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Report: 'Rigged’ house-building system is failing families

Words: Laura Edgar
93% of families in the West Midlands can't afford an average-priced new home

The current system of housebuilding in England is producing homes that are poor in quality and expensive, with eight in 10 families unable to afford a new build home.

New Civic Housebuilding, a report by housing charity Shelter, says the country has become too “reliant on one model of housebuilding: speculative housebuilding”.

It states that this method on its own “cannot deliver” the number of homes the country needs. It is constrained by the way land is traded, with house builders purchasing land competitively with each other before homes are built.

The firm that bought the land then has to try to reduce the risks created by such a major upfront investment, says the report. Firms cannot build and sell too quickly as they risk undermining prices in their own market and making a loss on their investment in land.

“Big developers and land traders are making millions from a rigged system” – Graeme Brown, Shelter

Researchers go on to suggest that 84 per cent of new-build homes are now unaffordable to renting families across England – even with the government’s Help to Buy scheme.

It says the West Midlands ranks as the worst-hit region, with 93 per cent of families unable to afford to buy an average-priced new home.

Graeme Brown, Shelter’s interim chief executive, said: "Big developers and land traders are making millions from a rigged system while families struggle with huge renting costs and have to give up on owning a home of their own, which has become nothing more than a pipe dream.

"For decades we’ve relied on this broken system and, despite the sweeteners offered to developers to build the homes we need, it simply hasn’t worked. The current way of building homes has had its day and it has failed the nation.”

Aside from being unaffordable, the report says many new-build homes are “poor quality”. Research by Shelter and YouGov suggests that 51 per cent of new homeowners have experienced major problems with their properties, including problems with construction.

The report states that sticking with the status quo will see housing choices getting worse while alternative options such as planning deregulation “are unlikely to work, politically unfeasible or both”.

Instead, Shelter has put forward a new model for housebuilding aimed at delivering “genuinely affordable, high-quality homes”.

The model – new civic house building – would increase housebuilding outside the speculative model through land market reform, combined with targeted public investment, says the report.

Civic housebuilding starts by bringing in land at a “lower, fairer cost” and channels competition between firms into raising the quality and affordability of homes.

It was used to deliver the Georgian new towns of Edinburgh and Bath, the Edwardian garden cities and the post-war new towns.

The method is capable of delivering homes on a scale that “can solve our housing shortage,” says the report. The goal is that the homes benefit the people who live in them and the communities they are part of.

“Developers and landowners have their part to play in this, but without strong government leadership we will never achieve the scale required,” it states.

Short-term profit-seeking can’t be allowed to completely override public good when it comes to determining what gets built, insists the report.

It suggests a number of factors to achieve this, including:

  • A clear, evidence-based vision for high-quality development:
-    Deliver the communities through development vehicles such as development corporations.
-    Allow neighbourhood exception sites to be allocated in neighbourhood plans, based on the rural exception site model, for small housing sites not already allocated in the local plan.
  • To improve outcomes from speculative housebuilding the government should:
-    Introduce a national minimum contribution of affordable housing and minimum standards for homes and rooms across England (except London, which has its own system).
-    Enforce transparent viability assessments.
-    Consider planning contracts instead of permissions.

Brown said the only way to fix the “ever-growing” housing crisis is for the government to champion a bold new approach that responds to communities to build “genuinely affordable, beautiful homes” they want.

“Until this happens, millions of ordinary families across the country will continue to pay the price."

Speaking at the launch of the report, Trudi Elliott, chief executive at the RTPI, said it mirrors what the institute has been calling in successive reports - more resources and powers for local authorities so they can plan and drive development for the benefit of their communities.

“More and better planning is a part of the solution the housing crisis rather than continuing with the failed approach to deregulating the system. Better planning can help us deliver more housing, including the diversity and mix of tenures, we urgently need.”

Kate Henderson, chief executive at the Town and Country Planning Association, (TCPA), welcomed the report as an “important contribution” to how the nation’s housing need can be met.

“By drawing upon examples such as Letchworth Garden City, Bourneville and Milton Keynes, Shelter have powerfully made the case for high-quality new communities, whether urban extensions or new garden cities, as part of the solution to the housing crisis,” she told The Planner.

Earlier this year, Henderson noted, the TCPA, the Local Government Association and a number of local authorities, published a joint statement calling on the government to modernise the New Town Act, something that was committed to in the government’s housing white paper. It is positive to see Shelter express support for development corporations in the report, she said.

“The legislation has a proven track record on delivery and with the right reform could put in place the tools for councils to capture, share and reinvest land values, providing the means to create and maintain well designed homes and great local services in thriving communities,” Henderson concluded.

Image credits | Shelter