being built. The 2012 devolution of power to unprepared local councils has made a bad supply situation worse. The way forward is for councils to take back spatial control of their areas. Land for large scale new housing development must first pass into the ownership of local councils. Local authorities must be motivated across the political divide locally and across local council boundaries spatially to take on the mantle of the landed estates. Currently they lack the expertise. Funding will be easier, if far sighted long term land purchase policies are adopted as valuers will point out that hope value for higher value uses remains low ten or twenty years into the future.
Landed estates needed generations to put themselves into the wealth league without the powers of planning control. Councils with planning control powers and ownership of the building land will be in a position to fast track the delivery of new housing sites, with land sales following a master plan. Milton Keynes is one example of an authority with a long term land control policy. The Crown Estate is another example of a ‘private sector’ which also seeks to act in the public interest.
Some will say allowing local councils to take back control of the building land in their areas by councils direct intervention in the market for housing land will distort the market. The other view is that the current system allows land owners and their partners to act as an oligopoly that takes advantage of a broken system. Provided that all land is acquired at it full open market value, inclusive of hope value if it exists, accusations that an asset is being confiscated are avoided. A policy decision to offer compensation above existing compulsory purchase rates would also go far to block opposition from this direction.
Giving and supporting local councils in high demand areas with these new powers will enable them, once they have understood their new responsibilities to block the release of housing on weak sites, and will enable them to adopt shrewd long term land supply policies which return the added value to their local communities. Massive added value follows planning consent.
The white paper, Planning for the Future published in August is the obvious starting point for introducing a policy which encourages councils to take control of their own destinies, and work with their residents to understand that when the current cycle of local plans expires in ten of fifteen years new long term land supply policies will take effect. It has taken four decades to undermine the foundations of the housing land supply market. It will take one or two decades to rebuild it in a community led long term consensual way.
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