In this week's blog, we are looking at three narratives being presented as the core blame for the housing crisis; as the fingers are pointed, we explore the idea that it's much more complicated than what is being presented in the media and will potentially require a complex array of reforms to fix a problem entrenched since the late 70s.
Narrative number one, we, the public, are to blame. Over the weekend, mixed into the array of April Fool's headlines, what could be described as a typical "it's all our fault" headline presented the story of the Guildford Cathedral housing plan rejected by the council to pause the development of 54 affordable homes on some underdeveloped woodland. The report lays the blame at the feet of the 286 objectors, whose primary reason for speaking out was the harm to local woods and the neighbouring Cathedral. The story hints at the irony that the Cathedral was selling the land to create an endowment for its maintenance. Without this deal, the Cathedral may fall into disrepair anyhow.
The perfect story to lay the foundations of the blame on nimbyism, and these stories are now a weekly occurrence in the press, but, these schemes are small; they tend to be in rural areas away from significant hubs of employment, away from primary transport networks, and in isolation, aren't tremendous contributors to the problem.
So let's look at a larger scale, and onto narrative number two, the overzealous greenbelt protection by local councillors. Bolton, a significant satellite town to Manchester, a town that already has considerable transport infrastructure in place to support homebuilding, has had a submission to a public hearing by representatives of developers for 500 new dwellings across two sites recently rejected. The land to the west of Belmont Road at Hordock's Fold was seemingly deemed totally unacceptable, with limited debate or opportunity for rebuttal. The documents submitted by developers explained the project is in a sustainable location "with good access to local facilities and services and with a variety of housing that would be affordable". It also stated that the existing landscape features would be protected. This kind of story presents the greenbelt protection policies as almost a form of nimbysim in itself, as some councils will allow encroaches onto the greenbelt if sufficient evidence is given; it presents the system as being based on personal taste rather than any hard and fast formula for decision making being in place, so maybe that's to blame.
"Buy land; they're not making it anymore."
- Mark Twain.
Moving onto narrative number three - land banking. This is the most interesting one, and perhaps the least palatable, as it suggests that we are the architects of our demise with the current situation and that it isn't curmudgeonly locals not wanting their views ruined or councils giving mix-and-match decisions based on their personal preferences, it's a form of market manipulation when it comes to end asset value. In data published 12 months ago, we can see that the top 8 developers in the UK own the best part of half a million undeveloped sites. Their primary benefit is that it allows them to build at scale for multiple years, rolling from one project to the next. Still, there is a massive secondary benefit here: they control the supply of an increasingly finite resource, drip-feeding these sites into play as and when required when smaller developers could be building on them today. It could be argued that if all of that land were released to smaller developers looking for affordable plots, there would be two negative consequences for businesses engaged in a monopoly, firstly the supply would increase, devaluing their end product, and secondly, other companies would start to compete with them, threatening their market share. So as a narrative, yes, there is some truth to this situation. Still, it can never be changed, as latter-stage capitalism drives that business practice, not the fault of any individuals.
"The basic law of capitalism is you or I, not both you and I."
- Karl Liebknecht
So if these three narratives aren't the leading cause, then what is? Looking at the macro picture, the slowdown of affordable home building began in the late 1970s; the backlog is estimated to be around 4.3 million and will take decades to rectify; two giant movements created it, firstly the decision to reduce council house production and secondly the mass commodification of housing as an investment class over the last 20 years. So over 40+ years combined, these factors have ensured we are not only building less affordable homes but also incentivising the production of unaffordable housing stock for the rental and middle affluent markets. Everything else is just a contributing factor or product of the situation.
We are a solution-based business and believe it's easy to identify all the problems without offering any positive solutions. So hence, one option the government should explore is Brownfield site development. In the years before Rishi Sunak became the PM, it was suggested in his last formal budget that £11.5bn be for constructing up to 180,000 affordable homes, with brownfield sites targeted for development. The issue with brownfield site development is that many of these sites are contaminated post-industrial usage; they have considerable costs associated with making them safe to build on, so they are not the projects of choice.
Asking SME developers to consider these sites at a time of cost overruns isn't going to work, so the government needs to do more to support smaller developers looking to utilise this land; some of the costs of the clean-up need to be mitigated to allow smaller players to build, because the benefits of increasing the supply are far more significant than not. Furthermore, Britain's brownfield sites are an untapped resource. Local authority brownfield registers contain over 20,000 sites – enough for over a million homes, just sat there - and if the big players aren't building on them, the nation's smaller developers could be, with the correct incentives and financial support from businesses such as ourselves.
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