Planning and affordable housing

The planning system in the Uk doesn’t work well.

Many people dislike it because they still end up with too much development on their doorsteps. They do not like the density, location and style of much of the building near them.

Many developers dislike it, because it entails them spending a lot of money on planning advisers and lawyers. The system is prone to delay and cost before they get the permissions they seek.

In recent years the planning system and the general economic circumstances have conspired to produce very high house prices and a very low build rate by historical standards. The last government forced large numbers of prospective new houses on parts of the country that did not want them through their regional plans, but still the build rate remained way below what they said they wanted. People seeking a home do not like the system as a result.

Because house prices are high and planning permissions for new homes limited, land values with planning permission are also very high. Many people feel the system is unfair. They feel that only the rich and powerful developers at one end and those who are prepared to break or bend the law at the other get the valuable permissions. Success in the planning lottery can turn cheap land into a very valuable commodity, making a six figure or even a seven figure sum of profit from just one acre with permission to build houses.

The big developers just spend and spend on planning advice and lawyers, pushing until the system in enough places gives them the permssions they need to carry on their business. Some people build on land without permssion, or push and push from a barn or commercial premises or a single property until they have dwellings on the plot they have acquired at agricultural or derelict land or other lower prices. This is why so many law abiding people who stick to the rules feel it is unfair. They might have their application for a conservatory or garden wall turned down for dubious reasons and have to live with the decision.

I will not restate the long arguments we had on this site under the last government which set out why high house prices were largely the result of the crazy money policy pursued up to 2007. It was the authorities approach to money, credit and bank regulation which led to the mortgage bonanza, lending more money at ever higher multiples of income driving house prices up.

This week I want to look at the issue of how the planning system should be changed to try to make more people happy with it.

The government has proposed two main changes. The first is a democratic override to deal with the sense that many have that the system allows too many homes to be built in the wrong places. Local communities will be able to have a referendum to approve or veto new development in a village. It will require 80% to vote in favour. The second is an incentive to Council planning authorities to allow more homes to be built by offering them extra money to spend based on how many extra homes they build.

What do you think of these ideas? I will set out some other possibilities later this week.


  1. JohnnyNorfolk
    August 16, 2010

    Letting local people decide with a referendum. It will never happen i am sad to say.

    1. Stuart Fairney
      August 16, 2010

      Thank God for that. I have been building houses for close on twenty years now, and despite some really great designs in wonderful settings, I have never yet seen a single person supporting any proposal I've ever made.

      My company is about to embark on another pointless appeal after a pending refusal from a Southern council. Magnum of champagne to £500 to a charity of your choice with anyone who cares to bet ~ not only will I win on apppeal (the design is superb, in-keeping and wonderful to live in, as are all Milvian Homes designs!) but within a decade of rejecting the scheme, the council will have it in their conservation area.

  2. Tim Carpenter
    August 16, 2010

    Handing over more money to Local Councils so they "allow" more homes sounds like a very bad idea. It is adding a distortion to try and correct a distortion.

    One of the problems councils, when "regenerating" look to grant permissions that only suit big developers who often build ugly, badly made, monotonous constructions with the risk of the developer making a handsome profit at the hands of the Simple Shopper.

    If land is to change use, or be regenerated, then what if that land is partitioned into plots and each is auctioned off separately?

    Not only is this likely to gain the highest price, far better than a bulk lot, this way those wanting to self-build, small speculators, those wanting to build a school, a doctor's surgery, commercial units etc can have a fair crack of the whip. You would get more people trying out new ideas surrounded by others doing likewise. Of course, a developer is quite at liberty to outbid everyone on each plot, i.e. pay what is the true market price, but I suspect they will not like that, but funny how the Council seems reluctant to get the most from their land value…

    Of course, the town planners will get their knickers in a twist as they have no control and their rice-bowl is threatened, but look at what they produce and look at what people produce when individual plots are sold and use is mixed and the location of different kinds of use decided by the very people who seek to gain from it. look at our historic towns.

    It will not be "perfect", but that is not the point. It will be human.

    Tim Carpenter
    Policy Director
    Libertarian Party

    1. Stuart Fairney
      August 16, 2010

      Yes, yes, yes. Tim, e-mail me, I will happily give you any info on this issue you need, and I speak as a director of a housebuilder, my address is stuart dot fairney at milvianhomes dot co dot uk

  3. Will J
    August 16, 2010

    What is it with this government and its dislike of simple majority voting? If 80% of people need to approve something then 21% of the population can block a plan supported by a full 79% of the population. Why on earth is that fair? I can imagine the 79% of people who support the building getting pretty frustrated with the mere fifth of people who are standing in its way.

    The plan would also be improved if the vote had to be conducted in the context of a village meeting, in which the arguments were heard either way. Assemblies, where viable, are democratically better (and cheaper) than plebiscites.

  4. nonny mouse
    August 16, 2010

    >>Local communities will be able to have a referendum to approve or veto new development in a village. It will require 80% to vote in favour.

    In other words, you offer a democratic solution but stack the odds against development. Why not just be honest and ban development outright?

    >>The second is an incentive to Council planning authorities to allow more homes to be built by offering them extra money to spend based on how many extra homes they build.

    This sounds like a good idea, but the impression that I got was that this will be funded from a green levy on house building. Making people build 'green' energy systems that use energy and raw materials to manufacture but don't generate much energy doesn't seem to make economic or environmental sense.

  5. nonny mouse
    August 16, 2010

    The UK has plenty of land. Outside of towns and cities there are miles and miles of countryside. If you really want development why not just allow new small towns to be built away from existing ones? This will not happen because the anti-development lobby has the ear of politicians so we get overcrowded towns with most of the population concentrated in small areas and the rest of the country empty and underdeveloped.

    In California they use house building outside of towns to fund building new transport systems. They build the rail lines and stations then sell the land around the stations and generate extra tax revenue to pay back the bonds issued to build them The UK could fund the development of new high speed rail lines by picking one or two green field sites along the line and put stations there, then encourage new towns to be built at those sites.

    1. StevenL
      August 17, 2010

      That's how I always played 'Sim City' too!

  6. Iain gill
    August 16, 2010

    Well where do we start on this one?

    First issue that springs to mind is the "traveller" community and the way the police and criminal justice and planning system handles them. I am afraid we need to get back to everyone being equal in the eyes of the law, and that means that the traveller community need to be brought into line. Sadly so often they are driving around in untaxed/uninsured vehicles, doing house repairs on pensioners homes which are substandard with no consumer protection, engaged in various aspects of the black economy, and so on and so on. Including many cases of setting up permanent residence in places where it's just not suitable, and even building on the land. The way these folk essentially push the boundaries of the state enforcement apparatus and get away with stuff routinely needs to be fixed. Now this needs national coordination, and it needs to be done in a framework which allows these folk to be channelled into productive safe contributions to society, which recognises it aint going to be fixed overnight, but medium to long term this needs fixing. In the short term they need places to stay and much quicker ways of removing them from places they should not be.

  7. iain gill
    August 16, 2010

    Then we need to fix the regulations, which have led to lots of flats being built and lots of housing with no parking spaces. Its fairly obvious most people aspire to a house with a drive. The anti car nutters in positions of power have gone too far.

    The we need to fix the attempts at mixing the middle class community with underclass by enforced addition of "social housing" to other estates. Is does not work. The first thing we need to fix is the medical and school provision for the underclass, and its tie to your postcode. I wanted to live in an underclass area but eventually had to move out simply because the NHS provision and local schools were sub 3rd world, like everyone else I moved out to middle class area. The situation would fix itself if state provision were not so biased to your address.

  8. Iain Gill
    August 16, 2010

    Then we get onto the real mobile workforce, who keep this country going, who are in no position to buy cos they move too often, and who the state housing sector doesn't cater for. The private sector rented housing these folk are forced into doesn't meet their needs, and all of this is bad for the economy. We need to encourage workforce mobility.

    Then we move onto the UK being the only country in Europe where decent folk cannot rent in middle class areas long term. We need to encourage landlords to rent longer term to give folk some security of tenure so that folk know they will be able to stay long enough to at least get their kids through a school year or whatever. 100% short-term tenancies is a bad model for everyone.

    Then we need to move onto price for housing. I can buy some perfectly good land for a house for a couple of grand, it would cost about 30 K to build an OK house on it, so the question arises why does the finished article cost around 300 K ? That little mystery is much about restrained supply due to planning etc.

    Good luck on this one John

    1. Stuart Fairney
      August 16, 2010

      It would not cost you £30K to build a house, with the sustainable stuff these days, the best you could realistically do a two-bed link for would be £70K minimum, trust me on this one.

      1. Mark
        August 16, 2010

        Time to revisit those regulations. £40k buys a lot of energy.

      2. Alan Jutson
        August 17, 2010



        I built my own home 30 years ago, and it cost £40,000 then, without land !!!!

  9. Onus Probandy
    August 16, 2010

    Here's (broadly) the solution: decide on those who will be affected — in effect, set a "distance" for a particular project. The developer is then free to buy the support of those within that distance. Effectively, the bribery and corruption that must already go on is made legitimate and non-corrupt. It becomes a simple purchase. The market will sort out the rest.

    This idea has worked well in parts of America, where the building of a prison near a town came with a payment for all the residents. It ended up that residents wanted the prison, and there was competition between towns to "win" the development.

    The same would work for building power stations. Thinking of the enormous sums involved, you could offer every resident thousands of pounds. That might change their minds about saying yes to the build. What about offering free electricity to everyone within five miles of a newly built power station? Advertise that and watch the people queue up to beg for it to be built near them…

    People get upset at these developments because they get all of the pain and none of the pleasure. Chuck out the planning system, and the developers have the cash to buy the resident's support. The residents are happy because they have effectively agreed a price. Just like with all capitalism, both sides benefit, and walk away happy.

    The government need be involved (as it should only ever be involved) in providing a court system to resolve contract disputes.

    1. David in Kent
      August 16, 2010

      This person is indeed making a valuable proposal. If combined with that of Tim Carpenter to ensure councils auctioned off the land they owned we would have a system which was much fairer and delivered more of the benefits to the local people.

  10. Iain
    August 16, 2010

    Its no point fiddling with the supply side while the state does nothing about the demand side, the result of too many people flooding into the country. We have neither the houses, food, water, energy, road space for the people we have, yet the population projections point to a 10 million rise in our population, with that sort of imbalance you might have thought our political class would be panicked into some action, but no we get some fiddling around the edges , here our political class are like rabbits caught in the headlights, frozen into inaction, they can probably see the problem hurtling towards us, but are unwilling to undo the policies they have foisted on us that have got us into this mess.

    1. whistle
      August 16, 2010

      You are dead right in what you say.Someone in these columns wants new Towns built on green sites,all very well,but,where do we grow food. The supply/demand is the sole reason for house prices going through the roof. There is NO ONE in Parliament willing to stand up and say "What is needed is a complete and utter stop to immigration into this Once Great Country,followed by a policy of repatriation of all the bogus Asylum seekers and illegal immigrants".No one and that includes the present originator of this blog.

    2. Iain Gill
      August 16, 2010

      yes despite govt claims to have taken "decisive action" on workers coming in from outside europe that is only some visa classes, we still have (numerous-ed)workers coming in on intra company transfer visas working for the outsourcers and immediately subcontracted into our leading companies undercutting and displacing Brits from the workforce, filling the schools with their kids, and housing with their families, the avoidance of the issue by the political class is a scandal

      now british kids will not even study a technical subject because they know those jobs will just be filled from cheaper labour here from the outsourcers

    3. Electro-Kevin
      August 16, 2010

      You hit the nail on the head.

      Few politicians include the obvious. We are far too densely populated. Increasing housing capacity will only lead to increased population.

    4. StevenL
      August 17, 2010

      "here our political class are like rabbits caught in the headlights, frozen into inaction, they can probably see the problem hurtling towards us"

      But not towards them.

  11. Chris W
    August 16, 2010

    It is the local authority planning department who approve the awful eye-sore monstrosities yet prohibit homeowner's non-intrusive garden walls and conservatories in my village. While govenment guidelines may drive some of the housing shortage problem most of the resentments and perceived unfairness is directed locally. I'm afraid this flies in the face of the Conservatives' localising' agenda.
    Note I say this as someone 18 months into a planning process and appeal for a very minor work intended to create accommodation for an elderly relative.

  12. Bill
    August 16, 2010

    There is a disparity between the small guy, wanting to build a porch and a large developer who hires a team of advisors. But this is true not just in planning but in most areas of law and life.

    That old quote-

    As Lord Justice Darling said in 1920: The law courts of England are open to all men, like the doors of the Ritz Hotel'

    I can’t really see a viable alternative.

    You can localise the decision making, but I don’t think that will make the residents of say Ditchling (at random) vote for a council estate.

    We can relax planning laws, but that would spoil huge areas of rural Britain.

    1. David in Kent
      August 16, 2010

      I think a lot of the residents of Ditchling would vote for a housing estate if it they got a share in the value created.
      The developer might have the weigh the merits of his proposal more carefully but that's OK.
      The planners and lawyers would be unhappy. That's another advantage.

  13. Duyfken
    August 16, 2010

    I hope that in your examination you deal with the problem of possible corruption. Often, one is perplexed by how planning permission has been given for developments of dubious benefit to the community, such that the comment is sometimes heard that "a brown envelope" must have changed hands. Whether or not such suspicions are warranted, I wonder whether more transparency would allay fears – but I reckon not, in that local government activity generally will always engender doubts by us Council-tax payers.

  14. Lola
    August 16, 2010

    Reform planning system?

    1. Localise it – but DO NOT give more central government money to LA's
    2. Change tax system to reduce tax on income and capital (i.e. wealth creation) and increase it on land.
    3. Do away with the recent legislation (who's name I cannot recall) that allows big projects to be steamrollered through.
    4. Return to very sund money and sensible banking hence allowing developers make decsions based on sound information.
    5. Stop the sale of council houses at less than market prices and return to councils the liberty to use their funds as their local citizens wish.

  15. DBC Reed
    August 16, 2010

    I thought that this coalition was laissez-faire!Now its proposing to block people buying the housing they desparately need .Laissez faire/laissez passer was of course the slogan popularized by the pre Revolutionary French Physiocrats but they had a single tax on land values in reserve to stop landowners hoarding land waiting for its price to go up . We need more more building land to be made available and a tax on land values remains the best way to go about it.

  16. john east
    August 16, 2010

    This is little more than a charter for NIMBY's which will halt rural development, which is fine by me, but let's not paint it as people power.
    As an aside, will this stop the imposition of travellers sites on settled communities? I doubt it.

  17. StevenL
    August 16, 2010

    Why not just sell the permission to the developers and use the windfall to cut taxes? Duh!

  18. Simon
    August 16, 2010

    the trouble with local people being able to block de elopements is that is all you will get, endless 'not here' votes in all the places where peole want to live, not sure I can see a way around this.

    What is really needed is for prices to fall to levels, relative to incomes, last seen in the 1990s. I bought and sold a flat back then for around £40k it is now worth around £140k and yet, in part due to Immigration, average wages in that town are about the same, huge numbers of people are now priced out of the small apartment market and houses are dreams for an unknown class of rich people!

    Buy to let coupled with foreign investors is the problem, as well of course as the loose monetary policy you rightly identify. This is a huge and little discussed social shift. British peole priced out of homes because of absentee landlords funded and encouraged by British Banks and British Government monetary policy.

    Perhaps we need a local people priority rule?

    1. nonny mouse
      August 16, 2010

      I just read this weeks Economist. They said that UK house prices dropped 20% in the recession compared with 32% in the USA. UK house prices are still 30% overvalued.

      1. Mark
        August 16, 2010

        UK house prices rebounded. They're only about 15% down nationally – and back to peak prices in London, although in Northern Ireland prices have almost halved in sympathy with Eire. Irish prices won't be helped by recent events. In the South East, prices have a long way to fall. After the last boom in the 1990s, prices fell in nominal terms by around 30% in the hotspots without the world coming to an end. It can happen again and probably will.

    2. Simon
      August 16, 2010

      In the Phillipines houses below a certain cost can only be owned by Phillipinos .

      How about ownership of houses of less than 30 times the median income was restricted to British Citizens ?

      Our population need to be compelled to save for their old age and not through domestic property asset class either so will have less money to spend on houses .

      I would not be unduly upset if the value of houses including my own halved .

      High prices mean bigger loans that take longer to pay off which equal money for old rope for the financial services industry .

      Everything seems to be geared towards propping up house prices .

  19. Mark
    August 16, 2010

    The incentive payment (£8,000 on a Band D property) sits oddly with the proposed Green tax on newbuilds that will add £15,000 to the price of a house or flat that fails to meet a zero carbon standard, like a lump sum stamp duty. Of course, the tax doesn't come in until 2016, so I suppose the real purpose is to encourage developers to get on and build before it happens, so they don't waste money on uneconomic green features or find that their properties are even more priced out of the market.

    Bribing councils to grant planning permission was at the heart of the Poulson scandal. For government to indulge in the practice by legalising it so long as they provide the bribe doesn't improve matters. Under Coase's Theorem, the side payment needs to be negotiated and made to the parties affected by perceived planning blight by the parties causing it. Still, if they can vote it down on a minority vote we will end up with a logjam.

    Most development is conducted on land banks acquired by property developers over many years. Their profits are determined by holding the land off the market in the bank rather than by developing it, controlling supply. Banks encourage this behaviour because it supports their Ponzi scheme mortgages. This is a feature of the property market that ought to be tackled. Of course, since the land is such a major asset, it has implications for the solvency of larger developer/builder companies – but they should not be in the business of land hoarding.

    1. backofanenvelope
      August 16, 2010

      Instead of bribing the local council, why not try bribing the local council tax payers?

      1. StevenL
        August 17, 2010

        Exactly – sell the permission – it is just about all we have left to sell. Of course, the politicans would rather we sold the motorways to the Russians that sell residential planning permission (am I right JR?).

        Something to do with how people vote (i.e. on the back of house prices going up to infinity) I guess.

        1. Mark
          August 17, 2010

          Infinite house price = zero value currency. Do people really understand what life would be like with hyperinflation?

  20. Richard
    August 16, 2010

    The local vote is a good idea, but I feel that the 80% approval level required will be too high to get most schemes passed.____Giving local authorities money if they approve the building of more homes is also a good idea, but only if this money were ringfenced so that it had to be spent on housing.
    We need to greatly simplify our comlpex planning rules, to reduce the increasing complexities of building regulations and a limit needs to be put on the time taken by councils before planning decisions are made.____The powers councils have over the owners of listed buildings and their powers to suddenly list buildings with little right of appeal needs to be reviewed.____Tax changes need to be made to discourage property companies from sitting on their land banks and instead to encourage them to go ahead and build.____But perhaps most importantly the Government needs to be bold and plan several new towns because with our rapidly growing population we are going to need them.____

  21. grahams
    August 16, 2010

    There are many different housing supply issues requiring very different solutions. In the cities, immigration is the key issue. At village level, I have two suggestions

    First, set up a voluntary network of Charter Villages, perhaps administered by the NFU. To join, a village/parish has to promise to provide enough sites to expand its housing stock at, say, 5 or 10 per cent every 10 years. The charter homes built under this initiative could have a covenant limiting ownership to people brought up and/or working locally (it can be defined) for the first 25 years. In return , Charter Villages would be guaranteed that they would not have any larger development imposed on them.
    Second, allow many more “holiday homes” (which can only be used for 10 months a year) in places where planning would not normally allow housebuilding (for lack of schools, sewerage or public transport rather than aesthetic objections ). These relieve the second-homes pressure that prices out local people.

    1. TimC
      August 16, 2010

      Cracking idea. The planning gain (increase in value of the land if it can be built on) can be split two ways, the village and the landowner Thus land worth £1000 without permission would with open permission be worth £100000. The village pays the landowner £33k. They sell it to a housing trust/cooperative/habitat for humanity for £66k with permission. They then have the seed corn for a further deal. I think the landowner would be happy if the land was such that it could never qualify for open market planning permission

    2. Alan Wheatley
      August 17, 2010

      "More holiday homes" is exactly what is NOT wanted in areas where there are already too many. In any event, "use" is not a planning consideration, though it should be.

  22. TimC
    August 16, 2010

    The 80% approval levle is too high. The idea is on the right lines though as it bypasses the local planning authorities. They add NO value, only cost. Local planners should be limited to building regs approval only and come to that those too could be outsourced to insurance companies for a 'certificate of compliance'. Why not allow 'permitted development' to be extended to ANYTHING you want to build as long as it is on land you own and within, say 50 metres of a building which has stood for more than 10 years. That way we would get new build and marginal agricultural land released .

  23. Liz
    August 16, 2010

    Unfortunately a local referendum of any sort to approve new house building is doomed to failure as most schemes would be turned down even with a much lower threshhold than 80%. There are several problems, immigration – the problems it causes for housing and other services are completely ignored, developers hoarding land, not enough building land, failure to enforce completion of the local infrastructures schemes that developers are supposed to carry out for being given planning permissions, too few builders and developers, very low architectural standards with minute flats and houses being built with only two bedrooms, one ensuite, plus a bathroom but with tiny rooms and no storage space. New towns would seem to be the only answer to most of these problems and to build enough housing for the enormous growth in population.

  24. Sean O'Hare
    August 16, 2010

    Oh dear nonny, you are obviously not a lover of the countryside are you? I look with dismay upon what remains of the countryside I walked in my youth. This included the footpaths through woods and fields around Wokingham as well as the rest of the home counties. It is sad that you and so many others have no appreciation of the beauty you are so quick to want built on. I suppose that once all the fields are concreted over and all the trees rooted up you will happy.

  25. Simon
    August 16, 2010

    As soon as houseprices start to go down , the mortgage lenders , land owners and others with vested interests will be lobbying for more immigration to help them line their own pockets .

    Will the government have the guts to resist them , especially with property being the MP's investment of choice ?

    1. StevenL
      August 17, 2010

      They'll be lobbying for more funny-money bailouts I think you'll find. Don't worry, it'll all end in tears one way or another.

  26. Lindsay McDougall
    August 16, 2010

    I think that if the UK population stopped growing there wouldn't be so much of a problem. So let us resurrect those fine words on immigration policy and decide how to apply them.

  27. peterL
    August 16, 2010

    I await the U turn with interest!!!
    If you let the local interest rule, nothing is going to happen Nibby rules – you have to get past that

  28. John
    August 16, 2010

    One policy solution to the lack of housing would simply be to address the levels of unoccupied property.

    I read a few years ago that 30% of the property in Port Isaac are holiday homes. Local people have been priced out of the market. The community has been broken, local businesses and shops have gone to the wall. These communities have suffered a huge penalty for the vanity of the wealthy.

    So let's deal with second homes. Bring in covenants to ensure that owners actually occupy the properties as main residences. Punitive levels of council tax on second homes (say 10% of equity value each year). Perhaps just change the law so you can only own a single property (if you need a second pad, rent it)

    When tens of thousands of young people are unable to obtain property at all, why should some be allowed to have two, three or more houses?

    1. Mark
      August 16, 2010

      Who would own the property you suggest be rented? You draw attention to an important problem, which is being addressed by removing tax privileges. It will be interesting to see how effective that turns out to be.

  29. Mark
    August 16, 2010

    Can we get rid of that terrible euphemism "affordable housing"? It's inadequate housing that will likely wind up as slums with a short life, making it very expensive – not really affordable at all. Houses will only become affordable when we get the property bubble unwound.

  30. Andrew
    August 17, 2010

    80% in favour !!?

    JR, in electoral terms, not even in Wokingham is the Conservative majority that large ! So why set the bar so high ?

    As for the financial "premium", — most planning permissions, –already, — carry a so called "Section 106" Agreement which requires the developer to pay to the Local Authority monies for agreed functions, health, education, parking provision, etc

    Moreover new developments increase the Council Tax base anyway surely ?

    This Coalition proposal frankly looks highly cosmetic, –using "smoke and mirrors " on already existing practices. The only advantage of the "premium" as far as I can see is that it is a more flexible and real time way of recognising population increases than say the Decadal Population Census. .

  31. simon_555
    August 17, 2010

    With our population predicted to soar to 80m by 2050 it is clear we need to build more homes. It's a shame that the countryside will shrink but that's the price to pay if we pursue the population growth path. People can't be expected to live in cramped housing , that is asking for all sorts of problems.

    The cries of the NIMBY's must be ignored. With our system geared around a growth based economy there is no hope for the countryside in the long run. It's all unsustainable of course but since when did sustainability ever take precendence over economic growth?

  32. christina sarginson
    August 24, 2010

    I look forward to the outcome of this argument, I think house prices have gone through the roof (pardon the pun) and many young people just cant afford to buy them. If they come down in price a lot of people will go into negative equity which will not help anyone, this requires a balancing act I would like to see some action and stop blaming the other side good planning and sound building is a must I wait and watch.

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