Calls for overhaul of planning system to ensure delivery of affordable housing

House prices have been rising faster than the rate of inflation for the past fifty years, but average house prices and average earnings increased at a similar rate so the cost of housing remained constant relative to the wages people were earning. However, between 2000 and 2014, average earnings rose by 51% whilst average house prices rose by 132%, meaning that the younger generation is expected to pay a much larger multiple of its earnings to buy a home than previous generations.

The Government acknowledges that the housing system is in crisis and argues that more homes need to be built and affordability needs to be improved. It has been estimated that £2 million per day is spent on temporary accommodation for homeless families.

The Chartered Institute of Housing recently reported that only £8 billion of the predicted £51 billion due to be spent on housing until 2021 will be used to build directly affordable homes.  Other critics argue that solutions to housing growth are currently designed at a national level despite every housing market being local, and that decentralisation is crucial to providing a long term solution.

Think-tank Civitas recently published a report arguing that the current housebuilding model limits for-sale housebuilding due to there being no obligation on the developer to build at a certain rate. It argues that the price of the land is calculated on the basis of current house prices and therefore ties the developer into a conservative build rate to reflect the rate at which people can afford to purchase homes. Therefore, a development of 1500 homes might then be built at a rate of 80-90 houses per year resulting in a 15-20 year completion rate. This rate does not depress house prices; restricting output and keeping prices high.

Civitas suggests diversifying the market by using a wider variety of providers such as SMEs rather than larger developers and also using off-site construction techniques. Further, it argues that the government needs to review the planning framework to find a way of delivering new homes at a faster rate to depress prices and restore affordability. If developers can sell houses more cheaply and build more quickly, further land can then be purchased at lower prices and the cycle would then continue.  In this way, Civitas hopes more houses could be delivered more quickly and more affordably, giving opportunity to those who are unable to purchase their first home to take their first steps onto the property ladder.

These suggestions alone however would not solve the housing crisis, though they would go some way to mitigating the effect of national development plans and stimulate economic growth. Were local councils able to apply local solutions to their regional issues, building homes of the required type in required locations, and able to borrow more effectively to do so,  more houses could well be built, expediting a resolution to this most serious of issues.

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