Geoffrey Lean's still not getting it about housing


It's becoming somewhat tedious to have to continually correct the misunderstandings that people have about the English housing market (and yes, it's really an English problem, not a British one). Today's example of just not getting it is Geoffrey Lean in the Telegraph:

You hear it all the time, in the mouths of developers, ministers and commentators. The reason for building over unspoilt countryside is that the nation is short of land for housing, thanks to an unduly restrictive planning system.

This mantra drives government planning policy, and – under its pressure – councils have set aside sites for up to 700,000 new homes on greenfield land. It is also the rationale for allowing, nay encouraging, speculative building that is threatening to swamp village after village across the country: its “physical harm” – even one of Downing Street's favourite MPs, Nadhim Zadawi of Stratford-upon-Avon, who sits on the No 10 policy board, has warned – threatens to become “the defining legacy of this Government”.

But it's wrong, plain wrong. For a start, developers are sitting on enough land for 400,000 houses which have already been given planning permission. That's enough for nearly four years at the present much too low rate of building – or two years of what would be needed to meet a realistic demand.

Yes, that land bank. So, how long does it take to get planning permission (by which we mean, from a standing start to actually being allowed to break earth on the project)? Two years? Four? It's most certainly not 6 months, is it?

Great, so, we would expect any responsible business to have enough, in stock, of its basic raw material to cover the lead time necessary to create more of that basic raw material. If it takes one week to get more steel then we'd expect a car plant to have, somewhere around and about the place, a week's worth of steel. So, given that we have a constipated planning system we expect builders to have a stock of their basic raw material, land with planning permission.

That these land banks exist is proof, not that the builders are hoarding, but that the planning system suffers from that constipation. Everyone would be a great deal happier if they didn't have to have vast amounts of capital tied up in such land.

Then there's brownfield land. This week a report by the Campaign to Protect Rural England concluded that there is enough of it in England alone for at least a million homes, enough to meet five years of demand, or to build that terrace from London to Cairo. What is more, it is constantly increasing as factories, hospitals and other institutions are merged or close down.

Ah, yes, brownfield land.

Developers far prefer building on greenfield sites because they make bigger profits, as they do not have to clear – and at times decontaminate – the land.

Er, yes, that means that brownfield land is more expensive to develop. To the point that, for some sites at least, the clean up costs are so high that even at current house prices a development proposal is entirely uneconomic.

More than that, what is actually being complained about is not the volume of housing available (although obviously these two are intimately linked) but the price of what is available. Meaning that yes, we want to build a great deal more housing. But we're not going to bring prices down, the aim and point of the plan, if we insist that only the most expensive to develop land can be used.

Finally – the property company Savills has just reported – central and local governments and the NHS are between them sitting on enough for two million homes, a full decade of supply and enough for a terrace from London to Caracas. Some 600,000 of them are held by the very central Government that has been so loudly trumpeting the scarcity of land.

That might well be true. But think through the implications of what is being hinted at here. Government is so inefficient, so cack-handed, that it's sitting on £200 billion's worth of development land (£100k a plot seems reasonable, at least for the SE) and yet the suggestion is that such fools should be tasked with planning the allocation of housing land.

It's doesn't work as a logical assumption, does it?