Questioning the house rules
Last week economist Kate Barker published her solution to the UK's perceived housing shortage.Here, developer and trained architect Crispin Kelly argues that her thinking is fundamentally flawed and her 'insane' recommendations bound to fail
Gordon Brown asked Kate Barker how to stop house prices rising, and how to meet the housing 'shortage'. Her 150-page report (see box above) boils down to doubling the number of new homes we build, and spending £1.2-1.6 billion more each year on affordable homes.
Her solution is that, with an affordability index established, the new regional planning executives can decide when and how much land with planning consent needs to be released to meet demand without prices going up.
She has little time for the Nimbys who have traditionally prevented planning consents; local councils will be told how much land is needed, with a buffer for periods of high-price pressure.
Inevitably Green Belt will need to be sacrificed, but once the need is measurable the role of consultation and local democracy is over.
Behind the report lurks a predictable government agenda: one aim is 'a more equitable distribution of housing wealth', another is the prevention of the 'over-consumption of housing'. So it is no surprise that new taxes should feature, with a recommendation, to be consulted on by government, for a planning-gain supplement tax, payable 'at a sensible rate'when land receives planning for development.
This is a worrying trend - planning is no longer about controlling development, it is about delivering a wide range of social outputs favoured by a central government that also wishes to participate in their delivery. Under Barker's recommendations, even customer satisfaction of new homebuyers would be a legitimate area of intervention, if levels do not increase from 65 per cent to 85 per cent.
There are moments of sanity in her recommendations, but the overarching madness of government intervention to control prices by forcing through planning consents prevails.
There is no evidence it works, and house prices have risen in other countries where there is no constraint on supply. Ireland, which has had Europe's most rapid increase in house building, also had the highest increase in house prices.
New-build a no-no Barker has focused on the new-build market, and this is a weakness; our industry is complex, and there is much capacity to meet demand in areas not explored: the simplest is the conversion of vacant B1 space to residential. Such changes are frequently refused by planners keen to retain employment uses. In urban areas, development is still constrained by regulations that restrict density, which were envisaged to protect suburban amenities. Here, flexibility and loosening could achieve a great deal, leaving the initiative to individuals rather than government. This is important in the South East, where demand is strongest, and where 60 per cent of undeveloped land is already protected by Green Belt or conservation area status.
A doubling of affordable housing provision seems unimpeachable - but is it? Affordable housing can be seen as a trap: once you are in, you can't afford to get out; and as a client of a housing association, you are an involuntary member of the government's constituency.
How should we define housing need that merits a new block of flats? This is a numbers game, which must be played, according to Barker, 'to meet the flow of new, needy households'.
Others have been less welcoming of this flow, pointing out the relative absence of homelessness on the streets, and the potentially large differences produced by different household formation forecasts. The 'needs' created by social trends, such as increasingly small households (divorce rates, children leaving home, etc), are as impossible to satisfy as health demands made on the NHS. At some point pricing has a role to play in limiting such needs.
Affordable housing on the scale proposed is, on past record, likely to make a poor contribution to the city. Although there have been a few exceptions, homogeneous large-scale development of cheap and sometimes poorly managed (another target suggested by Barker) estates tends to produce communities that are not sustainable because they have no financial grain other than subsidy; and their likely future is to be subject to 'regeneration' in a few years' time.
There is no reason that the market sector cannot produce housing available at low rents, in a myriad of small-scale initiatives. Government subsidy (at present averaging £70,000 per unit) could instead be put in the hands of the tenant, or into the landlord's equation as a tax credit on the income received.
This issue is increasingly critical as the new, needy keyworkers fail to access the housing they want. Under Barker, sufficient land with planning would be available to satisfy their needs and form a new sub-sector of dependency. But why should government decide who these people are, and where they should live? Markets and salaries should be left to adjust and provide for them, particularly if the industry is given the flexibility and loosening of regulation it needs.
Taxing times After the apparent virtue of more affordable housing comes the similarly virtuous proposal from Barker for a planning-gain supplement.
Taxing indolent landowners for windfall profits seems honourable. But Brown, perhaps nervous of a new tax, has promised consultation.
The equity of such a tax is dubious. A landowner would be liable to 40 per cent capital gains tax on his profit anyway, and would have suffered the reduction in his land value due to a Section 106 affordable housing impost. Who judges how moral a particular profit type might be? Gambling is effectively tax-free, and are landowners worse than arms dealers?
More to the point is the disastrous disincentive the supplement would be to land coming forward for development. Promoting land through the Local Plan is long and potentially expensive; if there is any hope that a future government would abolish the tax, landowners would sit tight. In a changing market, would landowners secure a residential consent and pay the tax, or plump for commercial?
As for architects, Barker holds out little hope she has understood their world. 'Houses should be designed to a high standard and in keeping with the surrounding area, ' she says. Recommendation 35 is worth quoting in full: 'The industry should work together with CABE to agree a code of best practice in the external design of new houses. Where planners and housebuilders disagree on specific design issues, they should seek arbitration, possibly through CABE, to resolve such matters.'
Barker's report shows the appetite government has for controlling house prices, giving subsidies to its dependent organisations, and taking second tax-bites out of the development land cherry. 'Assessing the level of housing need is subject to differences of opinion, ' says Barker.
Let's protect these differences. If these plans go ahead, we can look forward to land pointlessly released for centrally directed homogeneous development - twice as much as we suffer now.
The recommendations are a testament to the failings in education about the built environment and the nature of sustainable growth.
Crispin Kelly is past president of the Architectural Association and managing director of Baylight Properties