A Garden of One’s Own: Suggestions for development in the Metropolitan Green Belt

Our new paper on where to build on London's Green Belt is out now. Below is part of the press release we sent to the media; for the full press release, click here. To read the whole paper, click here. London must build on low quality Green Belt spaces around existing commuter infrastructure to solve its housing crisis, according to a new paper from the Adam Smith Institute.

Building on 20,000 acres of the Metropolitan Green Belt (roughly 3.7%) would create room for the 1m new homes needed, estimating 50 houses per acre; nearly all of which could be built within 10 minutes walk of a station.

The paper, A Garden of One’s Own: Suggestions for development in the Metropolitan Green Belt, identifies specific areas where tens of thousands of dwellings can be built, and points out how providing the housing Londoners need does not require ‘concreting over’ the countryside, destroying amenity, or overcrowding.

The author of the paper, Tom Papworth, considers the five main justifications given for the green belt: to check sprawl; to prevent towns merging; to safeguard the countryside; to preserve historic towns; and to force land recycling; and notes that many pieces of land currently designated that way do not meet any of these.

For example, there is an area of land between Hainault, Barkingside, Chadwell Heath and Colliers Row, totalling about 1,200 ha—or 60,000 dwellings at standard densities outside of London—where none of these purposes apply. It is already swallowed by Redbridge, it would have no impact on merging with London, there are no historic towns, and land recycling is irrelevant.

The table below lays out the total land available of different types that could be used to fill the 20,000 hectare demand, assuming standard densities. At inner London densities of 120 dwellings/ha it would take much less land, and at lower densities of 30-40/ha it would take more.

Britain needs more slums

The problems with the UK housing market have been well-documented. There is a 'housing crisis.' No-one today can afford to buy the sorts of houses their parents did. Household formation is depressed. Every day, the reports get more lurid. The latest example of this is a survey suggesting that all 43 of the affordable houses in London aren't actually houses, but rather boats. There has been a proliferation of not-houses in recent years, from houseboats to 'beds-in-sheds.' The reason is clear – Britain has a sore lack of proper slums.

Government regulations designed to clamp down on 'cowboy landlords' restrict people's ability to choose the kind of accommodation in which they want to live. Local authorities impose exhaustive energy efficiency standards, design codes, and depress density – if they allow construction at all. Each individual requirement sounds fairly reasonable, something that almost everyone would want. But housing should cater to a wide array of preferences. Some people might not feel like they need a bedroom space as large as the state expects, while others might not mind sharing a bathroom with another family if it means lower rents.

The consequences of forcing people outside the law are serious, as with immigration. If the only way you can afford housing is to live illegally, you have no recourse to the law if you do have a dispute with your landlord.

These regulations don't just affect the type of squalid accommodation that they were designed to outlaw. A recent project to build 'micro-flats' worth up to £231,000 required the intervention of the London Mayor to exempt it from certain regulations. Developments like these might be the future for young people like me struggling to get onto the housing market, but this kind of ad-hoc policymaking is no way to run a country. Wholesale change is needed.

The market desperately wants to provide houses people can live in at prices they can afford – but in the eyes of local authorities these houses are too small, or too tall, or the ceilings are too low, or the windows not energy efficient enough. Sweeping deregulation is the only way to provide Britain with the slums it is crying out for.

Theo Clifford is winner of the 18-21 category of the ASI's 'Young Writer on Liberty' competition. You can follow him on @Theo_Clifford, and read his blog at economicsondemand.com.

Housing the Homeless

Homelessness in the UK is on the rise. 2014 figures show that 2,744 people slept rough on any one night in England, a 55 per cent rise on 2010. In London, there has been a rise of 16 per cent in a single year. Homelessness is a result of poverty and creates a downward spiral that is difficult to escape from. It is clear that it is an issue that needs to be tackled, particularly given the rising figures. The current policy on homelessness from the government centres on preventing long-term rough sleeping on the streets. The ‘No Second Night Out’ scheme has been successful in achieving this aim: its introduction led to 75 per cent of rough sleepers not spending a second night on the streets. An admirable success - but largely superficial.  It does not account for the ‘hidden homeless’, those who live in hostels, nor is it a lasting solution to homelessness. It is extremely difficult to build a life around inconsistent housing.

The root problem of homelessness is not achieved by taking people off the streets into temporary housing. It is only solved by people having places to live. And the current crisis in UK housing is not helping this. The severe lack of affordable housing is forcing people onto the streets and into homelessness. In 2013-2014, only 140,000 houses were built for the demand of 250,000, hardly enough to cover those who can afford to buy them, let alone those who live on the streets. Moreover, the cut to housing benefit announced in the July budget will not be conducive to preventing homelessness, instead, making it more difficult to combat it.

When examining the most successful solutions to homelessness, offering effective housing solutions is the best way. Preventative measures have been lauded, but these do not help those who are recurrently homeless. Schemes in America and Canada offering long-term housing have been hugely successful in turning around homelessness figures. Utah has dramatically reduced their homeless problem through their Housing First program that offers housing to homeless people with no strings attached. When given a stable home, rather than inconsistent halfway housing, people were able to effectively build their lives. Similar projects in cities across Canada have brought the same results, showing that it is also more cost effective to offer housing rather than pay for the upkeep of the homeless in temporary accommodation, particularly when we included costs accrued indirectly - such as healthcare.

But these solutions seem unlikely to be as effective in the UK while housing is at such a premium and remains as expensive.  Until then, the government will have to rely on preventative measures as its most effective solution until it can solve the real problem of housing.

This article was written by Benjamin Jackson, a Research Associate at the Adam Smith Institute. Benjamin is half-way through his Classics degree at the University of Edinburgh.

Re-examining London's misnamed green belt

The momentum is building up for a change in London's housing policy after the election. The ASI published "The Green Noose" by Tom Papworth in January, showing that over a third of protected Green Belt land is devoted to intensive farming, by no means pretty to look at or environmentally friendly, and which in fact generates net environmental costs. In February London First published "The Green Belt - A Place for Londoners?" giving the facts and figures on London's land, and showing that only 26% of London's Green Belt consists of environmentally protected land, parks, and public access land. They similarly showed that only 27.6% of London is covered by buildings, roads, paths and railways.

In today's City AM Mark Boleat, policy chairman at the City of London Corporation, makes similar points, quoting the London First report, and pointing out that "a full 60% of the Green Belt is private agricultural land."

The research done by bodies such as the Adam Smith Institute and London First contradicts the popular image of the Green Belt as green and pleasant land. Far from the daisy-strewn meadows and woods teeming with wildlife that the term suggests, much Green Belt land is farmland, with monoculture fields by no means friendly to wildlife or accessible to people.

The first step in re-evaluation might be to classify Green Belt land into the different types that comprise it. There is genuinely green land, the fields and woods that everyone likes. There is damaged or brownfield land, partly made up of abandoned buildings, gravel pits and the like. And there is farmland, much of which is not environmentally friendly.

The government that takes office after May's election could take the initiative to redress a chronic shortage of housing where it is needed by allowing building to take place on land of types two and three, while leaving the genuinely green land preserved. The opposition will be much diminished if it is understood that only damaged, distressed or intensively farmed land will be affected. And more to the point, the extra houses will bring down the costs of housing and make it available to more people.

The housing question isn't just how many, but where

I usually like Policy Exchange’s work but its new paper on solving the housing crisis is a little disappointing. Its main argument is that “Over one million new homes could be built over the next decade if each of the 353 councils in England built just one garden village of 3,000 new houses”. The arithmetic checks out, but that still wouldn’t do much to solve the housing crisis. The problem with England’s housing market is not simply that not enough houses are being built. It’s that they’re being built in the wrong places. According to Paul Cheshire, twice as many homes were built in Doncaster and Barnsley (where there isn’t much demand for housing) as in Oxford and Cambridge (where there is) in the five years to 2013. In 2002/03, it was three times as many!

This is why national house construction numbers can often be misleading. The crisis of unaffordable houses is mostly centred on places like London, Oxford, Cambridge and the rest of the South East. People want to live where the jobs are. (As it happens, an older Policy Exchange paper recognised this, suggesting policies designed to make it easier for people to move from North to South.)

Spreading housing development around the country will hence end up doing much less than we might hope. If your problem is a housing shortage in London, building more in Hull won't help much.

A second problem is that building entirely new villages is expensive, because of the new infrastructure that needs to be built. The report suggests paying for this with levies on the new builds, which just reduces the downward pressure on prices these houses would have. Building all that extra infrastructure is needless when there is already so much empty land around existing train stations to be built on in the South East (enough for one million homes!), where there really is demand for new housing.

I also wonder how much people want to live in villages which really would be very small. At the UK average household size of 2.4, we’re talking about villages of 7,200 people, far enough from existing towns that those residents won’t object to them. As someone who grew up outside an Irish town with a population of 6,666 (seriously), take it from me – these places can be a little dull.

There are 138 authorities in London and the home counties. Building new homes there – even if they had to be in new villages – would be better than nothing, although I don’t know how you’d go about building new villages in central London. Building new homes in places like Scunthorpe and rural Cornwall would be a lot less good, and policies that do not recognise that will distract us from what we really need to do.

Maybe there’s no such thing as a bad policy that results in more housing, but is it too much to ask that they also be houses that people want to live in, in places they want to live?

Housing in London

In The Green Noose, Tom Papworth has argued persuasively for loosening the green belt. Another way to goose up the supply of housing in London would to deregulate the construction aspect of provision. We welcome competition in local government, so let HMG pass legislation encouraging London Boroughs to bid for time-limited privileges. The idea would be that the first (as it might be) eight out of thirty-two London Boroughs would obtain the full extent of incremental rates on new housing arising, if they bid for temporary relief from taxes and regulatory restrictions.

New construction is already exempt from VAT, so the targets would be to suspend officious HMRC registration of subcontractors, so as to reduce labour costs; taxes on capital gains, profits and dividends arising out of qualifying developments, so as to incentivise developers and investors; and suspending stamp duty on associated property transactions, so as to cheapen costs to purchasers.

This is however likely to be less effective than deregulation of land-use and construction practices. As to land-use, we would advocate suspending

• Height restrictions, protected sight-lines, listings, change-of-use consent and the whole paraphernalia of JNCC restrictions;
• The rights of occupants of collectively owned properties to form blocking minorities refusing market compensation (this is with a view to easing the consolidation of building lots); and
• Judicial review of compulsory purchase and planning decisions.

To conclude on this score, we would argue for a presumption of planning approval unless a reasoned refusal is delivered within fourteen days; developers’ access to an appeals tribunal with a presumption of summary reversal; and stricter tests for reasonability and timeliness in the exercise of neighbours’ rights, including local impact, party-walls and natural light.

Finally we turn to construction practices. These are hamstrung by obsolescent and intrusive restrictions by way of building and fire regulations. It’s an open secret that the latter are honoured in the breach, with new residents removing smoke-detectors and door-closers and demolishing corridor and lobby walls as soon as they can. As to building regulations, these are largely a cloak to defend time-expired practises and uncompetitive suppliers. Instead, let developers show that their proposals comply with best practice in the form of building codes elsewhere (eg. Vancouver, Melbourne or Chicago).

To those who argue that this encourages builders to resort to regulatory arbitrage, our answer is “why not?” More competition in local government!

Another strange idea to reform the housing market

It does continue to amuse us, watching the contortions that people twist themselves into in their attempts to reform the housing market. As opposed to, you know, just getting on with issuing more planning permissions so as to bring down the price of housing. The latest one is that self-builders should be treated as special little snowflakes with their own, special snowflake, planning permissions system:

But we also need to reform the land market, to make it dramatically easier for those without much capital to buy a plot of land and commission their own homes – either individually or as a group. All political parties pledge theoretical support for custom and self-build, and the government’s “Right to Build”, which allows people to buy council land on which to build their own houses, is a first step. But systemic change is needed to create a market providing land specifically for custom and self-build housing.

Let’s create a new land use class in the planning system “C5 Custom build”. In effect, that would create a parallel land market that differentiates between a house built as a speculative asset, and a house built as a place to live. Let’s create space for both, and see which works.

There's only one problem with this suggestion. Which is that we don't in fact want a special class of planning permission for self builders. What we actually want is simply the issuance of more planning permits. For as is entirely obvious to everyone the price of housing in the UK is determined by a shortage of said planning permissions. So, therefore, we don't want the creation of a special system for special snowflakes, we simply want the loosening of the planning permission system as a whole. And then indeed self builders can run alongside more commercially minded organisations and may the best man win.

Green Belts increase business rents too

If you’ve picked up a newspaper or turned on a radio or TV today then the chances are you’ve read or heard about the Adam Smith Institute's latest research paper – The Green Noose: An analysis of Green Belts and proposals for reform. A section of the paper considers the impact of Green Belts upon businesses. As author Tom Papworth explains, increasing the cost of business premises increases the costs of running businesses, which pushes up prices. This reduces the real disposable incomes of households, while putting UK businesses at a competitive disadvantage by shifting production overseas.

A few years ago, I interviewed the inventor of the iconic Brompton bicycle. While visiting their factory in Wandsworth a couple of television crews from the BBC and ITV turned up to record the conveyor belts and workers in action. It turned out this was a common occurrence, principally because it's the only manufacturing taking place on that scale in London (and the television crews didn't want to travel any further). According to Papworth, London’s Green Belt could be the reason Brompton is that last factory standing:

Evans and Hartwich suggest that land-intensive industries, such as manufacturing, have declined rapidly, because many have fled the country to locate themselves in a country with lower land prices. If correct, this would be a major challenge to the conventional view that deindustrialisation was the result of supply-side reforms and monetarist policies in the 1980s, instead suggesting that our land use planning laws bore a substantial amount of responsibility for the decline of UK manufacturing in the past half century.

This makes sense. LSE Geography Professor Henry Overman cites some concerning research in an useful blog looking at the case for building on Green Belts:

“Green Belts increase office rents. Cheshire and Hilber (2008) carefully document how planning restrictions in England impose a 'tax' on office developments that varies from around 250 per cent (of development costs) in Birmingham, to 400-800 per cent in London. In contrast, New York imposes a 'tax' of around 0-50 per cent, Amsterdam around 200 per cent and central Paris around 300 per cent.”

If enacted, the paper’s suggested reforms would provide affordable housing to Generation Rent, more competitive business rents, and the possibility for more manufacturing entrepreneurs to run their businesses out of this country. What’s not to like?

Philip Salter is director of The Entrepreneurs Network.

New ASI paper: the Green Noose

According to a new ASI paper, written by Tom Papworth, and entitled The Green Noose, we can blame the Green Belt for the UK's housing woes. It says:

• Despite academics, politicians, and international organisations recognising that the UK is facing a housing crisis, it is currently far less developed than many imagine, especially when compared to similar countries. Indeed, only two members of the EU 27 have less built environment per capita than the UK: the Netherlands and Cyprus. 90% of land in England remains undeveloped, and just 0.5% would be required to fulfil this decade’s housing needs.

• Green Belts are not the bucolic idylls some imagine them to be; indeed, more than a third of protected Green Belt land is devoted to intensive farming, which generates net environmental costs.

• The concept of ever-expanding urban sprawl is mistaken and pernicious. In addition, Green Belts can give rise to “leap-frog development”, where intermediate patches of land are left undeveloped due to restrictions, a phenomenon indistinguishable from what many understand urban sprawl to be.

• By encouraging urban densification, Green Belts take green space away from those places where it is most valued. Each hectare of city park is estimated to be of £54,000 benefit per year, compared to a mere £889 per hectare for Green Belt land on the fringe of an urban area.

• There are substantial welfare costs of Green Belts. They have made accomodation more expensive and smaller, increased costs for businesses (especially relative to other European cities), and have contributed to the volatility of house prices.

• The avenue of reform we favour is the complete abolition of the Green Belt, a step which could solve the housing crisis without the loss of any amenity or historical value – if only politicians and planners had the courage to take it.

• Failing this, we conclude that removing Green Belt designation from intensive agricultural land would also enable the building of all the housing required for the foreseeable future, and could help ameliorate the catastrophic undersupply of recent decades.

• In the short term, simply removing restrictions on land 10 minutes’ walk of a railway station would allow the development of 1 million more homes within the Green Belt surrounding London alone.

Click here to read the full press release.

Unemployment, home-ownership and accommodation vouchers outside London

In a much earlier post, Tim Worstall pointed to the findings of Blanchflower & Oswald (2013), which is particularly important when considering that increasing home-ownership is something that the government has been encouraging. They showed “that rises in home ownership lead to three problems: (i) lower levels of labour mobility, (ii) greater commuting times, and (iii) fewer new businesses.” Alarmingly, they found that “rises in the home-ownership rate in a U.S State are a precursor to eventual sharp rises in unemployment in that state… a doubling of the rate of home-ownership in a U.S. State is followed in the long-run by more than a doubling of the later unemployment rate”. They also postulated that since “the time lags are long”, this could explain why “these important patterns are so little-known.” This means that the “negative externalities” felt from housing policy in this time-period may be felt further down the line and that future generations may be in for a nasty unemployment shock. In the UK, we have lots of council housing but still, we supposedly don’t have enough low-cost housing. Milton Friedman famously suggested that, if we want to continue funding education in a way whilst ensuring that it is of a higher quality than what is currently provided by state schools, we should introduce education vouchers. Analogously, if we insist that society should house those who cannot house themselves, why don’t we introduce accommodation vouchers or housing vouchers which people can spend either on an extremely cheap mortgage (though, admittedly, the claim is that we’re short of low-cost housing) or on going towards rent for another place.

If current tenants of council housing are given the choice between vouchers and their current unit, we may see enough people move out for the council housing itself to be sold to real-estate developers which would, therefore, enable development of more accommodation over and above pre-existing units. This would help plug some of the government’s budget deficit, possibly increase the amount of low-cost housing and ensure dispersion rather than concentration of relative poverty (this last possibility would enable effective local, communal altruism).

Of course, such a policy may not be feasible in London where rents are already very high (due to the government’s ridiculous land-use policies) since accommodation vouchers may only serve to increase them further. However, in the rest of the country, rents are far more reasonable and haven’t grown as quickly as they have in London.

Ultimately, the provision of accommodation vouchers in regions outside of London and the sale of council houses could raise some much-needed revenue and lead to reduced house cost and increased labour mobility at the cost of higher rents.