Friday, 24 August 2012

Adrian Montague vs The National Trust

Have you noticed how expensive it is to rent in the UK? House prices have doubled since the mid 1990’s, while people’s incomes have remained stagnant. The cost of renting has followed suit. There is a simple reason for this; there are just not enough houses to go round.

The problem is approaching the critical level, with young families the hardest hit. The idea of bringing up children in a secure home is becoming an unattainable dream for many, leading to claims that the older generation, who got on the property ladder before the boom, are exploiting their wealth at the expense of the young.

If people need houses, and house prices are high, why are developers not building more in order to meet this demand? Why has the market failed in this instance? The answer lies in the planning system. Put simply, the effect of government policy is to prevent new accommodation being built, restricting supply in the face of rising demand, thus raising the cost of housing.

With long waiting lists and short supply, social (i.e. subsidised) housing is unable to meet the increased demand, while high prices and the limited availability of mortgage financing preclude most potential first time buyers from joining the property ladder. This leaves private rented accommodation as the only option for many young families. However, the cost of this option has also begun to rise above the level that many can afford. This week the Department for Communities and Local Government released the Montague Report, which aims to address this problem, by finding ways to encourage developers to build large scale rental developments of 100 units or more.

The report’s recommendations include local authorities encouraging the development of rental accommodation through the planning system and freeing up public land for development. The most controversial proposal is that the requirement for new developments to include an affordable housing element to be waived in certain cases in order to make development more profitable.

In the face of an impending crisis it is noticeable how timid the report’s recommendations are. If there is a need for more rental accommodation, why not set local authorities quotas which they must achieve? Why is only public land to be put forward for development and not the large amounts of countryside available around most towns and cities, which could be re-zoned at the stroke of a pen?

The answer is that the report shies away from taking on the vested interests which are against development. Organisations such as the National Trust have successfully lobbied the government against making any changes that favour development. Since it has become politically impossible to favour development in planning law, inadequate small scale measures are the only options left.

This situation cannot be sustained forever. Without development the housing shortage can only grow more acute. By surrendering to the anti-development lobby, the government has stored up greater problems for the future and done nothing to alleviate the social costs of the housing crisis. It is a classic example of the worst type of short term thinking.   

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