I have complete sympathy with the young (increasingly the middle-aged too) who are unable to become homeowners due to a dysfunctional market that is rigged against them. The severe restrictions on supply due to our planning system mean a bold approach is demanded.
Last week, the Office of National Statistics reported that the average house price in the UK is £285,000. How much do you need to be earning to be able to buy? Those on over £100,000 a year should be able to manage at a bit of a stretch. If you’re on £100k, you’re fine until you’re buying in Chelsea. You should be able to get a mortgage of three times your income but the hitch is that average annual earnings in the UK are £35,000. Even a five-times salary mortgage doesn’t get you close to the average house price, and that is before you consider saving for a deposit and all the other costs associated with moving.
There is nothing inevitable about this. It is a political choice. So much could be done to improve the current state of affairs.
But this hasn’t happened, and our politics are uglier because of it. The rich – meaning those of us who just happened to be older and bought when average house prices were closer to three times average annual earnings – are blamed. The politicians, the real culprits, are blamed too. If you are a rich politician then you face a challenging situation. This is the position the Prime Minister found himself in when he wrote an article for The Times setting out his offer:
‘We’re changing the complex planning rules to make it easier to build. And we’re going to introduce a new law to make it easier for all commercial buildings to be turned into homes. This will help revitalise high streets by allowing empty units to be turned into places for people to live.’
Allowing change of use for shops and offices into homes makes obvious sense. It will not, in itself, make enough difference to get housing affordability ratios back to the level of 30 or 40 years ago. But to dismiss an improvement for not going far enough is perverse. Indeed, a report from the Centre for Policy Studies showed that if empty retail space could be repurposed, it could create around 500,000 homes, or more if the space were converted into flats.
What also helps make this case is that we obviously have more shops than we need. One need only stroll down one of Britain’s high streets to see a number of empty shops. Even before the pandemic, the great businessman Sir John Timpson estimated we have about twice as many shops as we need.
When I was a councillor in Hammersmith and Fulham this was a regular battle. The planning policy committee refused to make concessions to economic reality. On one new development, there was an insistence on including shops which never actually opened – ‘we would not be in favour of residential development at ground floor level on a busy road’ was the justification. I appreciate the symmetry of having a row of shops along a high street. But nobody wants rows of boarded-up shops.
Another example was a derelict building that had been a Masonic hospital. It did not prove viable to reopen as a hospital and had been empty for decades so why not convert it into (hundreds) of flats? ‘Whilst I accept there is a pressing need to increase the Borough’s Housing Supply, the enhancement of community services is one of the Council’s key policies in the current development plan (Policy DM D1).’ Then came this response. ‘Furthermore, in our emerging Development Plan, Policy CF1 seeks to ensure high-quality healthcare and the retention and enhancement of existing healthcare facilities… accordingly, in my view the proposal to agree a change in use of the site to residential would not be supported.’
Avoiding this sort of madness in future would be extremely useful. Converted buildings also tend to make popular developments. Few Nimbys can be found for saving derelict eyesores, covered in graffiti and attracting rats and squatters.
Liberalising the planning regime is more likely to be achieved by gradual changes that placate critics than by a sudden revolution. Street votes to allow mansard roofs and basement flats is another example.
Personally, I have championed the cause of demolishing rows of empty garages on council estates and replacing them with cottages. Local authorities and housing associations could be forced to sell such land for development. It has been tiresome to get a response that such a contribution should be discounted as trivial.
Let us suppose that we had a completely open housing market. That planning restrictions were kept to those needed for genuine safety requirements and that there was a general presumption that you could build on your land where you liked. We have plenty of space in Britain, and with changes such as this we’d see house prices halve and the rate of home ownership gradually growing.
Of course, I would prefer a more dramatic overhaul of the planning system. The righteous anger is there so maybe, one day, it will come about. But incremental reforms are a more plausible means to success. Dismissing them is proven to be counterproductive, and it would be far better to encourage those offering them to make even more.
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