Planning system 'makes inequality worse and threatens financial stability', says think tank

The planning system needs "radical reform", including the introduction of a "flexible zoning system", a report by a think tank has recommended.

Foyle Street, Sunderland. Average housing equity in the city rose by just £3,000 over five years, the think tank said. Image: Flickr / Reading Tom
Foyle Street, Sunderland. Average housing equity in the city rose by just £3,000 over five years, the think tank said. Image: Flickr / Reading Tom

The Centre for Cities report, Capital Cities, called for changes to the planning system to address the "rationing of new homes in areas of high demand". It said a "flexible zoning system" that "allows most development by rights" should be adopted as in Japan and areas of the United States.

"In principle, once a local plan is in place, the planning system should allow people to build new homes unless the local authority explicitly says ‘no’, rather than forbidding any development until the local authority grants permission," the report said.

Centre for Cities said the current planning system "makes inequality worse and threatens financial stability".

It added: "While demand for housing and mortgage lending are linked to the strength of the local economy, the supply of new homes is not. Our planning system’s rationing of land creates housing shortages in these cities with the strongest economies."

The think tank said low levels of home ownership in the most expensive cities means "the planning system has redirected wealth to a relatively small band of homeowners and landlords in these cities, who tend to be older. Meanwhile, it has penalised renters in these cities, who tend to be younger, in the form of ever-higher rents."

Andrew Carter, chief executive at Centre for Cities, said: "Our planning system is fuelling a North-South wealth divide among homeowners. Restrictive planning policies in many prosperous southern cities are gifting wealth to homeowners in the Greater South East.

"This creates two wealth divides: one between homeowners in the Greater South East and elsewhere in the country, and another between homeowners, who tend to be older, and renters, who tend to be younger, within the Greater South East.

"The best way to address this inequality is to build more homes in the areas that have seen the biggest increases in housing wealth. This means radical reform of our broken planning system and challenging the nimbys whose voices dominate local politics."

Centre for Cities recently called on the government to provide funding to help "remodel struggling city centres" and to provide cities with blanket exemptions from permitted development rights.

Last year, the think tank recommended that national green belt policy should be revised to allow development to take place where "pressure to deliver housing within the belt boundary threatens economic growth".


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