We need to build more houses

In addressing the housing crisis policy makers will have to step on a few toes, argues Claudia Wood. Being squeamish about building houses is no longer an option.

‘We need to build more houses’ has become one of the great policy platitudes of recent years. Trotted out by politicians of all hues, declared frequently during the run up to the general election, the government was voted in on a manifesto pledge to build 200,000 new homes, extend right to buy and redevelop brownfield. Jeremy Corbyn is now leading the Opposition on a pledge to remove borrowing restrictions on councils so they can build new housing, and creating a National Investment Bank to lend to them (with money taken from the £93 billion of corporate tax breaks currently on offer).

Despite their differing approaches, these steps sound promising – we’re finally taking the housing crisis seriously. Or are we? Let’s remind ourselves of the scale of the problem. The latest estimates using the 2011 census have found we need to build 245,000 houses per year to meet population growth. The last time we built that many houses was in 1979. Last year – which the Government lauded as the most successful year for new houses since 2008 – we built just 140,000 new homes. We’ve been 100,000 houses short of housing need for seven years now – and apart from a spell in the boom years of the early 2000s we’ve been under-building for decades, with spiralling rents and housing poverty the result.

The government’s ‘big pledge’ of 200,000 new homes for first time buyers over the five years of this parliament represents less than one year’s requirement. Unused brownfield land can provide space for another 200,000. Then there’s the government’s flagship housing policy – Ebbsfleet garden village, a policy announcement so good they made it twice. In 2012, there was a promise of 22,000 houses, which failed to be built; and then again in the 2014 Budget a more modest 15,000 houses was pledged. So now we just need 16 new Ebbsfleet villages built every year, and we’re sorted.

If one thinks it’s just the Conservatives who are dabbling around the edges of the housing shortage, think again. Even Corbyn’s grand 2020 vision could miss the mark, relying on lifting borrowing caps for local authorities to unlock a flurry of supply. Many contend this is a red herring – many councils don’t make use of their borrowing powers as they are, with £1.4bn going untouched in 2014 as councils are hesitant (or lack the skills) to make such investments when dealing with widespread cuts to front-line services.

This big state solution assumes councils are desperate to fill their areas with new property – ignoring the fact many are penned in by green belt and strong local NIMBY campaigns, not to mention the threat of Right to Buy, and already sitting on tens of thousands of empty properties. If councils don’t have the wherewithal to get these already-built homes back on the market, what chance they’ll all borrow to build shiny new blocks?

Fixing the UK’s housing crisis needs big change and tough love. No more symbolic gestures.

Filling up empty properties

First, get the 610,000 empty properties around the country back on the market. That doesn’t mean ‘supporting’ local authorities to refurbish or ‘encouraging’ property owners to sell their empty assets. Let’s set targets – local authorities must refurbish and let all their properties or demolish them and sell the land to private and community developers by the end of this parliament.

They can fund this using the money they make from council tax levied on empty properties (which is subject to a discretionary 50 per cent discount at the moment). Scrap that – properties standing empty for three months or more (subject to the usual caveats for renovations etc) should be levied at 100 per cent. The 50 per cent additional premium that can be put on second homes should also be moved from discretionary to standard practice, and the money reaped from these policies ring-fenced and used to either bring empty properties back to market, or to build more.

And then let’s bring back the EDMO. This little known tool used to enable councils to take control of private properties that had been empty for six months and weren’t going to be occupied in the near future. The council would renovate, get a tenant in, and manage the property for a seven-year spell, without it changing hands. The coalition government all but sunk it by changing the rules so that the property had to be empty for two years, and be used for anti-social behaviour.

No one’s heard of the EDMO because no one uses it – just 108 properties have been EDMO’d since 2006. So let’s bring it back and fast-track the process: owners of properties not being used as second homes or being renovated standing empty for six months have to have the place for sale or occupied within six months, or run by the council under an EDMO for seven years. Suddenly hundreds of thousands of council and private owned properties will be available for tenancy.

Freeing up land

Once we get these filled, we still need to build more. Councils should have the lending cap lifted, but we can’t assume that will solve the issues with supply – private and builders need a hand too. Planning permission, land availability and lack of investors all thwart private builders. NIMBYism is by no means easy to overcome but is a moot point if there’s no land in contention, though community builders, like community land trusts, could prove a useful third way between private builders and councils in overcoming NIMBY concerns by being rooted in the local community – turning local residents into the driver of, not the obstacle to, new developments.

The problem with land is that we can’t make more of it. But the big myth is that it’s in short supply. Seven per cent of the UK is classed as urban, but once you consider 80 per cent of ‘urban’ spaces are gardens and parks, the built bit is only about 2 per cent of the country. And 90 per cent of us are squeezed into it. We don’t have to uproot ancient woodland or bulldoze hedgerows to give us all a bit more room. There’s great swathes of ‘green belt’ and ‘green field’ which is little more than scrubland, with no environmental value, sitting around towns across the country.

Analysis from Quod found that around a million homes could be built on ‘green belt’ land in London, 10 minutes’ walk from a station and with no environmental value other than it having ‘green belt’ designation. So let’s look at all of our green belt and separate the actual green stuff from the inaccessible bits of fly-tipped waste-ground which we could sell to housing developers.

Then there’s all those plots, privately owned and left empty while the owner waits for them to appreciate. Unlike the empty property owners, land-owners have no council tax to pay while they sit on it, or a gains tax to pay when they sell it. Introducing a Land Value Tax – the economists’ favourite tax – would rectify this, ensuring land speculators paid for the profits they reap. It might prompt more land-owners to sell on, stop construction companies from sitting on land banks, and generate a new source of revenue for councils to use to build or refurbish homes.

With more land becoming available, private developers are more likely to get investors on board to finance new housing developments as returns won’t be so fiercely capped by exorbitant land prices. The government’s fool-hardy Right to Buy policy might have made housing association stock an investment no-go area, but that doesn’t mean private developments of rental property and older people’s housing aren’t attractive prospects for investors, including pension funds, looking for modest but highly reliable returns.

Thinking big

To make this viable, we again need to think big. Not a garden village, and not a block or two in a town where hostile residents add years to the planning consultation. We need entirely new towns and cities, using HS2 as a backbone. What better way to add fuel to the northern powerhouse? The government could do well to get in on the action too, providing development loans and encouraging smaller developers, who struggle to get credit, into the market.

Being squeamish about building houses is no longer an option. Policy makers have to step on a few toes – be those land owners, empty property owners, or those objecting to new developments. When all’s said and done, objecting to new housing is not the same as objecting to a new polluting motorway or an anti-social nightclub. Objecting to new housing is objecting to new people. And our birth rate is not optional.

Housing policy needs to go big or go home (assuming you have one).