It’s a tale as old as time. Home ownership is in rapid decline, while the number of properties available to rent has fallen too. The supply of rental properties is down by a third, pushing rents up even further for tenants who are already struggling. Despite the glaring supply-side issues, politicians decide that the best way to deal with the crisis is to fuel the demand for housing. This time it’s via a raft of pre-briefed measures to be included in the Autumn Statement, such as extending the mortgage guarantee scheme and introducing a new ISA to encourage people to save for their first home.
But tinkering with ISAs and reducing the deposit needed to get a mortgage will do very little – 5% of the price of an unaffordable house is still, well, unaffordable. As many an abler commentator before me has said, the problem is actually very simple. We just do not have enough homes in this country. According to the Centre for Cities, Britain has a current backlog of 4.3m homes – a deficit that would take half a century to fill if the government simply met its previous targets to build 300,000 houses a year.
Of course, while the problem might be simple, the solution is not. Housing is a complicated and thorny issue, and it has been since the introduction of the much maligned 1947 Town and Country Planning Act, which created a discretionary and unpredictable planning system. The problem is worsened by the Nimby brigade. Indeed, according to the Deputy Mayor of London for Housing, ‘Nimbyism is the single biggest barrier to tackling London’s housing crisis’.
It would be easy to just have a go at the fortunate homeowners, who see nothing wrong with objecting to development in their area or, heaven forfend, on the precious green belt, at the same time as complaining about their grandchildren being unable to afford a home. But it solves very little. At some point you have to meet them in the middle – and that means introducing policies that make community buy-in central to development in a way that doesn’t place additional burdens on the taxpayer.
The good news is, this is possible. And, yes, it’s even possible on green belt land. According to new polling by JL Partners for the Adam Smith Institute [ASI], building on green belt land has net support, as long as a proportion of the profits is given back to the local community.
A new proposal from the ASI outlines just how we can do this. Under our ‘Homes for All’ scheme, the government would use Compulsory Purchasing Orders [CPO] to buy metropolitan green belt land. Shares, which can be traded on the stock market, would then be issued to land owners, local residents, and central and local government. The research estimates that, once the land has been developed, the value of the shares would multiply by almost 15. This doesn’t just benefit local residents through directly linking increased household wealth to development in their area – it’s also fairer for the original landowners. By giving them a share in the economic gains, the confiscatory aspect of the CPOs is abated. All this could mean that in the next 15 years, we could build almost 4m homes, all while raising over £900bn for the Exchequer – so the incentives are strong for all involved.
The government’s aim to assist first-time buyers is not an ignoble one. Indeed, it recognises that property ownership has historically been, and should continue to be, a conservative value. But I’ll say it again louder for the people at the back – we don’t have enough houses. So let’s get on and build them.
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