Work In Progress: A Note on Housing…

This note serves two purposes.

First, it covers some background issues on the housing development process for the Faculty Challenge project we’ll be doing with first year undergraduates in Sheffield University’s Faculty of Social Sciences in February.

Second, it highlights links to some recent discussions of the subject in the media, as well as some of the think-tanks and advocacy groups involved.

I’m putting it up as a first entry on my slightly dormant blog, because it means it’s in one place, people can see it, and I can edit it and modify it as new ideas come into my head… The student project will use the discussion around a potential housing development in a local park to consider wider questions about how we reconcile protecting the environment with meeting the need for new homes.

It’s an important topic, and an area which necessarily has implications for all of the social sciences, and where all the social sciences have the potential to contribute valuable insights. As a scene-setter, this article by Andy Beckett in the Guardian makes some trenchant comments, as well as giving some useful background. In another Guardian article recently, Dawn Foster asked why houses in the UK are so expensive. In the Independent last year, Ben Chu covered some of the same problems.

Britain is one of the most expensive places in Europe to buy a home, and rates of new building have been consistently well below the nation’s projected housing needs since the 1980’s. This is mainly due to the reduction in social housebuilding in that period, but there has also been a significant real-terms drop in private house-building since the late 1980’s as well. It is also argued in a number of places that the British housebuilding industry builds to a low standard, and hasn’t adopted the innovative approaches that its European counterparts have.

It could equally be argued that it hasn’t had to. Companies continue to deliver returns on capital for shareholders, and most weathered the recession well. And, because of barriers to entry to housebuilding in the UK, they won’t face any competition in the near future. The last Labour Government commissioned a major report on housebuilding by the economist Kate Barker, which looked at the industry. More recently, the Lyons review undertaken for the Labour Party in 2014 considered the problem again. Finally, back in 2006, the delightfully named Swing a Cat website highlighted some of the quality issues.

The UK housebuilding sector has become increasingly consolidated into a relatively small number of companies, a process chronicled in Fred Wellings’ excellent history of the sector. In 2015, the six major publicly quoted house builders in the UK are Barratt (founded in 1958), Bellway (1946), Bovis (1885), Persimmon (founded 1972, subsequently absorbing John Laing, founded 1848), Redrow (1982) and Taylor Wimpey (1880). They’re all British-owned, listed on the London Stock Exchange, and apart from Redrow, were all significant players in the UK housing market in 1980. For some further background on how housebuilders work, Sarah Payne has reported some useful qualitative research on their response to the recession, as well as their approach to brownfield development.

Contrast this with another item that on which British consumers spend large amounts of hard-earned cash, their cars. In October 2015, the top 10 selling car in the UK market was the Ford Fiesta, followed by the Vauxhall Corsa, the Volkswagen Golf, the Ford Focus, the Nissan Qashqai, the Audi A3, the Volkswagen Polo, the Nissan Juke and the BMW 1 and 3 series. None are made by UK-owned companies.

For those old enough to remember, in 1980 British Leyland still had 15% of the UK car market; Nissan, Toyota, and Honda wouldn’t produce cars in the UK until the end of the decade; and what is now BMW’s Cowley plant was still producing the Austin Maxi. A Ford Fiesta of that era with the standard 950cc engine delivered 33mpg. A current entry level Fiesta with a 1.0 litre engine delivers 65mpg.

Are some patterns beginning to emerge? Is the UK new-build home of 2015 bigger, better and cheaper to run than the 1980 equivalent?

Housebuilding doesn’t operate like most other industries, in particular in terms of its key raw material, land. After all, as Thomas Aubrey points out in a recent Policy Network report, the cost of land represents at least two-thirds of the cost of a new home. This represents a huge change from the 1930’s, when many of the UK’s current suburbs were built, when as Brian Green points out land values represented as little as  2% of the cost of a home.

The process by which a piece of development land is brought to market, sold and developed for housing may take twenty or thirty years. Generally, a landowner or housebuilder will identify a potential site for housing development. How things proceed then depends on whether the land is allocated for housing under the relevant local authority’s local plan. If it isn’t, the landowner or developer can still apply for planning permission, but in most local authorities they’re unlikely to get it. If the planning permission is refused, they can appeal to the Secretary of State, but if the local policies on which the refusal is based are sound, the appeal is unlikely to be successful.

Most new sites are brought into the planning process when the Council’s planners are drawing up a new local plan. These documents have changed title over the years – Local Plans, Structure and Unitary Development Plans until 2004, thereafter Local Development Frameworks, and more recently Local Plans again… However the key common features are

  • they cover all the land within a local council’s area
  • they set out policies about what development can and can’t take place, and where
  • they’re supported by evidence (in the case of housing by an assessment of local housing needs)
  • and finally, they’re subject to both consultation with the the public and other stakeholders such as businesses and developers

Once complete, the draft documents go to a public inquiry held in front of an inspector appointed by the Secretary of State. The developer or landowner will be hoping that the council includes their proposed site within the draft document, but if they don’t, they can be heard as objectors at the public inquiry. This can be costly, with most objectors opting to be represented by senior barristers with an expertise in planning law.

The process is also time-consuming. The first Local Plan activity in which I had any involvement was that around the Harlow Local Plan, in 1987. The key feature of this plan was the expansion of the town eastwards to create major new housing estates. After the Public Inquiry, the final plan wasn’t actually adopted until 1995, with the new housing development completed in 1998, more than ten years after comprehensive plans were initially put forward. These had probably been in development since the early 1980’s, and whilst a succession of Governments have sought to streamline the process, new development proposals will often be subject to objections from local residents, and other developers and landowners. So for a landowner or developer, the process of bringing a site to market requires patience, planning, upfront investment and skills in navigating the planning system. For a more thorough explanation of how the system works, Gallent and Tewdr-Jones book, Decent Homes For All provides a useful, though dated, introduction. The planning process can take years, but for the lucky winners, the upside is that the rewards can be immense, as this blog post by Malcolm Tait in the University’s School of Urban Studies and Planning demonstrates.

Needless to say, the system has its detractors.  From a developer perspective, John Stewart blames reforms to the planning system which were introduced in 1991. Academically, the system also has its critics, with Paul Cheshire suggesting that the planning system has turned houses into an investment asset.



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