Why 300,000 houses?

Where does the Governments target to build 300,000 houses come from – and is it objectively justified?  Because it has been around for a while, and featured in the 2017 Conservative manifesto, I had never bothered to question it’s ‘credentials’.

The targets origins are by no means certain but, back in 2016, the House of Lords Economic Affairs Committee in its report “Building more homes” strongly recommended that the Government must lift its target by 50% and build 300,000 homes each year to tackle the housing crisis. It also suggests that Local authorities and housing associations must be freed to build substantial numbers of homes for rent and for sale.

At Page 5. Para 1. The report notes “The Government’s target of one million new homes by 2020 is not based on a robust analysis. To address the housing crisis at least 300,000 new homes are needed annually for the foreseeable future. One million homes by 2020 will not be enough.”

And at Page 29. Para 81  “ The Exchequer Secretary to the Treasury told the Lords that: The modelling suggests that in order to keep the house prices to earnings ratio constant, somewhere between 250,000 and 300,000 homes per year need to be built.”

Interestingly, in the light of the current Planning for the Future consultations: Page 31. Para 85. of Building more homes notes:  “To achieve its target, the Government must recognise the inability of the private sector, as currently incentivised, to build the number of houses needed. Government action is required to address this, including helping local authorities and housing associations to increase their housebuilding.”

It appears from the report that the factors considered included (but were not limited to):  The current standard method for assessing local housing need – New mortgage affordability –  UK first time buyers – Live births and deaths,  England – Life expectancy at age 65 in England – UK immigration and emigration –  Government incentives to help home ownership.

Thinking about the current Planning for the Future consultation. The Government seem to be going round in small circles (or asking us to!). Their Lordships noted:

127. Adequately resourced planning departments are crucial to the effective delivery of development. It is possible to mitigate the effects of reductions in local authority spending on planning by increasing the fees that can be charged for planning applications. Builders and developers are willing to pay more.

128. We recommend that the Government:

(a) allows local authorities to set and vary planning fees in accordance with the needs of their local area. To prevent abuse there should be an upper limit or cap on the level of fees. To allow sufficient discretion to local authorities, this cap should be significantly higher than the current fees that can be charged; and

(b) provides that the money raised from these fees is ring-fenced for expenditure on planning and development.

Accelerating build out rates

129. The planning system could also have a role in altering the behaviour of private builders. A criticism made of the large house builders that we examined in Chapter 1 is that they hold land suitable and with permission for building, yet build at a slow pace and thus maximise the profit from each development.167 This part of our report considers how the planning system could be used to narrow that gap by using measures designed to speed up the rate at which sites are developed.

130. Witnesses proposed two types of incentive to address this issue. The first would put strict time limits on the use of planning consents; the second would use the tax system to impose financial penalties on builders who do not develop permissioned land.

Planning consents: ‘use it or lose it’

131.Planning permission is granted subject to a condition that specifies the time limit within which development must begin. The default time limit, which may be varied by the local authority, is three years.168 Once development has begun, there is no time limit on its completion. To fulfil the condition, work on the site must simply ‘begin’. “Any material operation” related to the development is sufficient.169 Once development has begun, there is no time limit on its completion.

132.Various ways of strengthening the existing regime have been proposed such as:

  • Developers should lose planning permission after three years unless they “use their best endeavors [sic] to develop a site”. 170

  • The lifespan of a planning consent should be limited to two years and a stricter test applied to what would count towards work on a site beginning.171

  • Local authorities should have the power to compulsorily purchase permissioned but undeveloped land at 50 per cent of its market value.172

And guess what. At Para 133 their Lordships note: Perhaps unsurprisingly, house builders did not favour any of the above schemes

Here is the full report:

1st Report of Session 2016-17 – published 15 July 2016 – HL Paper 20

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