The housing crisis remains one of the biggest domestic challenges that the UK faces.

While an entire generation of young people struggles to attain affordable and adequate housing in the most high-demand places, average housing wealth in cities and large towns in the Greater South East of England rose by over £80,000 between 2013 and 2018. This is a drag on the national economy and local prosperity, and it makes the UK less equal and more divided.

In this final paper in a series critiquing the UK’s housing and planning framework, Anthony Breach draws on the work of the economist János Kornai to explain how inbuilt features in the planning system inevitably create the affordability crisis that we see in many cities and large towns.

Drawing stark parallels with the ‘shortage economy’ seen in the former Eastern Bloc, he argues that our discretionary, case-by-case planning system rations land and restricts the supply of new homes – decreasing affordability. He calls for England and the devolved governments to move away from this discretionary approach and towards a flexible zoning system, as seen in other countries.

This paper proposes:

• A brand-new flexible zoning code designed by national and devolved governments to guide places in the development of local plans.
• New rules stating that planning proposals which comply with a zone-based local plan and building regulations will be automatically granted planning permission.
• Better organised public consultation and frontloading it in the creation of the local plan, rather than allowing campaigners to veto individual developments.
• Phasing of non-developed land into zoned areas, conditional on population growth.
• Replacing Section 106 agreements with a flat 20 per cent levy on a development’s value for infrastructure and new social housing.
• Maintaining opt outs and special designations, such as conservation areas or wildlife reserves to protect environmentally precious-land, while subjecting them to an economic cost-benefit analysis.

Ultimately, the housing crisis is the result of political choices, and a commitment to maintain a system that deliberately undersupplies new homes. This fuels inequality between prosperous places and those struggling, between homeowners and their children, and between the haves and the have-nots.

A flexible zoning system can end this, but it requires the political will to make it happen. A failure to implement one will further entrench our economic and social divides and make Britain an even more unequal place.