The demand for housing in London is enormous. A report from the London School of Economics estimated that 59,000 homes must be built every year in order to meet demand. With the gap between supply and demand constantly growing, prices are soaring. Londoners are paying roughly three times more than the average homeowner in the UK. So what is stopping supply from meeting demand? A terrible mixture of restrictive government regulations on development, and an outdated sense of protection over the green belt.
Strict regulations on where buildings can go, what they can look like, and what must be processed in order for their development to begin are all suffocating London’s housing supply. Proposed developments have to pass far too many tests in order to be deemed acceptable. Within the constraints of London, council regulations on building dimensions limit the height of buildings (lest they block out the sunlight for some poor tree).
But the real problem maintaining London’s housing crisis is not the inner-city laws, but the protected green belt. It was put in place to provide a ‘lung’ for the city, but in reality it is suffocating London’s housing market and forcing people away. No other European country has green belts, and many of them still prioritise brownfield sites over untouched plots. A total ban is harmful and unnecessary, but a sensible and selective approach to building on green areas would do much good for closing the housing supply and demand gap.
These constraints are also making houses in England more expensive. A study in 2014 estimated that around 35% of a house price in England is closely related to regulations and laws.
To adjust to a freer and more prosperous housing system, Londoners should look to America for inspiration. Most American cities are governed by strict zonal systems, which are administered by large government departments. These regulations dictate what kind of development gets the green light, and where it is allowed to be built. Washington D.C., the nation’s capital, has an extremely strict set of building restrictions not dissimilar to London’s. As a result of these policies, house prices are soaring. DC residents pay roughly four times more per square foot than residents of other similarly sized cities.
However, one American city escaped these restrictive property laws. Houston is an excellent example of how removing restrictions and improving developmental opportunity is a sure way of shrinking the gap between housing supply and demand. Houston is seen by many architects as a libertarian paradise for property development. Government has little influence on how Houstonians live their lives, and this happily distant relationship is maintained in property.
Houstonians possess the freedom to build whatever kind of house they want. This laissez-faire attitude to property development has created neighbourhoods with cheap and varied housing. Some neighbourhoods include family homes made entirely out of beer cans, and has led to the use of corrugated steel as a popular building material. Planning is simpler, building is faster, development is cheaper.
Instead of having government dictate where certain buildings can be built, Houstonians allow the free market take its course. Instead of having laws separating the development of waste plants from residential areas, Houstonians know that simple economics dictates that these kind of developments would never be proposed.
Londoners should adopt this kind of building attitude to avoid building expansions turning London into a sprawling set of identical copy-and-paste neighbourhoods. As London expands into the green belt and previously protected areas, people should be allowed to develop the kind of property they want to live in so we avoid consistently homogenous areas.
Some good work has been achieved by the Conservatives already. Chancellor George Osborne’s changes to building laws meant the developers had fewer barriers between planning and expansion.
Unfortunately, London’s mayoral candidates have all ruled out adopting these liberal solutions. Policy writers at think-tanks such as the Adam Smith Institute and the Institute of Economic Affairs say we must build on the green belt to solve London’s housing crisis, but all of the mayoral candidates refuse to do it. Due to his environmentalist stance, Zac Goldsmith is opposed to any building on the green belt, and he prides himself as being a “conserve kind of conservative,” so any sort of liberal housing policy is unlikely to come from his office. Opposition to building on the green belt is also held by Labour’s Sadiq Khan, Lib-Dem Caroline Pidgeon and, unsurprisingly, the Green Party’s Sian Berry.
All of London’s mayoral candidates have promised to double house building from around 25,000 to 50,000, but they want to do it in the least efficient way possible. London’s mayoral candidates should listen to what the people want. According to the British Social Attitudes Survey, 47% express support for more development in their area. Instead of taking the bold moves such as building on London’s heavily protected green lung and increasing the number of tall buildings, the candidates are all proposing expensive and unsuitable changes. Sadiq Khan wants to further infringe on the free market and boost the government’s role by introducing rent caps and Zac Goldsmith thinks much of the crisis can be solved by simply building two-storeys on top of public buildings like fire stations and libraries.