Why I agree with the CPA’s call for a grown-up discussion on housing – and urge them to follow their own advice…

29 Nov, 2023

Why I agree with the CPA’s call for a grown-up discussion on housing – and urge them to follow their own advice…

Director of External Affairs at the Home Builders Federation, Emma Ramell reflects on the Co-Founder of the Community Planning Alliance’s (CPA) call for a robust debate on housing and examines the truth behind recent claims about the industry.

It is testament to just how salient housing is becoming as a political issue in the run up to the next General Election that planning policy is being regularly discussed not just among the industry and politicians, but in the mainstream media too.

However, while the frequency with which house building is debated is increasing, the same cannot be said for the quality of the discussion which often leaves much to be desired. On this matter, I find myself agreeing with the Co-founder of the Community Planning Alliance (CPA), Rosie Pearson.

For the uninitiated, the CPA was founded in March 2021 and is formed of local campaigners from around the UK. One of its aims is to ensure “the right housing and infrastructure, in the right places”, rhetoric which has seen the group criticised for its approach to development and Ms Pearson dubbed by some as ‘Queen of the NIMBYs’.

Yet, despite the ideological differences in our respective approaches towards development, I do think Ms Pearson makes a valid point about the need for a robust debate around the housing crisis.

Take for example, her most recent comment piece in The Telegraph, ‘Don’t Blame the Nimbys for the housing crisis’, in which she wrote “The use of the word Nimby is a distraction tactic. It prevents a serious discussion of the housing crisis and its true causes”.

I think many of us would agree that we need a considered, mature debate around house building. However, achieving this hinges on all parties utilising robust, evidence-based arguments and experience shows us that this is where discussions with those who tend to oppose development, break down.

Take, for example, Pearson’s comments in The Telegraph in which she makes a number of claims about the industry’s model, its contribution to the housing crisis and the motivations of developers.

I have examined four of the claims in detail below.

  1. “Too much of the debate is about housing targets. As we have seen at the recent party conferences, meaningless targets are thrown around by developers and politicians, without a jot of evidence to back them up.”

Mandatory housing targets may not be universally popular but their importance to housing delivery cannot be overstated. Without clear goals in place, it is likely that Local Planning Authorities (LPAs) would significantly reduce the scale of housing allocations included in local plans in response to a minority, but increasingly vocal, number of residents opposed to new development.

HBF worked with planning and economics consultancy Lichfields to quantify the impact that the removal of mandatory housing targets could have on housing supply and the findings were sobering, with a potential loss of 77,000 homes per annum.

Indeed, while at the time of writing the Government’s response to its NPPF consultation was yet to be published, the policy is already having a negative impact on housing delivery with more than 60 Local Authorities having either paused work on or withdrawn their local plans.

Furthermore, abolishing mandatory targets is not the only available option (or indeed the most appropriate one) to dealing with the concerns of those who consider them to be too high, or as Pearson crudely and incorrectly states, “meaningless”.

The home building industry would never claim that the standard method, which forms the basis of how targets are calculated, is perfect. Indeed, we are more than open to discussing how it could be revised for the better, including:

  1. Using the existing housing stock of an area as a baseline, rather than household projections;
  2. Applying to this baseline a rate by which all areas would be expected to grow their housing stock in line with a national ambition and;
  3. be a starting point from which local assessments would be derived.

Such an approach, along with other changes, we consider would help to ensure that new housing is delivered in a proportionate way across the whole country.

However, it relies on interested parties coming to the table in the spirit of rationality and compromise rather than reckless abandonment which has largely characterised the debate over the past year.

  1. “Who benefits from high targets? Developers. And developers do not have any interest in helping those who face a real housing crisis – those 1.5m people stuck on council house waiting lists.”

Everyone is deserving of a safe and secure home and the only we can achieve this is to build more homes of all tenures.

Developers are already playing a crucial role in this and it often goes unacknowledged that the private home building industry is responsible for the delivery of almost half of all affordable housing each year through its Section 106 contributions, including almost 40% of all homes delivered for social rent.

HBF research, based on Freedom of Information (FOI) responses from 171 local authorities, also found that an estimated £2.8 billion in unused home builder contributions is currently sitting unspent by Local Authorities.

This includes £567m allocated for affordable housing, enough to fund the construction of nearly 7,000 social homes.

In fairness to local councils, we fully appreciate that the same capacity issues in Local Planning Authorities (LPAs) which are slowing down the planning process are also likely to be having an impact on the ability of councils to make use of these funds.

But regardless of capacity, the figures demonstrate that developers already make a sizable contribution to affordable housing, even if it largely goes unrecognised.

Ultimately, that there are 1.5 million people on council house waiting lists is evidence of a continual failure of government housing policy over decades. While there is no silver bullet that will resolve the problem, the closest thing we have to one is to overcome the barriers to delivery and support developers, Housing Associations and Local Councils to build, build, build.

  1. “Politicians generally ignore the fact that in England there are 1.5m more dwellings than households. We are not short of homes. They are just unavailable, or unaffordable.”

Despite new homes being built at a comparatively fast rate in the last decade, the long-term undersupply of new housing means that England still falls significantly behind European neighbours in terms of the number of homes per thousand people in the population. This restriction in the market makes it more difficult to find places to buy or rent.

HBF’s recent international housing audit, Housing Horizons, found England has far fewer dwellings relative to its population than other developed nations we typically consider peers, with 434 homes per thousand inhabitants, significantly fewer than France (590), Italy (587) and the OECD average of 487.

This dearth of properties makes England the most difficult place in the developed world to find a home, with the rate of available properties per member of the population at less than 1%, the lowest rate of all OECD countries.

Inevitably, this is having a severe impact on affordability with the average price of a property in England and Wales more than eight times the average salary.

The report’s data also shows that 10 million people are paying more than 40% of their income on housing - the second largest number in Europe. This equates to 15.1% of the UK population which is almost 5 percentage points higher than the EU average of 10.3%.

Quite simply, unless we rapidly increase the number of new homes being built, the twin problems of availability and affordability will not be tackled in any meaningful way.

Comparing the number of dwellings and the number of households is also problematic as it fails to take into account the number of new households that have failed to form due to a lack of available and affordable housing.

For example, the 2021 Census data showed around 1 in every 4.5 families (22.4%) had an adult (non-dependent) child, up from around 1 in 5 (21.2%) in 2011.

While there are, of course, multiple reasons for this, the Census found adults were more likely to live with their parents in areas where housing is less affordable, such as London.

  1. “If we want to point fingers at people for housing being unaffordable and unavailable, then look no further than the Government and housebuilders. A recent report by the UK Collaborative Centre for Housing Evidence found that the major housebuilders operated a “margins over volume” strategy – in other words they prioritise profits over the number of houses built. They are also assisted by the Government through mortgage support schemes such as Help to Buy and renegotiation of their development obligations.”

With regards to a “margin over volume” strategy, the reality is there is very little evidence to suggest land banking happens.

Multiple reviews, including those by Sir Oliver Letwin, Dame Kate Barker and the Office of Fair Trading among others, concluded that developers do not land bank.

Instead, these reviews cited issues with the complex process builders must navigate to get sites approved and the reasons why it is thus necessary to have land at different stages of the planning process. This challenge has also been acknowledged by the Competition and Markets Authority.

In terms of the Help to Buy scheme, it has been hugely successful in meeting the three objectives set at launch: to increase homeownership, increase housing supply, and generate economic activity.

Statistics show that more than 4 in 5 purchasers through the scheme were first-time buyers with the equity loan being, for many, the key to unlocking home ownership by overcoming the deposit barrier that still exists for first-time buyers.

Very few mortgages are available at 90% loan-to-values at competitive rates with fewer still available on new build properties. This situation has worsened recently due to financial uncertainty and increasing interest rates.

The scheme was also a key driver of the significant increases in housing supply seen in recent years and has also delivered for the taxpayer. As of March 2023, 134,546 (35%) of all loans had been fully repaid, with Help to Buy delivering an uplift on investment of just under £660m to the Exchequer - a figure that will increase over the coming years as the remaining loans are repaid.

Do as I say, not as I do

And so, for all of the encouraging talk about the need for serious debate, it is clear that there is still a significant way to go before this emerges in practice.

Ultimately, like it or not, groups such as the CPA have an important role to play in a balanced and democratic society. However, it has become far too easy for such organisations to throw mud at the development industry without being questioned as to the accuracy and validity of their claims.

At a time when the housing crisis is worsening by the day, I fully back the call for a grown-up discussion on housing policy. However, it needs the CPA and other likeminded organisations, to follow its own advice.

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Emma Thomas
Home Builders Federation
Director of External Affairs