In this new paper, we present the UK’s first calculation of the cost of restrictions on densifying our cities to the UK economy. Written by Adam Smith Institute Next Generation Fellow Duncan McClements and Jason Hausenloy, it is intended to demonstrate the destructive effects of Britain’s planning regulations.

This paper classes the removal of restrictions as allowing owners of existing dwellings to redevelop their properties so they are up to 8 stories tall.

Our model found that

• Liberalising these restrictions would boost the welfare of every person by 6.5% if limited to London, and 11.7% if extended to all cities;

• A liberalisation would correspond to annual nominal and real GDP gains respectively of 3.7% (£83bn) and 2.9% (£66bn) with conservative inputs, and 7.4% (£168bn) and 6.1% (£138.5bn) with liberal inputs. In other words, this is how much the UK economy has been losing out on every year as a result of our planning system;

• It is currently costing the government £15,000 to provide infrastructure  public services such as schools, GPs and utilities, to every new person who moves to a city.

Our findings outline the huge gains to be made from liberalising housing restrictions.