23 September 2021

Seoul searching – does the Korean capital have the solution to the housing crisis?

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Last week the Government announced that it was reconsidering its planning reforms; that it would include proposals for street plans to give residents more power to allow development; and that it had fired the Housing Secretary, Robert Jenrick, and replaced him with Michael Gove. As he reshapes the Government’s agenda, Mr Gove should consider an example from South Korea which, like the better-known TAMA 38 system in Tel Aviv and reforms in Houston, illustrates the way forward. It shows that communities can be eager to permit new houses if the system allows them the power and incentives to do so. The challenge can actually be setting appropriate limits on the intensification that communities permit themselves.

The reasons for last week’s about-turns can be traced back to last year’s planning White Paper, launched untested upon a surprised audience. Some of it seemed to ignore the difficulties of getting planning reform passed in a property-owning democracy, difficulties that should have been obvious after 80 years of failed attempts. The fact is that existing communities are intensely hostile to development near them, given a system in which development mainly brings them disadvantages, leaving most of the benefits for others. As a result, the rapid birth of an enormous new alliance against the proposals was foreseeable and indeed foreseen. It was no surprise that, over a year later, the housing ministry still had no draft bill that could get through Parliament. That is one reason Mr Gove is the new Housing Secretary. I trust he will get better advice.

Street plans are a novel proposal in a British context, but community-led intensification has international precedents. One of the most interesting is South Korea’s system of Joint Redevelopment Projects (‘JRPs’), which illustrates both what to do and what to avoid. The JRP system allowed new development if at least 75% of property owners in a designated neighbourhood voted in favour: the owners had a strong incentive to vote in favour because of the value uplift they would receive. The law enabling the JRP system was passed in 1983, and superseded in the early 2000s.

JRPs got one fundamental thing right: they allowed existing homeowners to harness the incentives of supporting development. Uptake was high, and an enormous quantity of housing was delivered through the system in the 1990s, mirroring the high uptake of the related scheme in Tel Aviv. The share of new homes produced by redevelopment schemes reached 53% of new condominium projects in 1992, even though the South Korean scheme was only ever made available in a tiny fraction of the city. Because the prices led homes to be added where people wanted to live in them, the new homes did not sit empty.

The Seoul example, like Tel Aviv, illustrates the tremendous power of allowing incentives to operate. No economist or planner who sees how many streets of homeowners in costly parts of England have already built out every last square foot of extension that they are permitted should be surprised. That is why both the Royal Town Planning Institute and the American Planning Association have encouraged trials.

If they were so successful, why were JRPs ultimately discontinued? The answer is that they got three things wrong. First, they enfranchised owners, not residents. Absentee landlords voted in favour of intensification and tenants were evicted with no share of the benefits, sowing bitterness. Second, instead of merely permitting residents to develop, they required it. Everyone on a JRP was required to move out while the land was redeveloped, whether they had voted for it or not. A third reason is arguably that JRPs allowed residents to permit high-rise development with negative effects on neighbourhoods beyond the JRP. These features ultimately made JRPs politically unsustainable.

What should be stressed, however, is that none of these features is essential to community-led intensification. Indeed, all of them are specifically addressed in the street plan proposals that the Government is now considering. Unlike JRPs, street plans enfranchise residents, not owners. So they would only happen on streets of private renters if landlords reached agreements with tenants to share the benefits, for instance by offering to refund a year of rent if the vote passes.

Second, street plans have no coercive component. Residents receive permission to add more, but are not required to do so: some residents may choose to remain in their existing houses while development proceeds elsewhere on the street. Sophisticated provisions have been included to protect such residents from overlooking or loss of light. Finally, street plans cannot permit high-rise: height restrictions and light planes, based on historic building regulations in English cities, would allow generous scope for more housing while ensuring negligible negative effects on people elsewhere.

I believe the success of the street plan proposals in addressing these concerns is why such a wide alliance is forming around them. This alliance includes ten Conservative MPs, the Guardian columnist Simon Jenkins, the tenants’ organisation Generation Rent, and the Chair of the Community Planning Alliance, which has helped lead opposition to the White Paper reforms. Street votes share with JRPs the power to bypass the bureaucracy, gatekeepers, blame avoidance and veto players of the current system to let residents of a street give themselves permission to allow more construction on their properties, if and when it suits each of them to do so. But they differ from JRPs in addressing a far wider range of the potential negative spillover effects of development.

Though there is now a growing consensus on the win-win nature of giving locals additional power to allow more housing, three concerns linger among a small minority. The first consists of saying that any housing reform short of full abolition of the green belt and/or of most planning controls is failure. We should look at the green belt, especially in the many cases where local people themselves already think it could be better used. But it is ideological foolhardiness to try to win a battle about the green belt at the cost of all else. After all, radical planning reforms like this have been repeatedly defeated over the past forty years. And it is anyway the wrong kind of ideology: picking the green belt over other areas as the only places to build homes is just another kind of central planning, like housing targets set by Whitehall or bans on new offices in the Midlands, that would have been entirely familiar to the Soviets. Street plans and similar solutions provide a market mechanism to let residents weigh the benefits of new housing against the costs.

The second concern is that such ‘street plans’ might be too generous to homeowners. This is usually voiced by those who are only interested in new houses if they come at the cost of the ‘evil boomers’ they blame for the UK’s issues. But even if we wanted to ‘smash the boomers’, we couldn’t. Homeowners are two thirds of the country, outnumbering tenants two to one, and private tenants about four to one. It is precisely their desire to keep control of their neighbourhoods to prevent disruption, nuisance, and noise that has strangled housing construction for the last four decades. Unless we make the policy work for most of them, it will never pass.

The third question asked is whether street plans will be used. Most of these objectors say that street plans ought to be tried, but are sceptical that homeowners will indeed overcome their inertia and vote for more development, even when it benefits them to the tune of hundreds of thousands of pounds. To be clear, this objection contradicts the second objection: the scheme can’t be both too generous and not worth getting out of bed for. In any case, this objection is refuted by the evidence from Seoul, not to mention Tel Aviv and Houston. Where housing is most in demand, homeowners are often eager to do more with their property, given half a chance. They are quite capable of discussing and voting for it. I hope Mr Gove will at least give them a chance to try.

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John Myers is co-founder of London YIMBY, a grassroots campaign to end the housing crisis with the support of local people.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.