This week, we read in the newspapers that planning applications have fallen to a 16-year low. According to reports, only 2,456 projects were granted planning permission during the second quarter of this year. Can it really be that low? The Home Builders Federation has warned that if this trend continues it will lead to a reduction in housing delivery of 44,000 homes a year, which would see supply for England fall to levels not seen for a decade. So what is it all about? If we want to get Britain building, shouldn’t we be issuing planning permissions like confetti?
According to Stewart Baseley, HBF Executive Chairman, the opposite has been happening, with the policy environment becoming increasingly anti-development and anti-business, resulting in a sharp fall in the number of homes being built. He added, “Fewer homes being built during an acute housing crisis has clear social implications, in particular for young people, and we’ll end up reducing the economic activity and cost jobs”.
So why is government policy skewed so much towards the ‘no’ lobby. Why at this critical time, has Michael Gove abolished the requirements for councils to have a five-year land supply for housing development? We’ve seen the same attitude towards green energy in which the ‘no’ lobby has been given a veto to block on-shore wind farms and the electricity pylons needed to transport green energy.
If you don’t believe there’s a housing crisis, look around you. Young people sleeping in shop doorways. Thirty-somethings still living with their mums because they can’t afford to get something of their own. Desperate renters in a bidding war with each other, just to find somewhere to live
It’s not just about supply and demand. The housing market itself has become distorted. Young couples cannot get on the property ladder because they are being priced out by a cash-rich buy-to-let market which is subsidized by the housing benefit system. Councils are having to rent back properties on their own estates just to meet their statutory housing obligations. The creation of a new class of middle-people plugging the gap in the provision of social housing, whilst at the same time taking their cut from the housing benefit system.
What has caused crazy state of affairs? What are the solutions? We start with the causes.
The causes of Britain’s 2023 housing crisis
There is no single cause of today’s housing crisis. There is a multiplicity of causes which, over the course of several decades, have converged together to create that crisis. Here they are.
The statutory right to buy
Remember that when statutory right to buy was introduced in 1981, there was no buy-to-let market. Most homes sold under right-to buy remained in owner-occupation until the private rental market opened up in the 1990s. We now have a situation in which, in some areas, up to one half of ex right-to buy properties are owned by private landlords and in many cases rented back to the same local authorities which originally sold them. There is also an intrinsic unfairness in the State gifting massive subsidies to a select group of people whom, by chance, are already in subsidised housing, at the expense of everyone else. Yet the government appears wedded to it. And why should any local authority invest public money in the provision of new social housing if, in three years’ time, they might be forced to sell it off at a discount.
Not enough new homes being built
I suspect that one of the reasons why fewer new homes are being built today than in previous decades, is that housebuilding is no longer as profitable as it once was. There are too many things getting in the way: one of them being shopping-list planning policies which are not only administratively slow but can also reduce the viability of a proposed housing development. It is quite right that any housing development must stand the cost of upgrading the public infrastructure required to serve the new development, including education and social facilities. It is also fair that someone who benefits financially from the grant of a large residential planning permission should contribute to the cost of providing affordable housing to those who cannot afford to buy privately on their estates. The issue is that the process of securing on-site affordable housing through the planning system is too cumbersome. Many housebuilders would quite willingly make a financial contribution towards the provision of off-site affordable housing, just to get the development of the ground, and which the local housing authority could then spend as it thinks appropriate in providing new affordable housing. And wouldn’t many cash-strapped housing authorities prefer a simple cash-injection?
The number of empty homes
According to official statistics, during 2022, the number of long-term empty homes in the UK stood at 248,633, up 5% on the previous year and which has increased annually since 2011 (excepting only the covid years). But it can’t be right that someone can choose to keep a residential property empty and unused whilst other people do not have a permanent home. In many of these cases, there are reasons why the property has remained empty for many years instead of being brought into beneficial occupation and use. An owner may have died or moved abroad or into residential care. Their whereabouts may have become untraceable. Perhaps no one has taken out probate in relation to a deceased’s estate. Maybe a property has remained empty for so long that it has become dilapidated and uninhabitable. But that doesn’t help Britain’s Housing crisis.
What about re-introducing rent controls? Wouldn’t that solve the crisis in rental accommodation?
Sadly no. Statutory rent controls never worked in the quarter century they were in force until their abolition by the Housing Act 1988. And there is no reason to suppose that they would work any better now. Until statutory rent controls were abolished at the beginning of 1990, safe legal advice to anyone thinking of renting out their home was “don’t”. Letting out a residential property carried too much risk. It wasn’t just that you might never get your property back. The rents you received for your property were not in your control. A rent tribunal could reduce it to a derisory level. Not only would you be accommodating another family. You would also be subsidising their living costs, even if they had more disposable income than you did. No one is going to volunteer to do that. It’s why someone working temporarily abroad might have been advised simply to leave their home empty, instead of renting it out to someone else.
What about the proposed abolition of section 21 no fault evictions?
Abolishing section 21 will give existing residential tenants a little more peace of mind, provided they keep to the terms of their tenancy. But it’s not going to make private renting more affordable. When section 21 was originally introduced by the Housing Act 1988, it was to give prospective residential landlords the confidence to let out their properties safe in the knowledge that they could get back vacant possession when needed. Back in 1988, no-fault eviction was not problematic for residential tenants because it was a new market and there were so many alternative properties to move into. Contrast that with the position today, where someone evicted from their existing rent the property might have nowhere else to go.
What about stamp duty holidays? Would that help first time buyers?
The problem with stamp duty holidays is that it leads to a stampede as desperate homebuyers try to get their purchases completed before the holiday ends. It’s great for Sellers, who can soak up the value of the tax-break by increasing property prices.
Here are the solutions which will work
- Abolish right to buy. Now! It won’t solve Britain’s housing crisis. But it will stop it getting worse. It will also give councils the confidence they need to invest in the provision of new affordable housing, safe in the knowledge that it will be kept permanently available to meet future housing need.
- Make the town planning system 100% self-financing, so lack of resource can no longer provide an excuse for delay. Where local planning authorities are still unable to determine planning applications within the statutory turnaround time, give developers the right to refer their planning applications to independent expert determination. The statutory appeals process is just too slow.
- Give housebuilders the option of meeting their affordable housing responsibilities by paying a commuted sum to the council’s housing revenue account, to be spent on the provision of new affordable housing in the way the council considers most appropriate. Councils would love it. So would housebuilders. Make it part of the community infrastructure Levy.
- Free up 248,633 long term empty homes by putting them in to public auction. Councils already have powers to compulsory purchase long term empty dwellings. But like the Empty Dwelling Management Orders, introduced by the Housing Act 2004, they are too slow and cumbersome to be of any practical use. So why not create a swift summary process whereby councils can apply to a magistrates’ court for an order forcing the sale of a long-term empty property?
- For councils and other social housing providers to use the current collapse in the housing market to replenish their housing stock. There is no better time to do it. Yes-interest rates are currently high. But they won’t always be high. And think about the massive savings in the housing benefit budget if councils no longer had to rent back from private landlords to meet their statutory housing responsibilities.
Now the big question.
Will these ideas work in solving Britain’s Housing crisis? You can bet they will!
V. Charles Ward Solicitor and LARTPI
September 2023
BRUCE AND HOLLY 