Setting priorities for a new housing eco-system

England has a shortfall of four million homes and affordability for buyers and renters is at an historic high.

We can stop measuring the housing gap and start to close it. Seventeen Housing Ministers over 20 years have serially failed to avert a crisis, instead setting ever more undeliverable targets – today’s 300,000 is way beyond the industry’s capacity to deliver. Bold targets are not the same as bold policies.

We need radical action both on supply and demand to create a credible housing eco-system. Here are five ideas to provide more houses, faster.

First, enhance housing powers for cities and local authorities. Targets set and owned by the Housing Minister make little sense when planning is mostly local. Central government can nudge and empower national bodes like Homes England, but the best housing ideas I see are locally-driven: in Newcastle and North of Tyne, Birmingham, Leeds, York, and Bristol, for example.

Enhanced powers could include greater borrowing for local authority land assembly, with greater participation and flexibility in land value uplift. Local Authorities that adopt higher housing numbers, rather than just meeting the minimum requirement, should get extra funding.

Greater accountability means local politicians, rather than the Housing Minister taking the credit or the blame for delivery. London should lead from the front providing an annual 60,000 homes, with penalties for the boroughs that don’t deliver.

Second, there should be increased resource and funding for planning departments. Planning fees should be ringfenced and applicant-funded planning resources permitted. Current policy rewards slow phased delivery and we must invert this, especially for Build to Rent schemes. Allowing applicants to pay for a dedicated planning officer could deliver 8 week determination and rapid agreement to provide homes more quickly.

Sites with outline planning permission is granted should have phases approved automatically within 4 weeks of submission. This would enable a much speedier starts and remove committee cycles from the process. We must speed up the s.106 agreement process with draft agreements to be issued with 10 working days of approval.

Over 80% of the UK’s population lives in an urban setting: this requires greater planning flexibility. Permission for change of use should be waived when it is from a non-dwelling to dwelling in order to drive forward new homes in urban hubs.

Greater density should be permitted. Current height restrictions and minimum size requirements in London reduce opportunities, especially for younger people. London has 263 buildings of 20 storeys or more, but Shanghai already has over 6,000 and plans 50,000 more. We don’t need to go that far but it is absurd that every building over 30m has to be referred to the Mayor.

Third, we need more age-appropriate accommodation: currently less than 2% of housing is specifically for older people. This is despite the massive health and social benefits that later living accommodation can provide. Independent living needs new build, and freed-up NHS land can support this. We need a new planning use class, and for later-life housing to become part of local authorities’ specific housing targets with appropriate incentives including through Section 106 and CIL. Thus far, planning has overlooked the requirement that a quarter of homes need to work for older people.

The blockers to rightsizing need to be addressed: a preferential rate of Stamp Duty should apply where people over state pension age move to smaller premises. The Treasury get its return through the transaction chains that are freed-up as a result.

Fourth, policy must genuinely support all tenures. With over 1m people on social housing waiting lists, we must recognise that institutional and affordable housing are institutional asset classes and encourage greater investment into purpose built rental homes, including by removing the additional 3% SDLT multiple dwellings premium. This would increase the affordable housing contribution.

Local Authorities’ financial models only permit institutional debt rather than direct investment. Many Housing Associations are also constrained by debt funding. There should be a clear entry point for institutional investors focused on deploying long-term patient capital, on a commercial basis, to support affordable housing. Local Authorities need to be more creative with land supply, including for time-limited social or affordable housing.

Fifth, massive encouragement of innovation. Our current housebuilding industry is capacity constrained and can’t possibly meet the 300,000 annual target. Precision-engineered modular homes offer a new way of building high quality homes - in volume and faster than traditional construction. Last year’s Budget proposals for modular must be implemented, education around this new technology supported, and clear central or local planning accountability for modular identified.

Homes England can enable development of schemes to fast-track modular delivery and create exemplars, with targets incentivising an efficient demand pipeline so manufacturers can scale.

We can address availability, affordability, and accelerate delivery – providing the homes people aspire to without sacrificing quality. This has to be the time for action.