The government needs to push through “fundamental reform to the planning system to solve Britain’s housing crisis,” according to The Institute of Economic Affairs.
The right-leaning thinktank calls the country’s housing market “broken” and agrees with many of the government’s plans to build 1.5 million homes over the next five years. Over the last five years, the country built around one million homes.
The body has reissued and updated an earlier report called “No Room! No Room! The Costs of the British Town and Country Planning System” by the late Professor Alan Evans, which lays out how constrained housing supply over decades has hit the UK housing market.
The report says:
- Housing affordability in London is “so poor” that median house prices are nearly 12 times the median annual income, it is over 8 times nationwide
- Rent consumes over a third of gross income for private renters in London, and 29% in the West Midlands, the South West, and the South East, “leaving little for savings or other essentials”
- Britain lags dramatically behind its European counterparts in housing supply, with a shortfall of millions of homes
The report, originally written in 1988, now says that Britain’s housing stock has fallen short by millions compared to its European peers, with an urgent need for at least 3.4 million new units.
It adds that the price of land is a key component of the crisis.
The study says: “Housing land prices in the Southeast are over 200 times higher than agricultural land, driven up by restrictive planning policies that have created artificial scarcity.”
The report makes several recommendations to fix the crisis, which include:
- Simplify and accelerate the planning system to reduce delays and lower costs, benefiting developers and communities. Create a default stance in favour of development, while ensuring economic costs and benefits are accounted for in planning decisions
- Offer direct financial compensation to residents impacted by nearby developments to reduce local opposition
- Develop parts of the green belt with minimal environmental impact to alleviate urban overcrowding and increase housing supply
- Shift tax incentives to local authorities, allowing them to benefit financially from granting planning permissions, thus aligning their interests with increasing housing supply
Lord Richard Best, an independent crossbencher and former chair of the Affordable Housing Commission, says: “I recall the original report by Professor Evans and it was certainly ahead of its time. Much of it is now broadly accepted by most housing experts — and indeed by the current government.”
Last month, the government said local councils must build a combined total of 370,000 homes a year, up from 220,000 last year, under an updated National Planning Policy Framework.
However, Prime Minister Keir Starmer has admitted that the targets are “ambitious”.
