Alex Morton is Head of Policy at the Centre for Policy Studies, and is a former Number Ten Policy Unit member.
The Government is turning to home ownership as an overarching theme. This is excellent news and well overdue – the Conservative Party has always had ownership as a key theme during periods of electoral success.
Meanwhile, the Levelling Up and Regeneration Bill has indicated that planning reform has been put on the back burner, a less welcome development, in part due to an overly aggressive initial strategy. Reforms need to boost supply without antagonising MPs. Two broad areas on which the Government is focusing are broadly:
- Planning reform and supply.
- Tenure shift to ownership.
Below are thoughts on where they could – and should – go next on both of these areas.
Planning reform and supply
Taking back control via streamlined, design and delivery focused local plans.
Michael Gove’s approach was described in recent briefing as ‘taking back control’. This is a great theme to tie reforms together. He is trying to simplify the planning system, to introduce measures like Street Votes in urban areas to allow gentle densification, and give more power to SME housebuilders. But he and his effective new Housing Minister, Stuart Andrew, must go substantially further – without reigniting the pointless fights of 2020.
Street votes need to be powerful and widespread, particularly in London. Elsewhere, despite pledged planning simplification, only new Environmental Outcome Reports have appeared. Planning applications and local plans must be streamlined mechanisms for delivery, with a mix of tenures and design features built into each site in local plans. SMEs and different tenures must be given a greater share of the land that comes forward in the local plan process.
Much more can – and should – be done on streamlining the actual mechanics of planning. On design, design codes are welcome, but risk becoming an ornamental policy peg not a fundamental systemic fix, and MPs may well press harder on this issue of quality.
Not cutting land supply and housing numbers.
The Government seems unclear on the 300,000 a year target. Its main focus must be on ensuring that by 2024 housing supply is maintained or rising, not falling – both for wider economic reasons and because selling an ownership dream if new build supply is falling will be much harder. Government needs to ensure that the supply of land is maintained even if there is pressure from MPs to change this. Not least because the SME sector – not the big players – will be hit the hardest.
Not delaying too long
Every month that the Government is unclear on planning causes delay and logjams out in the real world. We are now nearly two years into a reform process that has miles to go. As far as possible, the planning reforms should be finished by the end of this year. The economy is about to take a downturn, and the last thing that SME builders need is long and dragged-out changes to planning.
This is not strictly speaking part of planning reform. But politically the two are symbiotic. You can’t persuade people to build more homes if the main driver is soaring migration. This task is not helped by foolish MPs who complain about building in the South of England while pressing at any international crisis to take in huge numbers of refugees. If the Government wins in 2024 and wants or needs to return to planning reform, then the place to start is by getting to grips with immigration now, and bringing down the current rising net migration figures.
Tenure shift to ownership
Right to Buy extension
The biggest single policy there is time left to implement before the 2024 election is the Right to Buy extension to housing associations first promised in 2015 to nearly two million households, roughly four million people.
This group of voters is concentrated in towns in particular – and will notice if the plan is abandoned. The Government has recently hinted that it takes the point, and so should proceed as fast as possible. A deal already is in place with the housing association sector, and the sale of high value empty social housing to pay for it is not controversial: those who want to defend million-pound council homes are out of touch with the vast majority. The Centre for Policy Studies will soon publish further work on this crucial area.
The CPS published work that influenced the Government’s adoption of long-term fixed mortgages in 2019 (see Resentful Renters). While we have seen a few of these mortgages introduced as a result, we will only see them gain scale when the Bank of England embraces the product.
As an upcoming CPS paper will show, the Bank’s Financial Policy Committee has been unnecessarily limiting borrowers to four to five times their income. This has hit first-time buyers especially hard. There are numerous institutions waiting in the wings to offer these products and help get home ownership rising again, but the Bank must remove unnecessary barriers. If there are concerns about inflating house prices, action on buy-to-let should be taken at the same time.
Shared ownership and renters
There needs to be a clear offer to private renters – one option would be a huge expansion of shared ownership for those who cannot buy outright, (see Homes for Heroes). This could partly be funded by getting pension funds and others involved in the market. The plan could become even more important if house prices do start to fall and/or the house building industry is hit by the likely economic turmoil coming through the system.
The Government is focusing on the right goal: home ownership. But it needs to be careful that in avoiding planning civil war, it goes too far in defending a system that is clearly not working and ignoring the need for more homes.
One of the biggest problems is that many politicians carry around with them an electoral map that so archaic it was written on an Amstrad, that house prices rising is what the public wants to see.
Rising house prices are hugely unpopular as this polling shows – only five per cent want prices to rise and 50 per cent want prices to fall, with around a quarter wanting stable prices and the rest ‘don’t knows’.
So while new homes can be unpopular, the main obstacles to building more are infrastructure, design and quality of life issues, not the effect that building them may have on house prices. Opposition to house price rises is one of the few factors uniting 90 per cent of the public. Moderate falls – unlike a major crash – should focus politicians on how to keep house builders building, rather than prop up prices.
Ultimately, housing and home ownership are key agendas both ahead of 2024 and in the longer term. Those who defend capitalism will find that it will only become less and less popular if there are fewer and fewer people with any capital. It is true that all these difficult issues cannot be solved before 2024, but there has to be a clear direction of travel toward greater home ownership and plans for how to deliver this in the medium term, including further planning reforms.