The supply of housing

A series of earlier posts have looked at affordable housing, self help provision in shanty towns and at the supply of housing generally here in the UK. In this post I want to look at more general issues around housing supply.

To begin with, some stark figures.

According to recent research published by the TCPA, and carried out by Alan Holmans of the Centre for Housing and Planning Research at Cambridge University, there is currently a need for over 240,000 homes per year. We are actually building around 110,000 per year.

This huge shortfall is on top of the backlog of unmet housing needs and exists in a context where local planning authorities are legally required to maintain a five year supply of housing land. However given the gap between building and supply recorded in the research, the overall validity of that exercise must be questioned. If the majority of councils are meeting the supply requirement why is the gap between need and provision widening? To my mind this can only be because the basic premises on which these calculations are constructed are fundamentally flawed.

No discussion of housing in Devizes can ignore this basic problem.

The supply – or rather the lack of supply – of affordable housing is inextricably linked to the supply of ordinary housing, whatever that is. Of course we only need to create a special class of housing called ‘affordable’ because the general cost of provision has risen to such ludicrous heights on the back of the artificially constrained market created by the way in which we plan for housing.

Why is this happening? In areas like housing or health many argue from a perspective of social justice or equity, that the market will not meet the needs of those unable to pay and the intervention of the state is needed to redress that imbalance. It doesn’t seem to me however that this is what we have. . We have a market that is heavily regulated and controlled, while government increasingly tries to apply a market model in areas like health with conspicuous lack of success and a forecasting model to areas like housing and retailing with similar failure.

One technique of planning large human settlements developed in the past hundred years has been the device of establishing ‘projective need’. This means guessing the future physical and social requirements of a community or city and then basing present spending and energy so as to achieve a readiness for the projected future state. In planning schools, beginning students usually argue that people’s lives in time are wandering and unpredictable, that societies have a history in the sense that they do not do what is expected of them, so that this device is misleading. Planning teachers usually reply that of course the projected need would be altered by practical objections in the course of being worked out; the projective need analysis is a pattern of ideal conditions rather than a fixed prescription.

But the facts of planning in the last few years have shown that this disclaimer on the part of planners is something that they do not really mean. Professional planners of highways, of redevelopment housing, of inner city renewal projects have treated challenges from displaced community groups as a threat to the value of their plans rather than as a natural part of the effort of social reconstruction. Over and over again one can hear in planning circles a fear expressed when the human beings affected by planning changes become even slightly interested in the remedies proposed for their lives. ‘Interference’, ‘blocking’, and ‘interruption of work’ – these are the terms by which social challenges or divergences from the planner’s projections are interpreted. What has really happened is that the planners have wanted to take the plan, the projection in advance, as more ‘true’ than the historical turns, the unforeseen movements in the real time of human lives.

“The Uses of Disorder”; Richard Sennett 1970

This quote is taken from a book published in 1970, but is still relevant today. It applies moreover not just to what we conventionally call planning in the UK, but to all those other areas where the state attempts to predict what will happen in order better to work out how they – which means we – will pay for it.

At the root of predictive thinking used this way, is an idea of perfectibility that runs counter to all we know of human behaviour. We will never have enough information; we will never have enough money to do everything. Expecting the state nevertheless to act as if it can do just that is surely dangerous.

This is exactly what I think is happening in housing.

Limiting the land available for housing through the planning system does several other things:

  • It generally drives up the price of housing land and hence of both new and existing housing1.

  • It encourages the concentration of new housing in large chunks, because it is also easier for the planners to show compliance with the need to maintain a five year housing land supply.

  • house builders like big lump development too, because they are better able to keep out their competitors, This biases the market towards the bigger companies who can afford those big chunks, creating conditions of near monopsony in the market for land, and near monopoly in the supply of housing.

  • Large chunks allocations through the planning system hand huge financial windfalls to local landowners as land values shoot up from £3-5,000/acre to £3-500,000/acre or more.

  • Larger chunks of development concentrate the environmental impact of new development.

  • Concentration of development in the hands of a limited number of developers reduces the likelihood of innovations in design.

  • Smaller allocations do however make it harder to create new settlements as originally envisaged by Ebenezer Howard so encouraging the situation where existing settlements, like Devizes, are often extended beyond acceptable levels as the rate of development of housing often outstrips the ability of the local market to provide the other infrastructure, whether public or private, at the same time.

  • The ability of developers to contribute towards the cost of infrastructure without driving up the cost of housing even further is limited by high land costs caused by the artificial market.

  • In any event developers (and through them new occupiers) can only legally be asked to contribute to the cost of such additional demand on infrastructure as they might generate. They can’t be asked to make up any existing shortfall and even if they could that would be yet another increase in new house prices.

The big question of course is how to address these issues. If the predictive method is unsound, then we clearly need to find ways to increase the supply of land – by a substantial amount. We still however need to address other planning issues like density of development and urban form. Density of development is a key factor in assessing land requirements. We also need to look at ways to reduce central state power over the quantity and pattern of development without handing that power to locals who simply want to pull up the drawbridge behind them.

That will form the basis of the next post in this series.

1 A book published in 1973 “The Containment of Urban England” by Peter Hall and others (Vol 1; Vol 2) estimated that in some cases the effect of the planning system was to increase the value of agricultural land 100fold. I suspect this still holds at minimum and in crowded areas like the SE will have been exceeded.

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Posted in Housing
2 comments on “The supply of housing
  1. Phil Oliver says:

    A very interesting article Ian. One that poses many questions. On one hand rightly sceptical about the way in which developers can buy up large chunks of land, on the other concerned about residents shutting the door behind them. There must be a middle ground in this. One in which brown land, and there are plenty of chunks of that around Devizes can be utilized. Sold in small plots to local builders we could help invigorate local building trade, provide employment, prevent swathes of green land being torn up, produce houses of various design, and likely to get support from local inhabitants. Not the be all and end all of any housing problem but a possible start. Issues like this need the input of residents to help shape the future.

  2. Phil Oliver says:

    Following from below the concept of the sale of land goes against what I believe in. However, until such time that we evolve and move away from such practices it stands as a necessary evil. Surely a progressive step towards an overall aim within the system has to be better than banging on the door from the outside. In doing this then the need for balanced input from communities on how land or housing can be developed must surely be better than reliance on existing practices of those organisations who seek to make profit from these decisions or those who grant permissions for either personal gain or without truly representing their neighbourhoods. Ian, you are a lot closer to the issue of housing than I am and would appreciate your thoughts on how a better planning process would work within existing constraints.

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