We have a housing crisis. On just about every indicator, the
direction of travel is wrong.
Housing costs as a proportion of earnings remain
unsustainably high. We are spending 1.4 per cent of UK GDP on subsidising
housing costs, compared with 0.14 per cent in Germany. UK housing benefit has
doubled in a decade to £24.2bn.
Last week, Conservative Housing Minister Brandon Lewis claimed
that his Housing and Planning Bill will
“kick-start a national crusade”
that will “get one million homes built by
2020” and “help deliver the homes
hard-working people rightly deserve, transforming generation rent into
generation buy”.
It’s nonsense. You should put even less faith in Lewis’s
claim than that of his predecessor, Grant Shapps, who told me in 2010 that “Building more homes is the gold standard
upon which we shall be judged”, before going on to deliver a post-WW2
record low of 135,500 new homes in 2012/13.
Meanwhile, David Cameron proudly proclaims his new Starter
Homes’ initiative. These are set to cost no more than £250,000 outside of
London and £450,000 within London. Starter
homes at £450,000? Cameron thinks that this is ‘affordable’? Only on Planet
Eton! It’s no wonder that ordinary people think politicians are out of touch.
Cameron and Lewis have plucked a promise of “1 million new homes in this Parliament”
out of mid-air. Let’s be clear; there is no chance of this being achieved, let
alone the 250,000 minimum housing starts required each year, without a
significant investment in social housing which is essential to meet housing
needs as well as economic objectives. But Cameron, for ideological reasons
alone, has set his face against social housing with his latest hugely
subsidised right-to-buy scheme for housing associations.
Tackling the housing crisis requires some radical
interventions. Simply building more homes will not redress the problem of
absurdly high house prices fuelled by the absurdly high cost of land.
Where planning permission is given for housing, it’s the
public purse which should benefit from increase in value. This principle was
enshrined in the 1947 Planning Act. The landowner would receive the current use
value plus a helpful top up but not the windfall bonus of today’s system.
Denmark and Germany have led the way in addressing the
challenge of brining housing land in to use at lower prices, using land value
taxes and planning powers. It’s little wonder that they can deliver
house-building rates double or treble ours, whilst cutting the cost of housing.
If they can do it, so can we.
Building enough new homes is a huge challenge. Getting a
fair deal for taxpayers is an even bigger challenge. Land value reform now has
to be on the agenda.
