Increasing housebuilding by reducing the profit from housebuilding

That sounds like a very odd plan. But it does also seem to be Labour’s plan. Not that we’re particularly worried that it’s Labour’s plan - it’s simply a very odd plan indeed:

The next Labour government will oversee the biggest boost in affordable housing in a generation by getting tough on developers and reforming planning rules, the party’s deputy leader has said….(…)…Under Labour’s plans, the party would prevent developers from “wriggling out” of their affordable housing obligations, known as section 106 rules, by setting up a new expert unit to give councils and housing associations advice to get the best deal during negotiations with property firms. It would publish guidance to prevent developers claiming that building more affordable homes was not viable, permitting them to challenge 106 rules only if there were genuine barriers to building homes.

A more normal observation - backed by the more normal economics - is that if you want more supply of something allow suppliers to make more profit from doing that supplying. This increases the number willing to supply and so there is more supply.

Even in the current S 106 rules we see near all of the available profit being diverted into below market price housing. Which, we think quite naturally, reduces the amount of housebuilding. Do more of this and harder thus seems to us to be a very odd indeed manner of increasing housing supply.

A better solution would be to blow up the Town and Country Planning Act 1947 and successors. Proper blow up. Kablooie. Which would have the side effect of doing away with S 106 and the duty, even the entire concept of, affordable housing. To replace it with all housing becoming more affordable as the supply increases.

The actual problem is that we nationalised land use back in 1947. As ever, government supply has led to a shortage. So, privatise land usage. Simples.

Or to put this more colloquially. Look, we’ve tried this land use planning thing for 76 years now. Housing is ever more expensive, your way just hasn’t worked, Matey. So let’s stop doing that then, eh?