Councils are granting enough planning permissions – so why aren't we building housing?

The good old days. Image: Hulton Archive/Getty.

One of the central housing objectives of David Cameron’s government was to liberalise the planning system and increase the amount of land that was permissioned for residential development.

To be fair, in that respect, it didn’t do too bad a job. The number of units given planning permission in England increased from 176,209 in 2011 to 261,644 in 2015. The planning system is now yielding enough permissions to meet the roughly 250,000 new homes many housing economists think we need to keep up with household growth.

This doesn’t mean they are all in precisely the right places – although London’s permissions are running at around 50,000 a year, according to the latest figures from the Department for Communities & Local Government (DCLG), more or less in line with what the capital is thought to need. Nor does it mean that they are all necessarily in a position to be built out the very next day.

But, still, the number of plots approved for residential development in a given year has increased dramatically, by 48 per cent between 2011 and 2015.

Here’s the thing, though: this has not been matched by anything like a corresponding increase in building activity. Starts have risen over the same period by just 26 per cent, from 110,820 in 2011 to only 139,680 in 2015. If we’re ever to increase housing supply to the required levels, this growing shortfall between permissions and starts will need to be addressed and overcome.

Now, the Home Builders Federation (HBF) dismisses the starts figures as unreliable. And it is true that they probably underestimate activity somewhat  usually by a few thousand units, sometimes possibly by up to 20,000 units.

But even 20,000 (and I’m being really generous there) is nothing compared with the gap that has emerged between new planning permissions and building starts – a gap which was 65,389 in 2011 and, by 2015, have grown to a massive 121,964.

Sure, there is a little bit of give in the figures, but the trend is clear: homes simply aren’t being built as quickly as they are being approved by planners.

Another way of measuring this is to look at the completions numbers from the government’s other housebuilding data series, the more reliable “Net supply of housing”; this is published each November and is the HBF’s preferred source of figures.

Of course, completions take rather longer than start’s, so we have to allow for a degree of timelag: builders reckon homes take two to threee years to proceed from planning permission to being ready for occupation.

But even allowing for that, the same discrepancy occurs. There were 195,300 homes approved in 2012, for example; three years later there were still only 155,080 completions. Whichever we cut this, whether we look at starts or completions, it is clear that building activity has not responded proportionately to the rapid increase in land ripe for development.

The gap between permissions and building activity that has emerged since 2011 can be appreciated at a glance from the following graph. Note too that, pre-crash, while there was a gap back then, it was much tighter.

So what’s behind this? To be fair to developers, many of these planning permissions may not be in their possession. There has long been an issue of non-building landowners (speculators, historic landowners, public sector agencies, and so on) sitting tight while their holdings rise in value. This has been well documented in London by the consultants Molior.

However, Molior has charted a decline not an increase in the number of unbuilt planning permissions being held by non-builders over recent years, from 45 per cent in 2012 to 32 per cent in 2014.

So that still leaves two-thirds of unimplemented permissions in the capital in the hands of developers. So why are they not throwing up houses? Is there not a shortage of homes in this country?

Unfortunately the private housebuilding industry does not cater to housing need: it caters to effective demand. The building activity depicted in the graph above (minus 20,000 or so housing association starts each year) reflects not how many houses could be built, but how many willing buyers there are ready to purchase a new-build property at current market prices.

Developers do not build out sites as quickly as they physically can. They build them out as quickly as people are prepared to buy them – at the current market price or higher. As Philip Barnes, group land and planning director at Barratt Developments, recently observed:

The reality is that housebuilders, as return-on-capital businesses are not able to build our products at a pace faster than our customers will purchase them, at the market value.

“We could in theory cut prices to speed up sales – but we have based our land purchase price on the estimated market values so we don’t have this option in practice.”

Does this amount to landbanking? Developers say it doesn’t.

But, whatever we might call this process, the effect is that they are not releasing land with houses on it back into the market until it has reached the price they need to achieve to turn a profit. They are acting perfectly rationally in the present market – if I were a housebuilder I would do the same – but this is not an arrangement which is compatible with dramatically increasing the number of homes to plug a housing shortage.

Addressing this dynamic is something that Theresa May’s government must prioritise if it is to make any real headway on housing. There are various policies that have been uggested for tackling it. Opening up the market to SME builders by increasing the number of smaller development sites would be a good start, although it is unlikely this would make quite the difference that is needed.


A bolder route would be for the government or councils to directly commission builders (including, again, many SMEs) to put up the houses we need, and so bypass the private sector; but this will involve spending a good chunk of money.

Short of that, private developers will have to be incentivised to build more quickly. This will probably mean giving – and requiring – local authorities the power to impose contractual obligations about the pace of development when granting planning permission in the first place. It will mean creating a framework within which developers do not bid each other up for every plot of land to such a price that they cannot afford to build it out at speed.

If it is clear and explicit enough, the local authority’s requirements for all developments could be used by developers to signal to landowners that they cannot pay above a certain price for the land. Land prices, the repositary for most of the inflated value in housing, would be anchored.

Don’t get me wrong: we are still going to need lots more land, in perpetuity, to keep the housing pipeline going. This is not a Nimbys’ charter. It will still be a big task to ensure enough new homes are approved by planners – and in the right places – to meet the rapidly growing need for housing.

But the principal challenge right now is not increasing the numbers of new planning permissions. It’s getting those that are granted built out much more quickly.

Daniel Bentley is editorial director at the think tank Civitas and tweets @danielbentley. His briefing paper “Planning approvals vs housebuilding activity, 2006-2015” was published this week. 

Want more of this stuff? Follow CityMetric on Twitter or Facebook.

 
 
 
 

Five ways in which the rest of the world can avoid the homelessness crisis plaguing the US

Housing for all. Image: Nicobobinus/Flickr/creative commons.

Homelessness is a growing problem in the UK, where the number of people sleeping rough has doubled since 2010, yet it is dwarfed by the scale of the issue in the US. More than 500,000 homeless were found across the US during just one night, compared to the UK’s 2017 count of 4,751. Changes in the definition of homelessness and flawed methodologies suggest that the true number for the US could be anywhere from 2.5 to 10.2 times greater.

Millions more live in overcrowded or slum housing, forced to choose between the damage that poor conditions do to their physical and mental health, and the street. All of the US’s housing issues – from foreclosures to evictions to poor conditions – hit communities of colour the hardest.

This is due to a legacy of discrimination, which continues to undercut any commitment to safe and decent housing for all residents, whether in the private or public sector. In my recent book, City of Segregation, I explain how the long, violent history of creating spaces for the white and privileged classes is embedded in a number of practices, which continue in US cities to this day.

Exporting inequality

As private developers and investors seek out urban land in major cities around the world to secure their fortunes, real estate patterns and practices developed within the US are increasingly being observed elsewhere.

In cities as diverse as London, Sydney and Durban, community groups which have been working for decades to improve their neighbourhoods languish with little public or private resource. Meanwhile, developers create spaces for foreign investors and new residents, who anticipate certain protections and privileges such as greater security, high quality amenities and neighbours with similar interests and backgrounds.

This is a driving force behind rising evictions and the criminalisation of homelessness, alongside gated communities, hostile architecture, “broken windows” policing with its focus on prosecuting activities such as graffiti or jaywalking and the growing privatisation of public spaces through regeneration.

But there is still time for other countries to choose a different path. The UK, in particular, can build on the legacies of the post-war political consensus that all residents should have access to quality housing, and its acknowledgement of institutional racism and some history of government anti-racist campaigning.

Both legacies should be improved, but a renewed commitment to a programme of housing and anti-racism are central to increasing equality, prosperity and well-being for all. Based on my research, I’ve come up with five steps which the UK and countries like it can follow, to ensure that future development reduces – rather than drives – homelessness and inequality.


1. Build social housing

Unlike the US, the UK acknowledges a right to a home, and within living memory provided it for a huge swathe of British society. Social housing – whether in the form of traditional council flats, cooperatives or community land trusts – provides a variety of housing types and keeps rents from rising too far beyond wages.

When social housing is widely available, it makes a huge difference to people who – for one reason or another, and often through no fault of their own – become homeless. With social housing to fall back on, homelessness is a temporary condition which can be safely resolved. Without it, homelessness can become a life-destroying downwards spiral.

2. Preserve and expand community assets

Severe segregation in the US stripped entire communities of access to quality food, jobs, education, green spaces, services, banks and loans. Poverty is endemic, and can easily tip into homelessness. While far from perfect, the UK’s post-war commitment to universal provision of services, such as education and health care, and building social housing across all neighbourhoods underpinned a surge in upward mobility.

This achievement should be salvaged from the damage done by Right To Buy – a policy which sold off social housing without replacing it – and austerity, which has prompted a sell-off of public assets and land, as well as the closure of childrens’ services, libraries and community centres.

3. Decommodify housing

A market geared towards building apartment blocks for the portfolios of investors who will never live in them cannot produce the kind of housing and neighbourhoods which residents need, much less at a price they can afford.

While London has been badly affected for some time, this trend is now spreading to other areas of the UK and Europe. Local and national governments must act to prevent global demand for housing as investments from driving prices beyond the reach of those who need real homes.

4. Build communities, not walls

Gates, bars, armed security and homeowner restrictions are all ugly traits of private housing developed within the US context of desperate inequality and racism. The UK has a long and vibrant tradition of community development, creating a supportive built environment and social infrastructure of schools, libraries and other municipal services for residents.

Community assets. Image: Helen K/Flickr/creative commons.

This kind of development, and the social mobility and growing equality it fosters, safeguards public health and safety – not big walls, barbed wire and security guards. The private rented sector in the UK should be regulated to bring it more in line with Europe, where tenants prosper with security of tenure and strong regulation of rents and rent increases.

5. Raise your voice

Those who are bearing the brunt of our current housing crisis must be at the centre of efforts to change it. From tenants’ associations and renters’ unions, to campaign groups such as Justice for Grenfell, it’s vital to support those voices advocating fairer housing rights.

This also means rejecting austerity’s constant cuts to public services, funding social support for physical and mental health and ensuring that homes are safe, decent and secure, to create a safety net for those who are working to improve their communities.

The Conversation

Andrea Gibbons, Researcher in Sustainable Housing and Urban Studies, University of Salford.

This article is republished from The Conversation under a Creative Commons license. Read the original article.