Levelling up begins with housing

By Jonathan Webb | 06 October 2020

The housing crisis in England is not just confined to London and the South East. Cities and towns right across the country are becoming increasingly unaffordable, with many longstanding residents being priced out.

The popular documentary series Manctopia has drawn public attention to the challenges that northern cities like Manchester face. On the one hand, the construction of new homes creates jobs and stimulates the city’s economy. The luxury housing developments being built in the city also help attract more affluent residents, who are able to spend their money in the local economy. Yet despite this boom, Manchester can’t provide enough genuinely affordable homes that many Mancunians need. This results in many residents being increasingly priced out of redeveloped areas in the city and its suburbs.

The housing problems being grappled with in Manchester are not unique and many of England’s major cities now face a growing housing crisis. In the North, the problem is not just confined to Manchester. IPPR’s recent analysis showed that in cities like York and Leeds, housing is also becoming increasingly unaffordable for local residents. In the absence of adequate funding from central government and without proper powers, city leaders have struggled to build the genuinely affordable homes that people need.

The Government has promised that its planning reforms will help level up communities across the country. Under these proposals, the Government believes it can drastically improve the supply of homes by overcoming planning obstacles and local opposition to new homes. However, the main barriers to delivering more affordable homes aren’t related to the planning system itself. The overinflated value of land and a lack of government investment in the construction of new affordable homes are two of the main reasons behind undersupply. As such, the Government’s planning reforms are aimed at the wrong target and won’t address the fundamental issues holding back supply.

The consequences of England’s broken land market and this underinvestment are stark. Only 6338 social rent homes – the only type of affordable homes linked to people’s incomes and not market rents – were built across England from 2018-2019 with the support of government funding. In Greater Manchester itself, just 64 social rent homes were built with government subsidy in this period.

Despite this, the Government’s proposals for its forthcoming Affordable Homes Programme are only set to make things worse – half of the homes being promised will be built for affordable ownership and only a very small number will be built for social rent. With more than 1.16 million households on the waiting list for social housing in England, the Government isn’t prioritising the delivery of the homes that people need.

The Government should be working with regional leaders to tackle the housing crisis and should ensure they have the resources they need to fulfil their local plans. This will require more than new planning laws. Greater resources will need to be made available so that regional and local leaders can independently build affordable homes at scale. At the same time, further devolution of housing powers would allow cities, county and local areas across England to regulate and control the composition of their housing markets, as is the case in many German cities.

Cities like Manchester need a greater say in shaping housing policy, with proper powers and resources to tackle the housing crisis. Without this, city leaders will remain reliant on private developers who – thanks to a land system that allows them to build minimal affordable homes – inevitably focus their efforts on developing properties for market sale. Reducing the cost of acquiring land and providing resources directly to regional and local leaders to build the homes that are needed would go far further than the Government’s current plans to tackle the housing crisis.

An ambitious drive to build social housing would also help stimulate local economies and help the country build itself out of the recession. Only by tackling the fundamental causes of our broken housing market will we deliver the homes that people need and truly level up across the country.

Jonathan Webb is a research fellow at IPPR

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