Mend the UK’s broken land laws to fix housing

By Tony Murrell | 29 April 2020

The housing crisis is the prime driver of inequality in our divided nation and has created such widespread social and economic damage it’s become a national scandal. It has become a national emergency too because overcrowding and homelessness have now reached epidemic proportions. This shameful fact has taken on a chilling dimension in the context of the deadly coronavirus pandemic.

That is because those who are hit the hardest by the housing crisis are by definition highly vulnerable to the coronavirus and to passing it on. That is a double whammy of the worst kind.

The country’s housing market has become comprehensively broken as a result of public policy failure over many years. What we are experiencing is the catastrophic long-term effects of the Government’s ‘right to buy’ legislation, its deregulation of the private rented sector, its deliberate underfunding both of the maintenance of council housing and the building of homes for social rent, and its failed stewardship of the country’s land and planning system. This last failing is starkly exemplified by the cynical marketing con trick that is so-called ‘affordable’ housing.

Right at the heart of the problem is a dusty old piece of planning legislation dating back six decades. It’s now chronically unfit for purpose, a continuing open invitation to excessive corporate greed, and urgently needs to be reformed.

The Land Compensation Act 1961 sets a floor on the price of land based on the most profitable uses imaginable. That means a landowner whose land might be suitable for genuinely affordable housing for those on low incomes can always choose to hold it back from development in the sure knowledge of receiving a better price tomorrow for a standard new-housing-for-sale scheme.

There’s growing political support to dismantle this Act and replace it with a law requiring landowners and developers to share the windfall profits of new housing developments with local authorities.

Only by mending its broken land laws in such a way can the UK solve the housing crisis that’s created the continuing insecurity and lack of affordability being endured by ‘Generation Rent’ and caused such severe problems for those at the sharp end: low earners and otherwise vulnerable households.

The housing crisis deepens

The situation is dire. There are currently about 320,000 homeless people around the country, the highest level in a decade. Councils spent £1bn on temporary accommodation in 2018, up a massive 70% from five years before. The number of households in temporary homeless accommodation went up by more than 20% in the last three months of 2018 alone. Approximately 87,000 families with 128,000 children are currently in temporary accommodation, often crammed into a single room in a bed and breakfast, sharing bathrooms and kitchens with strangers.

Hundreds of families in urgent need of homes are being given temporary accommodation in converted shipping containers by councils struggling desperately to cope with the ever growing homelessness problem. Some of the temporary accommodation provided even has no windows as rules on minimum space for dwellings are being circumvented thanks to seriously flawed laws about converting offices to residential use.

There has been a sharp rise in the amount of illegal renting of outbuildings in London, with tens of thousands of people occupying such dangerously substandard accommodation. The majority of so-called ‘affordable’ housing provided on new developments isn’t affordable at all because it’s provided at 80% of open-market prices – and these are colossal.

Major drive needed to build rented homes for people on limited incomes

While there’s an urgent need for more homes built for social rent there’s no sign of it being provided in anything remotely close to a sufficient quantity. The small number of such homes built in 2018 provided accommodation for a mere 0.5% of the 1.2 million households on council waiting lists.

A cross-party commission spearheaded by the respected housing charity Shelter has called for 150,000 homes for social rent to be built a year for the next 20 years. However, crucially, Shelter also say that while obviously more direct public investment will be needed to fund this, it should only take place after land reform has happened. They point out that the problems of financing such housing are inextricably bound up with the problems of accessing the land on which to build it and argue ‘it’s not enough to pour more money into a broken system. The Government must also act to reform the broken market for land’.

Urgent need for land reform

If they don’t do this the additional demand for land generated by a new social housing programme would instantly be factored into land prices, bidding them up and making land even more expensive. And land prices have already risen to astronomically high levels. Between 1995 and 2018 the value of land across the country went up 550%.

Developers currently compete in a land market that’s incredibly competitive, designing schemes to maximise the profitability of each individual plot of land so they can offer the highest bid to landowners. As things stand the sky-high cost of land makes it virtually impossible to build good quality developments with enough homes at social rents.

Under the present profoundly-flawed system councils and housing associations would have to pay grossly inflated prices for land to be used for such housing in the volume called for by Shelter and it would therefore need colossal Government subsidies. Unless another way can be found this would be a huge waste of public funds.

‘Help to buy’

A startling example of just such a waste of taxpayer’s money is the Government’s disastrously ill-conceived help to buy (HTB) scheme – or ‘help to sell’ as it’s caustically been dubbed by its many critics. It has involved pumping a massive £20bn-plus of public funds into the new build market, causing new build house prices to surge an eye-watering 25% ahead of second-hand homes. It has also meant those so-called ‘affordable’ new build homes that aren’t actually anything of the sort have become even less affordable.

HTB resulted in a major boost to the profits of the developers (the profits of the UK’s five largest house builders increased by 400%between 2012 and 2016) while making affordability that much worse for the majority of those most in need of help.

The way ahead

Shelter, and a broad range of think-tanks across the political spectrum, believe the way forward now is for the Government to introduce primary legislation requiring landowners and developers to share the planning uplift windfall they get 50-50 with councils. It is estimated this could slash around 40% off the total development costs of the new scaled-up programme of social house building that’s required to meet the desperate need for this accommodation.

Such a reform represents the only real solution to the housing emergency the UK faces and importantly would also provide funding for much needed communal infrastructure such as schools, parks, medical centres, transport and other services. Such infrastructure is essential to create successful communities and has been noticeable by its absence in most recent housing developments.

A twofold benefit of that magnitude would clearly be a huge prize for society. But when it comes to the crunch will the Government be prepared to make such a reform? After all, this was a party that only three short years ago was hell-bent on the virtual annihilation of new build housing for social rent. Also the introduction of new rules of this kind would be strongly resisted by powerful vested interests, notably big developers and landowners. They have become richer than the dreams of avarice simply because for much too long the Government has chosen to treat a piece of antiquated planning legislation as if it was set in tablets of stone – and at what hideous cost to our society.

It’s estimated by Shelter that currently one in every 200 people in the country is homeless and that one child every eight minutes loses their home. These are heartbreaking statistics. They are also extremely alarming in the context of the deadly coronavirus pandemic.

The first line of defense against the virus is to stay at home and self-isolate. But there are hundreds of thousands of people in this country who don’t have a proper permanent home due to our ever deepening housing crisis.

COVID-19 has exposed in a chilling way the disastrous social consequences of Government policies that created the housing crisis in the first place and it has made the need to resolve that crisis more urgent than ever.

Tony Murrell is a former director of housing at Horsham DC and is the author of the short e-book How to Solve the UK Housing Crisis, available at www.amazon.co.uk. All proceeds from the e-book will be donated to Shelter – the housing and homelessness charity.

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