Neil O’Brien is MP for Market Harborough and is a board member of Onward.
Last year, the Prime Minister wrote that we have a broken housing market. She’s right to recognise that this is one of the biggest problems facing the country. On the one hand, homeowership has been in retreat for years. Among middle-income people aged 25–34, home ownership has been slashed from 65 per cent in 1996 to 27 per cent in 2016. On the other hand, the fact that we often build new houses in the wrong places and without the infrastructure that’s required is one of the top complaints of my constituents.
These two facts are actually connected. Our broken planning system maximises local opposition to new homes. That in turn means we don’t build enough houses. And over time that has made housing unaffordable. Time and time again I see the property rights of my constituents trampled by the planning system. Tiny suburban streets choked with deafening construction lorries – because the council are unable to make developers use a more sensible route through a field. People see new houses crammed in so tight that they are within feet of the homes they have enjoyed for decades.
In a recent report for the think tank Onward I set out some ways to reform the planning system. Instead of steamrolling opposition to new homes, we need to tackle the underlying reasons why people oppose so much new development.
There are lots of things we could do to reduce opposition to new homes. We could put more new housing at the centres of our great cities, a number of which still have smaller populations than they did in the early 1980s. We could make it easier to build upwards in our cities and liberalise change of use to make it easier to regenerate shabby retail parks into housing. We could promote the kind of “gentle density” and traditional terraces that the group Create Streets argues for. Where we build outside our cities, we could put more new homes in properly planned new developments with the infrastructure that is needed built in.
All this would produce less opposition compared to the current piecemeal approach, which is to tack more and more developments onto existing towns and villages, without any corresponding improvement in the infrastructure.
However, one of the main obstacles to this, and to better quality development generally, is that it costs money. A thing that drives my constituents mad is the way that developers make a killing when they get planning permission, but then refuse to pay for the matching amenities and infrastructure that are needed.
Whether it is a bit of parkland to separate new homes, or some landscaping, or the provision of enough car parking spaces, or a new classroom for the village primary, all too often residents requests are turned down, with teeth-sucking claims from developers that they can’t afford it.
New research from the National Housing Federation and Centre for Progressive Policy out today calculates that granting a piece of land planning permission for new houses makes it dramatically more valuable. If you buy a hectare of land for £20,000 and get planning permission, you could walk away with a profit of almost £5.5 million, all before a single brick is laid.
The federation calculates that after tax, windfall profits from the grant of planning permission came to nearly £11 billion last year. In my constituency, as in so many others, land speculators are active to grab easy money from gaming the planning system. They don’t even build any houses, but instead use high-powered lawyers to bully through planning permission. They pocket this increase in land value all for themselves, before flogging the land on to a builder.
If, instead, we could divert some more of this money into infrastructure for the local community then we could lighten the burden on local taxpayers, make people less unhappy with development, and build the homes we need. The Conservative Manifesto pledged that we would do more: “to capture the increase in land value … to reinvest in local infrastructure, essential services and further housing, [so] communities themselves benefit from the increase in land value from urban regeneration and development”
More and more people want change. As well as the new report from the federation, last week the Communities Select Committee put out a report making the case for more land value capture. Before that, 16 housing organisations, ranging from the Campaign to Protect Rural England to the think tank Civitas, all came together to sign an open letter to James Brokenshire calling for reform. You can sign up yourself here.
There are lots of ways we could do it. We could abolish rules which limit the way councils use Section 106. We could prevent land from being put in local plans unless developers are prepared to meet their own infrastructure costs. We could empower rural councils to assemble sites for development so they not developers can control where development goes.
But however we do it, the key is that we see more of the gains from development used to help the community. To help young people who can’t get a house. To protect existing residents. To get better, less ugly new housing, and ensure that we keep this a green and pleasant land.