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Land use, not land price is the problem

The House Builders Association (HBA) has recommended reforming Compulsory Purchase Order (CPO) rules in almost every government consultation response since 2015. As the author of those responses, it would be easy to suggest we back Labour’s proposal to purchase land at closer to existing use value. 

However, alongside CPO reforms, every one of those consultation responses has included a caveat that the major challenge to more housing is not the price of land but the opposition to land use. 
London is facing an acute housing crisis and therefore, you would expect Local Planning Authorities (LPAs) to do something special when it comes to using their own land; either by speeding up the planning process or building more densely. Yet when looking at 22 Southwark Council projects of social homes, mostly on existing sites or garage sites, the mean homes per development was 19 and planned time frame from planning to completion was three years.

The largest of the developments, ‘Land Between Redcar Street and Wyndham Road,’proposes 73 homes, with the potential of 114. Discussed in 2021 and expected to submit a planning application in summer 2023, it currently has no lead consultant, no architect and no constructor assigned. Previous indications of the sites potential suggested the tallest block will be a maximum of six storeys high.

In the centre of London, where a council has more than 10,000 people on its social housing waiting list, you might question why a council, which says it desperately needs social housing, would not build more densely? Well, density opposition to this development is centred on increased car dependency and service stresses, and height opposition is based on being out of character, a security risk and privacy loss. A campaign suggests three or four storeys should be ample.

Additionally, this project will also be mixed use, to help balance other needs, which from a strategic point of view makes the justification for density even greater. Yet the Council is not embracing this reality. 

Density and height opposition has become so restrictive that most politicians resort to the emotive ‘overdevelopment’ trope at least once a year and campaigns around ‘gentle density’ (fantastic in the correct places) are being promoted to eke out a few more homes. 

Zero sum land use 

Increasing density is difficult enough, but we regularly see politicians bemoan the loss of the alternative or previous land use function when homes are built and to an extent, this is a fair criticism. However, rather than trying to encourage the original function to remain, councils force zero sum rules on them. The best examples of this relate to transport. 

The loss of a car park is certainly a problem, but car parks do underuse land. Therefore, the strategic option would be to build homes over the car park or streamline planning and increase density but commit new development to building underground parking. Yet politicians continually pick the side of retaining the car park or using it for new homes, rather than a sensible third way. 

This odd lack of foresight also plagues our publicly owned railways stations, where instead of building over them in our most dense cities, we leave them open or cover them, without any consideration for integrating housing or needs into the project. 

Greedy landowners
The ‘greedy land owner’ narrative is prevalent across the housing crisis debate; however, Love Money’s, ‘Who Owns England’ research showed that charitable organisations and environmental interests own 3,238,057 acres, Royalty and Nobility 1,591,251 acres, the Military 1,116,060 acres, and utility companies 459,876 acres. Whilst property developers own just 55.033 acres.

Of course, not all this land is developable and it is spread across many organisations, but the third biggest individual land owner with 678,420 acres, is the Crown Estate and thirty seventh is Homes England, the non-governmental body in charge of delivering homes and places, which owns 19,349 acres. 
Thanks to modern technology, anyone can search their councils land ownerships and it’s often mapped. It is astounding how much land is owned by the public sector. If land owners and developers are so greedy, why are we not criticising the public sector’s land banking and hording antics? 

Profiteering politicians 

A pervasive narrative around profiteering housebuilders has emerged in the last two decades and it has had a devastating impact on the housebuilding sector. The result has been a lack of desire to de-risk planning, increased regulation to extract value from development, and the squeezing out of smaller builders. 

Small and medium sized developers, in particular, struggle to make sites viable because they buy land at the current market price, not the price of the market five or ten years ago. The planning system ensures the sites they pick up aren’t at the top of the pile to be delivered, yet they still see the same value extraction. The longer planning goes on, the more overheads they pay, which cannot be offset through viability assessments. 

In contrast, councils have a different experience. Some will have their own development companies, but most will not, instead they will contract out a planning permission they have secured, which can be a mix of any tenure they choose. They pay little to no planning levies and have lower borrowing rates. This minimises their overheads and the land they typically own isn’t being taxed. Yet they complain about having to pay market price for land!

In Reigate and Banstead, a mixed-use council development called ‘The Rise’ is delivering no affordable housing, with viability cited as the reason. Exeter Council has struggled to deliver on some of their lofty Passivhaus ambitions due to contractors struggling to make the councils proposed costings work.

In Falkirk, a report to the council executive revealed that increased building costs should encourage a greater focus on council home buy backs, rather than new build. Sheffield has decided to swallow increased costs to meet their ambition and Greenwich council is reconsidering some site proposals, while also admitting ‘site constraints’ have caused them to drop several projects.  

It seems perverse that the public sector complains about developers profiteering while simultaneously stating that they cannot make their own sites viable. With significantly fewer costs and impacts, why do councils find ‘profiteering’ so difficult? 

It’s land use, stupid.

If land price was the main problem, councils would buy at market price and build homes themselves. However, it’s far easier to allocate sites submitted by landowners and developers and then blame them for not building enough affordable homes, taking too long, over-stressing the local infrastructure or profiteering.

This is also the reason why Local Planning Authorities (LPAs) choose large sites outside of communities to meet housing supply. It is political suicide or a considerable electoral challenge to encourage the building of fifty smaller sites in 13 council wards, when you can build the same number of homes on three sites in two wards outside the urban area. 

When the politics of using land means building densely is opposed, new towns are unthinkable, green land is sacrosanct, pitting roads, services and amenities against affordable homes is politically expedient and the private sector is a great scapegoat for failure, the premise that a lower land price will fix the housing crisis is pure fantasy. 

The price of land must come down, but if we continue to strangle the use of land and the amount that comes forward, while avoiding spatial planning benefits, all we’re doing is feeding the housing crisis. It’s time to stop tinkering and start using land properly. 

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