That ‘something’ is to urge developers to deliver the solution in the form of increased housebuilding.
It is only three years since Bank of England economist Kate Barker confirmed in her Review of Housing Supply that the worsening shortage of housing is key to long-term price rises. However, knowing what the problem is and getting it solved are two very different things. There has been a marginal increase in new homes completions over the past few years, but average house prices across the country have continued to rise.
NIMBY influence
The gap between supply and demand will continue as long as local planning authorities, who ultimately decide whether or not new homes can be built, are influenced by the not-in-my-backyard lobby (NIMBY). In order to ensure levels of housebuilding can continue to increase, the government needs to tackle this NIMBY influence in local policy decisions, as well as the planning approvals process. It needs to ensure that new legislation, such as the Planning Gain Supplement (PGS), does not dry up the flow of opportunities, particularly on brownfield sites where it wants to boost housing development.
It is of some note that independent housebuilders we supply funding to are proving to be the most effective at operating on brownfield sites. In fact, our developers are building more than 83 per cent on brownfield sites, compared with an industry average of 72 per cent.
In the South, where the anti-development lobby claims the countryside is most at risk of development, housbuilders in our portfolio are building almost all (99 per cent) of new homes on brownfield sites.
These medium to smaller-sized housebuilders have the flexibility to tackle the complexity of a brownfield scheme and are often the most adept at tackling the unique characteristics of the site.
Consequences
There have been other much less recognised consequences resulting from pressure to build more homes on less land.
Since January 2005, our analysis of over 2,500 units in our portfolio of 140 client developments across the country reveals that the percentage of apartments we are funding has increased from 54 per cent to 62 per cent. Meanwhile over the same period, the percentage of detached homes has decreased from 22 per cent to 14 per cent. More homes on less land certainly, but the danger in the drive for greater density and subsequent granting of too many flatted planning permissions is that it can create an imbalance in supply to demand.
A further result of the drive for density is evident in our research.
Analysis of the portfolio reveals that since the Summer, average plot sizes have decreased by half a percent, and over the past 15 months plot size has fallen by 2.3 per cent. This gradual erosion of the amount of space we are living in has been a long-term trend.
The government is starting to address the issue of shrinking homes, and in her recently launched planning guidance (PPS3), Housing Minister, Yvette Cooper, specifically called for new developments to be ‘family friendly’, and to deliver a broader mix of homes that cater for all types of household; singles, couples and families.
The government is determined to ensure that its promises to increase housing supply are carried out; not only as a way to promote economic growth, but also to meet the needs of the next generation, giving more first-time-buyers the chance to get a foot on the housing ladder, and more families the chance to step-up in size into larger family homes they can afford.
Early this month, Kate Barker, the Bank of England economist commissioned to carry out a review of housing supply for the Treasury, called for a review of the Green Belt to see whether all of it was really was ‘green’ and in need of protection, or whether some less attractive parts were suitable for development. Barker also recommended that basic planning applications from householders – such as loft conversions and small extensions - should be rubber-stamped by planning departments if there was clearly no objection from neighbours. These are common sense proposals.
However, to increase the flow of planning consents for residential development, will require local authorities to become pro-development. With planning policy being so discretionary, huge numbers of planning applications for residential development finish up at appeal, taking planning decisions out of the hands of local authorities.
We hope that there will be a meeting of minds in balancing the need for efficient use of scarce land resources achieved through high density planning and the provision of housing schemes with reasonable plot sizes to meet the demand in the marketplace for family homes.
Tim Percival is Southern chairman of Wolsey Securities
