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Only planning reform can solve the housing crisis

UK Housing (Credit: Andrew Paterson / Alamy Stock Photo)

4 min read

The only way to solve the housing crisis is by building more homes – but the number we need is daunting. Centre for Cities’ new report shows that, compared to the average European country, 4.3 million homes are missing from the United Kingdom.

Political debate hasn’t yet risen to the scale of this challenge. Parliament furiously debated England’s annual 300,000 homes target at the end of last year but, even if it was reached, it would still take at least half a century to clear the backlog.

Solving England’s shortage within 25 years would require 442,000 homes every year and within the next decade at least 654,000 per year – currently we’re building roughly 230,000 a year.

How did the British housing situation get so bad? Sometimes, the root cause of the crisis is blamed on the introduction of Right to Buy in 1980 under Margaret Thatcher and the subsequent decline of council housebuilding.

More certainty for protections and routes to planning permission is an easy win for the government

This is at best partially true. Our report shows that housebuilding did fall after Thatcher was elected, driven by the end of mass council housing, but that this was preceded by two larger declines that suggest the planning system is the underlying problem.

Immediately after the Second World War, total housebuilding fell by a third after the modern planning system was introduced in England and Wales by the Town and Country Planning Act 1947. Even though council housebuilding increased after the war, it was outweighed by private housebuilding falling by more than half.

In the 1970s, both council and private housebuilding fell by half in the decade before Right to Buy. This decline in construction coincided with the planning system becoming much more restrictive with the exhaustion of the initial local plans, the end of slum clearances, and the green belt more than doubling in size from 1968 to 1984 to cover 12 per cent of England’s land area.

These post-war supply problems can also be seen in comparisons to the rest of Europe. The UK had five per cent more homes per person than the average European country in 1955. But by 1979 this had fallen to two per cent fewer homes in the UK and by 2015 it had fallen even further to at least eight per cent fewer homes per person than the average European country.

The result is the UK built less private sector housing than any other European country and less social housing than Europe’s leaders. Had the UK built housing at rates similar to the Netherlands or Austria after 1955, we would today have between 2.8 million and seven million more private homes and more than two million more social homes.

The underlying reason for decades of housebuilding problems is that our planning system is discretionary. Most other countries have zoning systems that give certainty to builders, but the UK is unusual in making nearly all decisions case-by-case. Instead of development being allowed on all non-protected land in and near urban areas so long as builders follow the rules, development in the UK is prohibited on all urban land until the owner is given an uncertain planning permission.

Some proposals currently in Parliament risk compounding this issue. The wrecking amendments proposed for the National Planning Policy Framework, such as the prioritisation of the green belt over local housing need and blocking changes to the density of urban neighbourhoods, should not become national policy.

The forthcoming National Development Management Policies are a great opportunity to reduce the political conflict generated by the planning system. More certainty for protections and routes to planning permission is an easy win for the government.

In the long run, replacing the discretionary planning system with a new flexible zoning system – similar to New Zealand’s recent planning reforms – is ideal. Planning reform to improve certainty may sound like a big job, but it is the only solution to this big problem of 4.3 million missing homes. 

Anthony Breach, senior analyst at Centre for Cities

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