Empty homes are no argument for Nimbyism

Why should we allow more development when existing homes sit empty? That’s the view of St Helens Conservatives leader Allan Jones. The St Helens Star reports:

Rainford councillor Allan Jones backed calls to focus on vacant properties, questioning the need to use the green belt.

Cllr Jones said: "With that amount of unoccupied houses and the fact that the council now have a brownfield register it may be possible to specify the projected total of houses required in the borough without using green belt land."

"With that in mind we will maintain our position which is to oppose mass house building on green belt land in Rainford and throughout the borough."

It’s an argument used by uber-Nimby Simon Jenkins too:

“As long as politicians refuse to put a stop to empty London, I will laugh in the face of those who claim that we must have ever more towers “to meet London’s housing needs”. I will do the same to those who demand an end to city conservation areas and green belts. There are thousands of houses and flats lying vacant in London and hundreds of acres awaiting renewal. And all our rulers can do about it is build more empty towers.”

The problem is their argument is simply false.

First, that some homes sit empty shouldn’t be a cause for concern. Well-functioning labour markets should still have a degree of frictional unemployment as people move from job to job. Just as opposing immigration because we have unemployment is bad economics, so is opposing new housing. As people move from location to location, we should expect a similar degree of friction within the housing market.

Second, there’s no reason to assume that restricting new development will increase the number of empty homes in use. But, the opposite is true according to a new paper from Cheshire, Hilber, and Koster. They find that restrictive planning policies increase vacancy rates. In fact, for every standard deviation increase in planning restrictiveness they find that vacancy rates rise by 0.9pp (23%).

In theory, the effect could go either way. As planning restrictions raise prices they also raise the opportunity cost of keeping a property empty. Indeed, there is a negative correlation between prices and vacancy rates.

But there’s another factor at play. Planning restrictions not only mean that more people are chasing fewer homes, but they also restrict the type of home on offer. For instance, there might be a rise in the number of single adults looking to move, but they’ll struggle to find the right property if the housing stock is mostly family homes and supply has been blocked from meeting new demand. As a result, people spend longer looking for houses and are more likely to stay in less restrictive areas.

The researchers found that it was this latter factor that trumped the former. They also found that planning restrictions increased commuting time as workers are forced to live further and further away from the high demand areas where new development is restricted.

It is time to reject the empty homes argument. Blocking new development doesn’t lead to fewer vacant properties – the opposite is true. Of course, this in itself isn’t the knockdown argument for planning reform. Just as a functioning labour market should have a degree of unemployment, so should a functioning housing market have empty homes. But, the fact that planning restrictions raise vacancy rates suggest that many people are stuck in homes that are too small or too far out. That’s a big problem, and the only solution is to ignore the Nimby’s and let the market build more homes.