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Better Planning: Housing affordability

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Better Planning for Housing Affordability position paper (February 2017)

This position paper sets out how in England in particular we have adopted the wrong approach to improving housing affordability, based on an incorrect diagnosis of what the problem is – and sets out a better approach.

There are many reasons why we are not delivering enough houses. Under successive governments in England, pursuing "planning reform" as the silver bullet solution to housing affordability (on the basis that planning is the primary problem) has overlooked the range of other factors involved, and therefore the full range of solutions that can be brought to bear on the problem. In particular, this approach has ignored the positive role that planning can play as a part of the solution.

This paper sets out the basis for a better approach to housing affordability, based on:

  • an acknowledgement of the multifaceted nature of the problems in housing, which successive governments' policies have often neglected;
  • a recognition of the positive role that planning can play in delivering better housing affordability; and
  • a call to rethink how we develop policy, in ways which are less theoretical and more grounded in practice, based on what actually works locally.

The paper can be downloaded using the link below.

Better Planning for Housing Affordability position paper (February 2017)

Further research work under this programme is outlined below.

The Deliverability and Affordability of Housing in the South West of England

RTPI South West has commissioned research into the delivery and affordability of housing in the region. The research aims to expand knowledge and understanding of how planning practice can deliver affordable housing, through an examination and comparison of recent large-scale housing developments.

The research includes an analysis of a range of data sources to track affordability and housing supply in the South West, in comparison with other parts of England and the country as a whole, and an investigation of six case studies of large-scale developments in the region. Heriot Watt University and Three Dragons are conducting this work.

Local Authority Direct Provision of Housing

This research project will identify the practical ways in which local authorities in England are engaging in the direct provision of housing in their areas.

The purpose of the research is to identify ways that more housing is being provided by the public sector at a time of significant pressures on local authority budgets, using a variety of innovative methods that have been developed by local authorities seeking to maximise their resources while meeting social and economic need.

Professor Janice Morphet and Dr Ben Clifford at The Bartlett School of Planning, University College London, are leading this project, commissioned by the National Planning Forum and the RTPI.

Planning Permission and Development Finance

The primary aim of this research is to investigate whether it is possible to reduce uncertainty through the plan-making process by allowing local planning authorities to grant planning permission on land when drawing up local plans (thus eliminating the need for developers to apply for permission). If so, what would the implications of this be for land owners, land values, developer behaviour and profit margins, LPAs, and house prices?

This work is being conducted by a joint team led by Dr Claudio de Magalhães, The Bartlett School of Planning, University College London, and Professor Christine Whitehead, London School of Economics.

This research is supported through the RTPI's Small Project Impact Research (SPIRe) scheme, which is aimed at RTPI accredited planning schools (planning schools are welcome to collaborate with other research organisations, but the proposal must include an accredited planning school).

Collaborative Centre for Housing Evidence

The RTPI is also a partner in a new national research centre set up to inform housing policy in the UK. To be launched in summer 2017, the Collaborative Centre for Housing Evidence (CaCHE) brings together the expertise of nine UK universities, the National Institute of Economic and Social Research, the RTPI, the Chartered Institute of Housing and the Royal Institution of Chartered Surveyors.

The centre will be independent of government and aim to provide robust evidence to inform housing policy and practice across the UK, and aim to tackle housing problems at a national, devolved, regional, and local level.

The five-year project will launch on 1st August and will receive £6 million of funding from the Economic and Social Research Centre, the Joseph Rowntree Foundation and the Arts and Humanities Research Centre.

Led by Glasgow University, the centre will have staff located at five hubs across the UK in Glasgow, Sheffield, London, Cardiff and Belfast.

The work of the centre will focus on six overlapping themes: housing and the economy; understanding housing markets: demand and need, supply and delivery; housing aspirations, choices and outcomes; housing, poverty, health, education and employment; housing and neighbourhood design, sustainability and place-making; and multi-level governance.

Crook Public Service Fellowship

As part of the Better Planning programme the RTPI is involved in the Public Service Fellowship project at the University of Sheffield. The Crook Public Service Fellowships at the University of Sheffield provide the opportunity for future leaders in public and not-for-profit sectors to take short periods away from their day job and immerse themselves in a collaborative project with academic colleagues on a pressing policy issue or challenge.

Working closely with academics in a partnership that offers mutual learning and encourages original thinking, combining the latest academic research with practical experience, in order to influence their sector and potentially the wider society.

In 2016, the focus of the Crook Public Service Fellowships is on 'The Housing Challenge' with the opportunity to engage with the University's Department of Urban Studies and Planning, the Urban Institute at Sheffield and other expertise across campus. The project the RTPI is working on is explained below.

The Use of Alternative Land Value Capture Mechanisms to Deliver Housing in England and Wales

Investigators: Joe Kilroy, RTPI; Craig Watkins, USP; Sarah Payne, USP; Richard Dunning, Liverpool; Tony Crook, USP

Abstract

There is a long standing argument that the inability to fund local infrastructure is a major constraint on housing supply. The approach currently used in the UK has come in for sustained criticism in recent years (Peel, 2017). In this context, this project sets out to consider alternative approaches. It starts with an extensive review of the mechanisms used in different international contexts. This international evidence review is used to identify mechanisms that might be effective in the UK and has been used to inform our applied study. The applied research seeks to systematically explore the strengths and weaknesses, potential and pitfalls of these mechanisms. The empirical part of the project uses scenarios, based on hypothetical sites, as a means of testing different stakeholders perspectives on the likely impact of four different LVC mechanisms. The mechanisms tested include the current S106/CIL regime from the UK, a simple tariff mechanism, and two variants on the North American Impact Fee approach, one based on a payment schedule and the other negotiated at site level. The mechanisms are considered in the context of both brownfield and greenfield sites and the interviews seek to take account of variations across market conditions and economic cycles. The interviewees include Planners, Planning consultants, lawyers, valuers and land agents. The initial participants are all prominent in regional and national debates and have been selected on a reputational basis with further interviewees added using a snowballing approach. The interviews reveal that different mechanisms may alter the distributional impacts of LVC, changing the scale of the impact and shifting the burden between landowners, developers and consumers. It is clear that the effectiveness of LVC mechanisms is also dependent on other institutional arrangements, including the nature of the planning system, the tax system and the structure of the development industry.

About our Better Planning programme of work on housing affordability

The Better Planning programme will provide practical advice and intelligence to RTPI members and others, in ways which demonstrate how planning is part of the solution to major social, economic and environmental challenges.

Housing costs of all types and tenures are rising across the UK, as part of a phenomenon frequently referred to as 'the housing crisis'. The high cost of housing is not confined to house prices; whatever type of accommodation people live in they are spending a disproportionate amount of their income on it. This trend is illustrated by the consistent rise of the housing cost to income ratio over the last 20 years, and today more than three million households in the UK spend more than a third of their income on housing costs.

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The situation is often explained with reference to a lack of housing supply, but there is in fact a multitude of other factors involved too: a dysfunctional land market; demand stimulating policy measures; intergenerational inequity; lack of development finance; skills shortages in the construction sector; the location of development; the tax system; housing being treated as a short term issue due to political cycles; and the financialisation of housing particularly in London and the South East.

Although the issue of housing affordability is clearly complex, policy making in recent years has sought to simplify the issue by sweeping away planning regulations as a means to increasing supply and making housing more affordable. Altering planning policy may have an impact on housing costs, but it is important to bear in mind that the impact is unclear and that deregulation is just one of a range of options available to policy makers.

This work stream will consider how proactive planning can deliver housing affordability. It is important to make this argument not only because it is largely absent in the debates around housing and affordability, but also because according to the figures the current approach is failing. Alternative proposals to deregulation have been quite muted until now, and this presents an opportunity for the RTPI to offer a more progressive, solution orientated position.

This project will use a broad definition of affordability which encompasses not only house prices but also transport accessibility, local economic opportunities, and access to public services. Essentially all of the things that good planning delivers alongside housing.

If you would like to know more contact: tom.kenny@rtpi.org.uk