Will our new Council continue to kowtow to the big developers or will it listen to the local community?
There is a strange policy paradox in the housing debate; on the one hand we have Conservative housing minister Michael Gove now taking on the big developers, insisting on good quality design of new housing developments, and removing the notoriously arbitrary mandatory housing targets in which numbers are the only criterion; on the other we have Keir Starmer claiming he will bring back housing targets and wage war on NIMBYs when he is elected PM.
That policy has been discredited – does he really want to hand back control of housing policy to the big developers? The problem with targets is that they play into the hands of the big developers as described below. Nor do they relate to the biggest actual demand for family housing of 3 – 4 bedroom homes with gardens. A studio flat or a one-bedroom flat is worth the same in terms of numbers as a 4-bedroom house. It’s a blunt and indiscriminate numbers game with little basis in reality.
We have learned how housing targets play into the hands of the big developers as discussed further below. Housing policy has been in a terrible mess for a long time. The official housing target of around 300,000 new homes per year has proved to be a fantasy. It hasn’t risen above 200,000 per annum since 1990. Housing policy has essentially been controlled by a cartel of big development companies, who have (until Michael Gove’s recent change of tack), for many years contributed 20% of the total donations to the Conservative Party.
These half a dozen or so big developers includes the Berkeley Group – notorious in Brighton for attempting to bulldoze through their proposals for the Gasworks site. Read all about it in countless articles previously posted on our website. They and firms like Barrett, Persimmon, Bellway and Taylor Wimpey build the vast majority of new housing in the country. The numbers of new houses built by small developers and builders has been shrinking for years and is now represents tiny proportion of the housing built in this country. This virtual monopoly has enabled the big developers to use government housing targets as a weapon.
Using the threat of a costly Appeal against a planning refusal, they effectively force Councils – who like Brighton & Hove are unable to demonstrate a 5-year housing supply – to grant them planning approval. This immediately vastly increases the value of the land to be developed. which in turn increases the value of their balance sheets which allows them to borrow yet more funding to finance yet more speculative developments – and so it goes on.
After obtaining planning approval, in many cases they then either sit upon the land waiting for the value to increase even further – artificially restricting the number of new homes to be built, which pushes up the cost of new homes even more – or they sell the land with planning approval on to another developer and pocket the enormous speculative profits.
Planning approval last for three years before expiring if work has not started. Often, developers like to sit upon a planning approval for as long as possible while the land values rise – partly due to the consequent scarcity of housing. Just before the end of the three-year period in which they must start the development, some developers dig a hole in the ground and claim they’ve started. And the land value continues on its upward trajectory.
Recent reports indicate that there could well be up to a million building plots with unused planning permissions which construction companies are just sitting on. That’s well over three times the government’s annual housing target, and more than five years worth of the number of new homes currently achieved per year.
To add insult to injury developers then claim that they cannot afford to provide any or very little affordable housing. At planning application stage they employ cost consultants who are paid to prove that it is not financially viable to provide any affordable housing in spite of the huge profits the developers make. Councils don’t have the in-house expertise to challenge these Financial Viability Assessments (FVAs) and have to farm out that task to outside cost consultants, who invariably seem to agree with the developers who feed their industry.
The result is that Councils – as here in Brighton – completely lose control of their own affordable housing policies.
The whole procedure is seriously flawed. It’s no way to get any new housing built, let alone any housing which is genuinely affordable.
And that’s the real problem. Even if you met the 300,000 per year target, under the existing system the cost of housing is astronomical. Some investors and landlords might be able to afford them – but they are out of reach of the average wage earner. And even more so now that the costs of a mortgage are increasing steeply.
In other countries such as Germany, Singapore and Australia local Councils participate in a share of the proceeds from any land sold, often receiving as much as 50% of the profits. This money is then re-invested into the local community. This isn’t possible in this country – but it should be.
Over sixty years ago, under pressure from landowners, the Conservative Party passed the Land Compensation Act of 1961. This enshrined the right of landowners to receive full value of all sites including any prospective ‘planning gain’. It encouraged speculation in which the enormous increase in land values vastly increased the costs of housing.
The result was – and still is – that Local Authorities are left largely powerless when it comes to promoting community-based or social housing interests because they don’t get a share of the speculative profits from the planning gain when land is sold. The current CIL arrangement hardly makes a small dent in the enormous speculative profits developers make.
After the 1961 Act land prices soared with landowners and developers standing to make huge windfall profits once planning approval was obtained. This situation has to change if we are to begin to resolve the affordable housing crisis.
Local authorities such as Brighton & Hove’s new Council must help start this process and join with other Councils across the country to lobby the government to change national planning policy and repeal the 1961 Land Compensation Act to start the process of releasing a proportion of the speculative profits from planning gain in order to contribute to providing more affordable or social housing.
There are lots of other problems the Council will have to address too. It will need to examine the housing shortage in the light of local considerations; be aware of the wider context of national planning policy within which new developments have to examined and either approved or rejected; set policies to ensure the type of housing proposed is suitable; (at the moment the vast majority of new homes in the new tall buildings disfiguring our skylines is comprised of mostly small studio or one or two-bed flats, when 50% of the demand is for family homes with 3 – 4 bedrooms); the effect of tall buildings and poor design on the city’s urban heritage; the degree to which the views of the local community should be taken account of – most communities prefer to see new low-rise housing with a substantial affordable component; and finally to understand the power of large developers to influence understaffed local planning authorities and poorly informed and poorly briefed local councillors.
That is what our new councillors are going to have to do. Which way will they swing? Support Michael Gove? Or go along with Keir Starmer and support and promote the financial interests of the big developers, in the face of the expressed wishes of the local community?
The answer is staring them in the face. They have just been elected to represent the people and communities of Brighton & Hove. That has to be their priority.