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There is a very widely held view that planning regulation is weighted too heavily in favour of the status quo.
Those who live on the edges of towns and villages take pleasure in being surrounded by open countryside, and object strongly to anyone spoiling their environment by building on it.
They couch their arguments in terms of ‘protecting the greenbelt’ and the need to prevent England being concreted over by greedy developers for their own profit. But the fact remains that the shortage of available building sites is a major factor in the rise in house prices and the shortage of house building.
The Barker Review of Housing Supply in 2006 concluded that in large part this shortage was a result of planning restraints.
The Economist newspaper and many other commentators have suggested that rather than fanning the flames of demand to increase the supply of new housing, the government should be doing more to loosen planning regulations to increase the supply of building land.
Other countries have succeeded in this much better than the UK, while still preserving a richly varied countryside. We are almost unique in suffering from this particular problem, by giving so much power to NIMBYs.
Most European countries have much stronger zonal planning regulations than the UK.
The principle they most commonly follow is that all land is zoned and within each zone limits are set to what you can or cannot build.
There is far less emphasis on obtaining individual planning permissions for each development, which substantially reduces the scope for NIMBYs.
Each administrative district has to balance the demand for new housing against the protection of rural and other environments.
National, regional, and district plans each reflect the need for new housing development, and ensure that demand does not outstrip supply.
This approach applies in Germany, France, Holland, Denmark, and many other countries.
Providing you have sufficient land, you will be granted planning permission in France to build or enlarge properties within the rules set out in the ‘certificate d’urbanisme’.
The only other factors that come into play tend to concern drainage or other public health issues.
It is the same for new build in France, where planning permission typically takes about 2 months to complete, and is largely a matter of checking that the proposed development fits within the zonal rules.
When properties in France are in close proximity to listed historical buildings the aesthetics of the proposal will also be taken into consideration.
In response to the Barker Review the Labour government introduced measures to speed up the planning process using the internet and setting target time limits.
They began a shift towards a more zonal approach to planning by introducing Regional Spatial Strategies and Local Development Frameworks.
In March 2013 the Coalition government’s National Planning Policy Framework came into force, very much in line with the conclusions of the Barker Review.
This introduces a “presumption in favour of sustainable development” to ensure new development projects are not held up unless they are against a local community’s collective interest.
The planning process has to consider the impact of new developments on the local economy, and ensure that there is a ready supply of housing to meet demand now and in the future whilst enhancing the “natural, built and historic environment”.
They shied away from making planning consent a technical issue as to whether a developed complied with an agreed local plan and left democratically elected local politicians to determine it. But they introduced a much stronger appeals procedure the effect of which is intended to achieve a similar objective.
Simon Jenkins responded in The Guardian that this would ‘sacrifice our countryside to market forces, invite corruption, and sink us in urban sprawl’.
It is too early to say how much impact the change in planning regulations might have, but it does appear to be a step in the right direction.
A major consequence of this imbalance between supply and demand is that housing in the UK has become a speculative asset.
In most of the better-off parts of Europe house prices have been much more stable than in the UK.
The Barker Review pointed out that real rates of inflation in house prices across Europe (averaging 1.1%) were less than half those in the UK (2.4%).
As a result they experienced much less difference in the benefits of home ownership over renting.
This is most strongly seen in the richer European countries.
In many of the countries that joined the EU in recent years house prices have been even more volatile than here.
In Ireland the availability of German-level interest rates following their joining the Euro combined with rapid economic growth and inflation lead to a housing boom fuelled by excessive borrowing.
They were the first casualties of the financial crisis, soon to be followed by Greece, Portugal, Spain and to a lesser extent Italy.
In all these countries house prices have fallen substantially, whilst in Germany and Austria they have remained steady throughout the crisis.
It is only in the UK that we talk about a ‘housing ladder’. Once you get onto it, you are assured of an increasing asset, and can expect to move into more expensive housing as your wealth increases.
During my lifetime my home has increased in value by more than it cost me to purchase it, including the interest paid on my mortgages.
From an investment point of view, house buying in the UK is purely a cash flow problem: how much of it you can buy is limited by how much cash you can raise.
There are risks of course, and there have been a couple of severe housing crashes in the early 1990s and again twenty years later, which have resulted in some people losing substantial amounts of money, and being trapped in negative equity.
But the downside risk remains very small compared with the potential and actual gains from home-ownership.
About the Author
Dave Treanor recently retired as managing director of M3 Housing and secretary of the National Housing Maintenance Forum.
He wrote Housing Investment Appraisal for the National Housing Federation, and developed financial appraisal systems widely used by housing associations.
Prior to that he spent many years working with housing cooperatives.