Central planning doesn’t work, so why are we using it for house building?

by Tom Guyton-Day 3 months ago in opinion

Written by Tom Guyton-Day and edited by Lauren Mansey

Central planning doesn’t work, so why are we using it for house building?

With the potential welcoming of over 2.3 million Hong Kongers this morning by Dominic Raab, plus a burgeoning population in the South East, the traditional right of every landowner to build on their own domain ought to be restored. This would help to reduce the supernormal profits seen within the building industry and therefore the price of housing for first time buyers.

The median house price, in England, has gone from £106,000 in 2001 to a staggering £240,000 in September 2019, according to ONS. This rocketing of house prices, primarily due to demand for homes far outstripping supply in much of the country, has meant many people will not buy their first home until well into middle age or possibly not at all.

This situation is set to worsen with few local authorities in a position to support the populations that already occupy them, let alone also support the growth in population in many areas from immigration and the baby boom.

It is time to say enough is enough. Planning is one of the few archaic areas that still relies heavily on central planning from civil servants. Like much of the failed industries of the 1970s, it is time to tear off the plaster and let the market control flow, giving a sensible equilibrium price for buyers and sellers rather than this heavily inflated price environment which gives huge profits to housebuilders and those landowners lucky enough to get planning permission.

I was talking to an estate agent last week and we had a very interesting chat, but one key figure amazed me: your average acre in the South East is worth £7-9,000. Get permission though and the land value gets to 1/3 of the retail price of the property once built. So, let’s say the property sells for £370,000: the landowner/housebuilder there has made a staggering sum in profit. Granted a section goes towards the council in tax, but most is profit…

Is it any wonder that the large housebuilders also donate large funds to the Conservative Party (traditionally a neoliberal party – except on this very small section of policy)? Is it at all possible that Governments (Labour ones too) are deliberately restricting house building to protect a very small business interest that hugely benefits from a heavily regulated market, one with only a few large names? This, of course, is pure speculation, but it only takes a small time to join the dots in one’s own head.

It is very well known that large businesses within the South East own vast swathes of land with permission to build but don’t. This has been to the annoyance of local councillors forever, but nothing is being done about it – at all really.

Government tinkers at the edges of the planning process with people able to now build larger extensions but it’s not enough. People are not having larger families and do not require more three-bedroom homes turning into four. They are having smaller families with more individual housing units required because of divorce and separations and a changing society.

I say therefore, in the words of the Prime Minister, we must “Build, Build, Build”. We must release every landowner in England from the constraints of an archaic planning system built for 1940s England and a markedly smaller population. It is not time to be squeamish but time to be brave.

It is time to trust that if there is demand for a home then a home will be built, and that as the supply of homes increases England will be gentrified. Is it not the right of every Englishman to own a small piece of England, live and work it as he so chooses?

opinion
Tom Guyton-Day
Tom Guyton-Day
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Tom Guyton-Day

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