Planning reform can be safe as houses

Over on Medium I've written up what I think is a politically-achievable plan for the Conservatives to get some real action on housing now that gives them something to campaign on at the next election.

In housing, the root problem is mostly the planning system restricting supply – not enough nice, big homes are being built, which keeps prices higher than they need to be across the board. You're not going to win by promising planning reform or anything like it — unlike rent controls, they don't sound good. But you might win if you can show that housing is becoming more affordable and more secure. 

I propose a three-pronged approach — allow densification within cities, and have it done on a bottom-up, street-by-street level instead of exclusively through massive new developments; let local councils capture some of the uplift in land values that comes when planning permission is granted to new developments; and introduce a 'long-hold' midway point between shorthold tenancies and leaseholds, which effectively confer ownership of the property:

"Private rents in the UK are some of the highest in the EU, and private rented households spend between 35% and 40% of their post-tax income on rent compared to a European average of 28%. This does not capture the second-order problem caused by expensive housing costs, which is that it is much harder to move to economically prosperous parts of the country where better jobs are, so people end up forgoing better jobs and salaries than they might otherwise get.

"Housing quality is also quite poor. New builds in England are some of the smallest in the developed world, and shared living areas are being turned into extra bedrooms in many rented properties, squeezing more people in. In 1996 54% of 16–34 year olds owned their own homes; now only 34% do. That’s a twenty percentage-point drop in twenty years. Over that period the number of renters in that age category has doubled from from 1.1 to 2.2m.

"Labour made this a major part of its election campaign. Economists nearly unanimously agree that rent controls do harm, but many voters do not realise the risks. Bans on lettings agency fees and making three-year tenancies the norm similarly sound appealing to people fed up with wheeler-dealer agents and having to find somewhere new to live every year.

"These are tangible policies that sound good on the doorstep. The Tory manifesto was vague on housing issues and offered no track record of improvement. The government’s housing policies were basically useless — they only seemed to be interested in getting people to own their own homes, but because they did little on the supply side, policies like Help to Buy mostly only raised prices and changed the distribution of who got houses, not increase the total number of homeowners."

Read the whole thing, and my previous piece on some other policies the Tories should be going for to win at the next election.