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Spectator Briefing

How can Britain build more homes?

29 May 2018

10:56 AM

29 May 2018

10:56 AM

It is generally agreed that Britain is suffering from a housing crisis, with big cities such as London being particular flashpoints. This year in the capital, the number of renters exceeded the number of homeowners for the first time. In the country, home ownership rates stand at a 30-year-low. And the proportion of 25 to 34-year-olds who are renters has almost doubled in the last 10 years. At the same time, 1.8 million families with children live in rented homes with tenancies shorter than a year. Homelessness is also on the rise and house building has consistently fallen below the government’s target.

But what is the policy solution to all this – and what direction should the country be taken in? Those are the questions discussed at a recent Spectator event, the inaugural Housing Summit, sponsored by Lloyds Banking Group.

In his opening speech, Scott Barton, Mid Markets Managing Director at Lloyds, told the audience of Lloyds’ commitment to help solve the housing crisis with the government and private actors. In increasing supply, for instance, Lloyds has committed ‘£2.25 billion in support to housing associations by 2020’, with housing associations building more than a quarter of homes in the UK. It has also helped and continues to help fund SME builders, lend to first time homebuyers, and others. As Barton said, Lloyds has a ‘particularly wide perspective to the housing debate because we are involved in so many parts of it.’

The summit’s keynote speech, delivered by the Chief Secretary to the Treasury, Elizabeth Truss MP, focused on the importance of mobility – and the obstacle that problems in housing pose to this. ‘As a 21-year-old who’d grown up in Leeds, looking to make my way in the world, I chose the bright lights of London and I was able, at that age, to find somewhere to rent, and get my first job.’ She wished that today’s young people could do this. But recent research by the Resolution Foundation found that a third of millennials will never own their own homes. Yet, she observed, ‘the Resolution Foundation suggested that by moving [to London], people could gain as much as £2,000 in their salaries, as well as better prospects for future earnings’; the same think tank also found that mobility has fallen for young people. What can public and private actors do to help?

At the heart of Truss’s argument was the importance of more flexible and innovative regulation, which sometimes might mean less regulation. The first thing to do is to loosen zoning restrictions. She hopes that London can become a city that can challenge ‘the likes of Sao Paulo and Shanghai’. This would increase mobility for young people looking for better prospects, and loosen the tight housing supply in central London. For the same reason, we can also start building up much more than we do currently, Truss told the audience. ‘I’m talking about density here,’ she said.

Truss suggested other ways to loosen legislation and more innovatively tackle the housing shortage. One way was to make better use of empty commercial space, for instance converting the top floors of high street properties into residential spaces. Currently, this hits local legislation barriers such as limited building access, disparate ownership and so on. In the panel discussion that took place following the keynote speech, Chris Carr, Chairman of the Home Builders’ Group at Federation Master Builders, reflected on his personal experience in meeting these difficulties. ‘It’s private investors who have the loudest voices, as these are corporate actors like pension funds, who have invested in commercial properties and are not going to let the estates become residential property.’ Clive Betts MP, Chair of the Housing, Communities, and Local Government Committee, reinforced the point. Many high streets are struggling from the popularity of online shopping. In any case, he said, ‘we need to update our legislation.’

Traditional methods also need to be reinvigorated. For one, the success of regeneration projects such as Canary Wharf should be emulated, Truss argued. ‘We have Canary Wharf – now let’s have Canary North.’ What’s more, she made the case for further greenbelt building, around London and across the country.

Truss warned that these projects are bold and will meet with opposition from ‘vested interests’. Giving the example of planned greenbelt building in the park behind her home, Truss said ‘some people locally are opposing [the planned building]. And I refuse to do that, because you put your money where your mouth is. We have to support new development, even if it is on the field that our house personally overlooks.’

She then acknowledged the extent of the housing crisis, arguing that it is intimately linked to the Conservatives’ electoral success. ‘It’s a lot less uncomfortable having the field next to your house built on, than it is having your property appropriated by a bunch of Socialist-Marxists,’ she said, referring to the Labour party under Jeremy Corbyn.

Following the keynote speech, the Summit featured a panel discussion with questions from the audience, chaired by Spectator Editor Fraser Nelson. Deregulation was highlighted again as a solution to tackle the housing crisis. As well as Chris Carr and Clive Betts’s agreement with Liz Truss on the antiquated approach to empty commercial spaces, Natalie Elphicke, CEO of the Housing and Finance Institute, emphasised the importance of up-to-date and practical legislation. She had visited a designated greenbelt area which ostensibly served the purpose of dividing two towns. But, she told the audience, she was shocked to see the greenbelt cushioning either side of the M25, which ran between the two towns. ‘Isn’t the M25 good enough to separate the towns?’ she asked.

Other innovations can be made through bringing in new technologies and efficiencies. The panel discussed the potential of modular homes, whose constituent parts are built in factories, and transported to be assembled at the new location. Naturally, this would save production costs and time, and may provide a faster and more efficient increase to the housing supply. However, from his experience, Carr shed light on the existing impracticalities to the method. ‘Often these residential areas have narrow roads, and the delivery of modular panels means that existing lampposts have to be taken down, or bus stops removed. That’s a considerable cost.’ For private actors, it is costly to embark on such operations. Housing associations needed to take the lead to make these viable options, Carr said.

Andy Hulme, CEO of the Housing Growth Partnership disagreed that these infrastructural problems should be a barrier to the use of better methods of building homes. The Housing Growth Partnership is an example of the sort of public-private partnership that could help builders overcome such market barriers. Created in 2015, by the government and Lloyds Banking Group, who sponsored the Spectator Housing Summit, the fund seeks to support SME housebuilders and developers in accelerating their growth. The fund currently has over 2,000 homes under construction across the UK and aims to deliver £1bn of housing in the next twelve months.

In tackling the housing crisis, many challenges still lie ahead. But with private-public partnerships, governmental motivation to push through red tape, and innovative solutions, a renewed push to solve the crisis is achievable.

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