Tom Papworth

Housing in London

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In The Green Noose, Tom Papworth has argued persuasively for loosening the green belt. Another way to goose up the supply of housing in London would to deregulate the construction aspect of provision. We welcome competition in local government, so let HMG pass legislation encouraging London Boroughs to bid for time-limited privileges. The idea would be that the first (as it might be) eight out of thirty-two London Boroughs would obtain the full extent of incremental rates on new housing arising, if they bid for temporary relief from taxes and regulatory restrictions.

New construction is already exempt from VAT, so the targets would be to suspend officious HMRC registration of subcontractors, so as to reduce labour costs; taxes on capital gains, profits and dividends arising out of qualifying developments, so as to incentivise developers and investors; and suspending stamp duty on associated property transactions, so as to cheapen costs to purchasers.

This is however likely to be less effective than deregulation of land-use and construction practices. As to land-use, we would advocate suspending

  • Height restrictions, protected sight-lines, listings, change-of-use consent and the whole paraphernalia of JNCC restrictions;
  • The rights of occupants of collectively owned properties to form blocking minorities refusing market compensation (this is with a view to easing the consolidation of building lots); and
  • Judicial review of compulsory purchase and planning decisions.

To conclude on this score, we would argue for a presumption of planning approval unless a reasoned refusal is delivered within fourteen days; developers’ access to an appeals tribunal with a presumption of summary reversal; and stricter tests for reasonability and timeliness in the exercise of neighbours’ rights, including local impact, party-walls and natural light.

Finally we turn to construction practices. These are hamstrung by obsolescent and intrusive restrictions by way of building and fire regulations. It’s an open secret that the latter are honoured in the breach, with new residents removing smoke-detectors and door-closers and demolishing corridor and lobby walls as soon as they can. As to building regulations, these are largely a cloak to defend time-expired practises and uncompetitive suppliers. Instead, let developers show that their proposals comply with best practice in the form of building codes elsewhere (eg. Vancouver, Melbourne or Chicago).

To those who argue that this encourages builders to resort to regulatory arbitrage, our answer is “why not?” More competition in local government!

Green Belts increase business rents too

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If you’ve picked up a newspaper or turned on a radio or TV today then the chances are you’ve read or heard about the Adam Smith Institute's latest research paper – The Green Noose: An analysis of Green Belts and proposals for reform. A section of the paper considers the impact of Green Belts upon businesses. As author Tom Papworth explains, increasing the cost of business premises increases the costs of running businesses, which pushes up prices. This reduces the real disposable incomes of households, while putting UK businesses at a competitive disadvantage by shifting production overseas.

A few years ago, I interviewed the inventor of the iconic Brompton bicycle. While visiting their factory in Wandsworth a couple of television crews from the BBC and ITV turned up to record the conveyor belts and workers in action. It turned out this was a common occurrence, principally because it's the only manufacturing taking place on that scale in London (and the television crews didn't want to travel any further). According to Papworth, London’s Green Belt could be the reason Brompton is that last factory standing:

Evans and Hartwich suggest that land-intensive industries, such as manufacturing, have declined rapidly, because many have fled the country to locate themselves in a country with lower land prices. If correct, this would be a major challenge to the conventional view that deindustrialisation was the result of supply-side reforms and monetarist policies in the 1980s, instead suggesting that our land use planning laws bore a substantial amount of responsibility for the decline of UK manufacturing in the past half century.

This makes sense. LSE Geography Professor Henry Overman cites some concerning research in an useful blog looking at the case for building on Green Belts:

“Green Belts increase office rents. Cheshire and Hilber (2008) carefully document how planning restrictions in England impose a 'tax' on office developments that varies from around 250 per cent (of development costs) in Birmingham, to 400-800 per cent in London. In contrast, New York imposes a 'tax' of around 0-50 per cent, Amsterdam around 200 per cent and central Paris around 300 per cent.”

If enacted, the paper’s suggested reforms would provide affordable housing to Generation Rent, more competitive business rents, and the possibility for more manufacturing entrepreneurs to run their businesses out of this country. What’s not to like?

Philip Salter is director of The Entrepreneurs Network.

New ASI paper: the Green Noose

According to a new ASI paper, written by Tom Papworth, and entitled The Green Noose, we can blame the Green Belt for the UK's housing woes. It says:

• Despite academics, politicians, and international organisations recognising that the UK is facing a housing crisis, it is currently far less developed than many imagine, especially when compared to similar countries. Indeed, only two members of the EU 27 have less built environment per capita than the UK: the Netherlands and Cyprus. 90% of land in England remains undeveloped, and just 0.5% would be required to fulfil this decade’s housing needs.

• Green Belts are not the bucolic idylls some imagine them to be; indeed, more than a third of protected Green Belt land is devoted to intensive farming, which generates net environmental costs.

• The concept of ever-expanding urban sprawl is mistaken and pernicious. In addition, Green Belts can give rise to “leap-frog development”, where intermediate patches of land are left undeveloped due to restrictions, a phenomenon indistinguishable from what many understand urban sprawl to be.

• By encouraging urban densification, Green Belts take green space away from those places where it is most valued. Each hectare of city park is estimated to be of £54,000 benefit per year, compared to a mere £889 per hectare for Green Belt land on the fringe of an urban area.

• There are substantial welfare costs of Green Belts. They have made accomodation more expensive and smaller, increased costs for businesses (especially relative to other European cities), and have contributed to the volatility of house prices.

• The avenue of reform we favour is the complete abolition of the Green Belt, a step which could solve the housing crisis without the loss of any amenity or historical value – if only politicians and planners had the courage to take it.

• Failing this, we conclude that removing Green Belt designation from intensive agricultural land would also enable the building of all the housing required for the foreseeable future, and could help ameliorate the catastrophic undersupply of recent decades.

• In the short term, simply removing restrictions on land 10 minutes’ walk of a railway station would allow the development of 1 million more homes within the Green Belt surrounding London alone.

Click here to read the full press release.