England’s planning drought for housing projects merely stores up problems
The English obsess over house prices. Residents in densely populated areas are often resistant to the new housing developments they fear may dent values
Planning approval for new housing projects in England is at its lowest quarterly level for more than 15 years. The “not in my backyard” (Nimby) brigade may regard that as a victory for local democracy. But England’s planning drought will merely store up problems.
Housing experts doubt whether England can build a targeted 300,000 new homes a year by the mid-2020s. Housebuilders are seeking permission now for homes that will be built from 2025. This points to a worsening supply squeeze.
The number of approved housing projects in England fell to 2,456 in the second quarter, according to lagging data from the Home Builders Federation, a 20 per cent drop on the same period a year ago. It is the lowest quarterly level since the trade body began collecting this data in 2006 with research group Glenigan.
The number of homes in England granted approval in the second quarter fell 13 per cent year on year to just over 54,200. The tally over the past four quarters is 265,223. Housebuilders are scaling back new projects given falling sales. Higher lending rates and the withdrawal of the UK government’s subsidy for first-time buyers, Help to Buy, also contribute.
The government last year proposed giving local communities a greater say over what is built in their area after some of its own MPs threatened to rebel. Ministers had wanted to scrap EU-era rules designed to protect England’s waterways. These have often thwarted new housing schemes for builders. But the plans were defeated in the UK parliament’s House of Lords on Wednesday after a backlash from environmental groups.
The valuations of big UK housebuilders have recovered from last year, when Help to Buy closed to new loan applications. But they are still some way off levels reached in the middle part of the last decade.
For now, investors are more concerned about dwindling sales. They hope a game of brinkmanship between the political parties over housing might encourage a replacement for Help to Buy.
Deregulating planning or imposing a development land tax are radical solutions that could break the logjam. Neither main party has the stomach for the unpopularity such measures would bring. Restricted housing supply remains baked into England’s political system.
The Lex team is interested in hearing more from readers. Please tell us whether you think there is a way of improving the supply of new homes in the comments section below.
Source: Financial Times
