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Amidst all the news, Labour conference took place this week. While new policies around electric cars and prescription medicines grabbed the headlines, some of the most significant ideas floating around the conference were about housing and the land market.
Labour is aiming to build one million homes over the next Parliament, with over 100,000 new council and housing association homes a year. But this laudable goal faces a big barrier. How can policymakers acquire or unlock the land that these new homes have to be built on?
A paper published a few months ago for Labour tries to answer this question. Land for the Many contained a bumper pack of suggested policies.
The basic idea they set out is that, because the value of land can rocket by millions when it is granted planning permission by a council, local authorities and the public sector should be allowed to purchase land beforehand and “capture” this increase in value. This is currently not possible, and councils are required to buy land from its owners at the “hope value” of what it might be worth if granted planning permission.
This would mean that local authorities could buy expensive land for less than its market price, develop it, and then sell or rent new homes for less than their market price.
Cheaper land leading to cheaper houses sounds like a no-brainer, and there is a certain consistency to the idea. But although there are some concerns about the sustainability of such reforms – similar legislation has historically been repealed as landowners withdrew from the market – there are two immediate problems.
The first problem is that the decision as to whether new homes are built would still be with the local authority. Although there is no doubt some cities would crack on and permit lots of new homes using these new powers, other cities would choose not to do so. Any new reforms have to find a way of building more homes in cities where it is unpopular.
The second is that these homes still have to be built somewhere. Land must be acquired which is then developed if we are to end the housing shortage, but restrictions like the green belt make this near impossible in many expensive places. Any new reforms have to address the barriers to changing how we use land, rather than just changing who owns land.
Our most recent research shows how policymakers could solve all of these problems in one fell swoop. Homes on the Right Tracks: Greening the Green Belt to solve the housing crisis by Prof. Paul Cheshire and Boyana Buyuklieva sets out a plan to build up to 2.1 million houses within easy commuting distance each of London, Bristol, Manchester, Birmingham and Newcastle.
Their idea is to grant development rights to land within 800m of existing railway stations in the green belt to the railway infrastructure companies (so Transport for London, Transport for Greater Manchester, National Rail etc). By possessing this right, the companies would be able to purchase this land for a fair, yet discounted price. Protected land like National Parks would remain protected, and some land would be set aside for parkland and open space.
These railway companies could then build millions of homes on just 1.8% of the existing green belt. If combined with a decrease in public subsidy for the railways, the companies would be encouraged to sell and rent new homes on this land to pay for their upkeep, saving the public purse money. Instead of tortuous s106 negotiations with the developer about “viability”, a straightforward 20% Land Development Charge on the sale of this housing for infrastructure and new social homes would apply.
Homes in these “button developments” around train stations would be climate-friendly by providing people with easy commuting to city centre jobs by public transport, while also making green space and the countryside accessible near their new homes.
This would be a more ecological use than Land for the Many’s suggestion of protecting this land for farmland and allotments, which would push new housing supply further away from public transport infrastructure and increase commuting by car.
Central to the thinking behind Cheshire and Buyuklieva’s paper is that new housing does not just shape local affordability, but also local economies. Building new housing in places with good transport links to city centres means we’re putting new homes in the right places. The result is not just cheaper housing, but shorter commutes, less carbon, and a bigger labour market for workers to find a job in. What’s not to like?
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