COMMENT
We need Plan B. The Localism Act may actually hinder the provision of housing, says James Buxton.
T
he slow rate of house building in the south and east of England is contributing to a growing housing shortage. James Buxton, Director,
Pigeon Investments, argues that further rationalisation of planning legislation is needed to speed up development. There’s a perception that the market is
subdued because people can’t afford mortgages, which is true in some parts. However, in the south and east of England the issue is not so much about affordability as about the ability to obtain a mortgage. This is a product of the financial crisis. Not long ago a first time buyer could
put down a five per cent deposit to buy a house. Now most lenders demand a deposit of 30 per cent, way beyond the savings of most young people. Cash is particularly difficult to accumulate if savers are paying rent, their earnings are static or falling and costs are rising. Many young people are living with
parents, sharing rented accommodation or renting on their own. The majority are aspiring homeowners. When the economic climate changes and mortgages are easier to obtain, there will be a sharp increase in the demand for housing which will drive significant house price inflation. This will be made worse by the chronic lack of supply. The rate of house building in the south and east of England is at an all-time low, partly because the market is down but also because the planning system is so complicated and cumbersome. Because of high demand and shortage of housing in the south and east, property values have recovered pretty well since the credit crunch, unlike other parts of England, Scotland and Wales where demand is subdued and supply is greater, and house prices have fallen dramatically. A real problem is building up in the south as a consequence of the restricted
system. However, it’s likely that the Localism Act, which delegates responsibility and influence to local people and residents, will have the opposite effect. The more that local people get involved, the greater the potential for delay. Quicker decisions and faster delivery within local authorities must be balanced with sensible public consultation at a local level. Research by the CBI a few years ago
supply of housing land. Part of the problem is that housing must be properly serviced – schools, roads and hospitals; developments are constrained by a lack of such facilities and no funding for their provision. Building without services is a short-term solution which has caused major problems for local authorities in the past. If we are going to meet future housing demand we must accelerate the rate of delivery, and dramatically speed up the planning system. There are several examples of large sites eastern England; allocated for development for five years or more, but still awaiting planning permission. This is a waste of time and resources, and it does nothing to alleviate the housing deficit. The Government knows there is a
problem brewing. Every government for the last 20 years has tried to reform the planning system, but none has delivered. Just to meet the demand arising from an ageing population, and ignoring all other factors, we will need to increase the national housing stock by five per cent over the next 30 years. Factor in inward migration and the continuing reduction in the size of households, and the extent of the problem is clear. The Government has, through its
National Planning Policy Framework, attempted to streamline the planning
identified that a major constraint on economic growth is the lack of reasonably priced housing for skilled people moving into the region, particularly in the Cambridge area. Technology companies recruiting staff from abroad and from elsewhere in the UK found that they could not meet their housing requirements within sensible commuting distance. As active promoters of development
sites we have an obligation to put forward new projects as and when we can, to deliver much needed housing in sustainable locations where there is demand. Local knowledge is vitally important for this, as well as the ability to recognise opportunities and see projects through to fruition. But until the planning system is radically streamlined, all those involved in the industry will struggle to meet the ever- growing demand for new housing. This situation underlies our strong belief
that the house market in the south and east will be robust over the next few decades, and that land values will rise in spite of difficult economic and fiscal conditions.
James Buxton is Executive Chairman of land promotion and development company Pigeon, a former Senior Partner of Bidwells and a former Chairman of the CBI for the East of England.
Do you have any views to share?
www.propertydrum.com/articles/localism0712
PROPERTYdrum JULY 2012 45
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