Graeme Bell: How to build homes with no funds

"I do not believe that continuing at the current rate of housebuilding is a realistic option, unless we are prepared to accept increasing problems of homelessness, affordability and social division...and increasing the costs of doing business in the UK - hampering our economic success," said the Barker Review of Housing Supply in March 2004.

New homes: struggle to develop in downturn
New homes: struggle to develop in downturn

Kate Barker's urgent clarion call was made when English housing completions were just shy of 160,000 a year. And yet by 2011, that figure was 109,000. Barker's call for more than 100,000 extra homes to be built each year has translated into a 50,000 fall.

Eight years on, Barker's predictions are coming to pass. The rising levels of homelessness and overcrowding are taking their toll, while the lack of sufficient private rented accommodation must be reducing labour mobility. And house prices in the most popular parts of the country remain out of reach to many would-be buyers.

The government's realisation of the seriousness of the predicament underlies its criticism of planning. But the main problem is not planning, it's lack of scheme viability. Indeed, various recent government announcements that were presented as planning measures were actually viability measures. Prominent among these was the ability for developers to renegotiate affordable housing requirements as part of section 106 deals.

In reality, UK housebuilders have never achieved the completion levels envisaged by the Barker review. In previous periods when we have built around 200,000 homes a year, it has been through state investment, either as gap funding or as direct development in the form of council housebuilding. So in an era of austerity, how do we replicate those levels?

One approach is by sharing risk through public-private partnership, as we have pursued in Croydon with our urban regeneration vehicle with John Laing Developments. We have just completed our first housing development and have three more schemes in the immediate pipeline.

Another is to extinguish or at least reduce unrealistic land values. This can be done through targeted compulsory purchase orders to unlock stuck sites or by designating whole areas in the form of new town settlements or town extensions.

The state can also help to cut costs by reducing the uncertainties of consent regimes, particularly those layered on top of the planning process.

And finally, government can encourage new firms in the housing market by reducing barriers to entry and incentivising institutional investment in new housing products, particularly in the private rented sector.

Post-war history would suggest that these types of measures will not get us to where we need to be. That will only happen when state capital investment in affordable housing can really start to flow again. But they would make a difference. And for those households in need of a decent home, they would represent a worthwhile contribution.

Jon Rouse is chief executive at the London Borough of Croydon.


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