Ignoring the wood for the trees


Compass has a report out about the state of the housing market. Dire they say, there should be lots more, well, essentially, lots more of the things that Compass likes. State intervention, more taxpayers' money being spent, more social housing and, by the way, can we get the bankers out of the whole thing? It isn't all bad, it has to be said, they come out in favour of land value taxation which as has been pointed out here before is a thoroughly good idea.

However, they seem incapable of, while discussing which shade the bark on the trees should be, of understanding the wood which is our real problem in the housing market.

The need to understand notoriously opaque land markets and the complexities of the planning process also make housebuilding an extremely difficult industry for new competitors to enter, reducing competitive pressure further. The result is a business model that does not deliver the homes we need, but is very difficult to change.

Now someone like me would say, OK, then we should be looking at changing the planning system if that's one of the major problems. And of course, the planning system is. They note that in recent years we've been building flats on brownfield sites, the houses that do get through are rabbit hutches crammed together: and yet they fail to note that this is exactly what the planning system, in all its complexity, has been demanding. If you don't put 14 houses on a hectare you won't get permission. The extraordinary price of housing is not because houses are expensive to build, nor is land: what is expensive is the licence that allows you to build a house on a certain piece of land.

There have been solutions proposed to this of course: if the planning system is the problem then let's change the planning system. But of this sensible sort of thinking we get none from Compass: despite their approval of LVT showing that they have at least one rational individual within their ranks.

Still, at least they are not quite as crazed as the current government was with the Pathfinder scheme. This baby of John Prescott's was going to solve the shortage of affordable housing by knocking down hundreds of thousands of cheap houses: you can imagine how well that worked.