Housebuilding targets: Britain becomes a NIMBYocracy
6 December 2022
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25 June 2024
Mandatory housebuilding targets are going to be scrapped.
This represents the final victory of NIMBYism in Britain. Thus far, housebuilding targets have been one of the very few tools to hold the worst excesses of NIMBYism in check. Their abolition marks the passage from a de facto NIMBYocracy to an official NIMBYocracy. Thus far, governments have felt obliged to at least pretend to care about Britain’s housing crisis. With this latest measure, the last vestiges of that pretence are gone.
How did we get here?
The problems of the British housing market have been known for quite some time. Already in 1988, when housing was still a relatively low-profile issue, the Institute of Economic Affairs published the book No Room! No Room! The Costs of the British Town and Country Planning System by Prof Alan Evans, who argued:
“[T]here are […] significant economic costs associated with the planning system. It has significantly increased land and housing prices […] and distorted the economic structure, all of which have led to the British standard of living being lower than it otherwise would be. […]
The aggregate reduction is […] probably of the order of 10 per cent or more of national income” (p. 50).
Fourteen years later, when the house price explosion was in full swing, the IEA published another book on the subject, Liberating the Land by Prof Mark Pennington. He argued:
“[T]he local amenity lobby […] are keen to prevent any development from taking place ‘in their backyard’ and have been particularly successful in stopping new housing developments in high demand areas such as South-East England. Evidence from the local planning process suggests that over 60 per cent of the changes brought about by the process of public participation result in a reduction in the amount of development proposed […]
The principal effect of such restrictions has been the inexorable rise in the price of housing land and hence house prices brought about by the increased scarcity of supply. While there is continuing academic debate as to the precise magnitude of the price rises that may be attributed to such nimbyist action, that prices have risen as a consequence is in little doubt” (pp. 62-63).
These were think tank publications, which most policymakers and opinion formers would not have been aware of. However, in 2003, the Blair government commissioned a landmark study into the British housing market, led by Bank of England economist Kate Barker.
The Barker Review opened with the following observation:
“The UK housing market is unusual, in that over the past 30 years there has been a long-term upward trend in real house prices of around 2½ per cent per annum […] By contrast, […] the increases in many other European countries, such as France and Germany, have been much lower” (pp. 16-17).
She found that housing supply in the UK had become completely unresponsive to price signals, and that if the UK wanted to limit future house price growth to the European average, annual housebuilding numbers would have to almost double (pp.: 58-60).
Barker warned that “in the absence of structural changes […], national home ownership rates will reach only 71.7 per cent by 2016. Unless there is a structural change in supply, most higher demand will be squeezed out by higher house prices” (pp: 23-24).
The actual home ownership rate in 2016 was 62%, so if anything, the Barker Review was too cautious in its warnings, and too temperate in its choice of words.
On the causes of the housing shortage, Barker said:
“The relationship between supply and affordability is not always recognised in debate: the lack of market affordable housing is bemoaned, while, at the same time, new housing developments are fiercely opposed. […] [T]his issue has the characteristics of an insider-outsider problem, where those inside the housing market have more power over any decisions than those outside and their decisions naturally reflect their own interests rather than those of the wider community” (pp: 14-15).
And elsewhere:
“[L]and supply is the key constraint to increasing housing supply […]
In some areas not enough land is allocated for development and/or the rate of land release is not responsive to market conditions and rising house prices. Housebuilding is often politically contentious and […] the incentives facing decision makers do not reflect those costs and benefits. Local costs of development can be high and those already housed have a much stronger voice than those in need of housing” (p. 25).
The Barker Review marked the end of any plausible deniability. It took away ignorance as an excuse. Since its publication, it is entirely fair to say that any policymaker or opinion former who wants to know the basic facts about Britain’s housing crisis and its causes does know.
The political reception of the Barker Review set an unfortunate precedent, in that it was widely praised, but then not followed up on with any meaningful political action.
Since then, this has become a bit of a political tradition in Britain, observed by Labour governments, Tory governments and coalition governments alike.
Nick Boles, the Minister for Housing and Planning from 2012 to 2014, started with the correct diagnosis of the problem, and the right ambitions to solve it:
“[I]n Germany real house prices have remained constant since 2000. And in the Netherlands, […] real house prices rose by a little bit more than a fifth in the same decade.
So why did they nearly double in the UK? The answer is simple. We’ve built too few houses […]
We have to accept that we are going to have to build on previously undeveloped land. […]
[S]ome [councils] are dragging their feet. And a few are looking for ways to evade their responsibilities”.
This was a very clear-sighted analysis, which explicitly addressed, and rebutted, the usual excuses from the anti-development lobby: imaginary empty homes, imaginary brownfield sites, the myth of “landbanking”, the idea that it is all just due to immigration, and so on.
But then nothing happened.
Similarly, Sajid Javid, Housing Secretary 2016-2018, also started with the correct diagnosis and the right intentions:
“The housing market in this country is broken, and the cause is very simple: for too long, we haven’t built enough homes. […] This isn’t because there’s no space, or because the country is “full”. Only around 11 per cent of land in England has been built on. The problem is […] not enough local authorities planning for the homes they need”.
But then nothing happened.
Robert Jenrick, Housing Secretary from 2019 to 2021, was another reformer who started with the right diagnosis and the right intentions:
“[The planning system] simply does not lead to enough homes being built, especially in those places where the need for new homes is the highest. […] The result of long-term and persisting undersupply is that housing is becoming increasingly expensive […]
In Italy, Germany and the Netherlands, you can get twice as much housing space for your money compared to the UK”.
But again – nothing happened.
I suppose the good news is that this cycle of grand ambitions, followed by capitulation to NIMBY interests and disappointment, has finally been broken.
The bad news is that it has ended, because the government decided that they can no longer be bothered to even try.
This represents the final victory of NIMBYism in Britain. Thus far, housebuilding targets have been one of the very few tools to hold the worst excesses of NIMBYism in check. Their abolition marks the passage from a de facto NIMBYocracy to an official NIMBYocracy. Thus far, governments have felt obliged to at least pretend to care about Britain’s housing crisis. With this latest measure, the last vestiges of that pretence are gone.
How did we get here?
The problems of the British housing market have been known for quite some time. Already in 1988, when housing was still a relatively low-profile issue, the Institute of Economic Affairs published the book No Room! No Room! The Costs of the British Town and Country Planning System by Prof Alan Evans, who argued:
“[T]here are […] significant economic costs associated with the planning system. It has significantly increased land and housing prices […] and distorted the economic structure, all of which have led to the British standard of living being lower than it otherwise would be. […]
The aggregate reduction is […] probably of the order of 10 per cent or more of national income” (p. 50).
Fourteen years later, when the house price explosion was in full swing, the IEA published another book on the subject, Liberating the Land by Prof Mark Pennington. He argued:
“[T]he local amenity lobby […] are keen to prevent any development from taking place ‘in their backyard’ and have been particularly successful in stopping new housing developments in high demand areas such as South-East England. Evidence from the local planning process suggests that over 60 per cent of the changes brought about by the process of public participation result in a reduction in the amount of development proposed […]
The principal effect of such restrictions has been the inexorable rise in the price of housing land and hence house prices brought about by the increased scarcity of supply. While there is continuing academic debate as to the precise magnitude of the price rises that may be attributed to such nimbyist action, that prices have risen as a consequence is in little doubt” (pp. 62-63).
These were think tank publications, which most policymakers and opinion formers would not have been aware of. However, in 2003, the Blair government commissioned a landmark study into the British housing market, led by Bank of England economist Kate Barker.
The Barker Review opened with the following observation:
“The UK housing market is unusual, in that over the past 30 years there has been a long-term upward trend in real house prices of around 2½ per cent per annum […] By contrast, […] the increases in many other European countries, such as France and Germany, have been much lower” (pp. 16-17).
She found that housing supply in the UK had become completely unresponsive to price signals, and that if the UK wanted to limit future house price growth to the European average, annual housebuilding numbers would have to almost double (pp.: 58-60).
Barker warned that “in the absence of structural changes […], national home ownership rates will reach only 71.7 per cent by 2016. Unless there is a structural change in supply, most higher demand will be squeezed out by higher house prices” (pp: 23-24).
The actual home ownership rate in 2016 was 62%, so if anything, the Barker Review was too cautious in its warnings, and too temperate in its choice of words.
On the causes of the housing shortage, Barker said:
“The relationship between supply and affordability is not always recognised in debate: the lack of market affordable housing is bemoaned, while, at the same time, new housing developments are fiercely opposed. […] [T]his issue has the characteristics of an insider-outsider problem, where those inside the housing market have more power over any decisions than those outside and their decisions naturally reflect their own interests rather than those of the wider community” (pp: 14-15).
And elsewhere:
“[L]and supply is the key constraint to increasing housing supply […]
In some areas not enough land is allocated for development and/or the rate of land release is not responsive to market conditions and rising house prices. Housebuilding is often politically contentious and […] the incentives facing decision makers do not reflect those costs and benefits. Local costs of development can be high and those already housed have a much stronger voice than those in need of housing” (p. 25).
The Barker Review marked the end of any plausible deniability. It took away ignorance as an excuse. Since its publication, it is entirely fair to say that any policymaker or opinion former who wants to know the basic facts about Britain’s housing crisis and its causes does know.
The political reception of the Barker Review set an unfortunate precedent, in that it was widely praised, but then not followed up on with any meaningful political action.
Since then, this has become a bit of a political tradition in Britain, observed by Labour governments, Tory governments and coalition governments alike.
Nick Boles, the Minister for Housing and Planning from 2012 to 2014, started with the correct diagnosis of the problem, and the right ambitions to solve it:
“[I]n Germany real house prices have remained constant since 2000. And in the Netherlands, […] real house prices rose by a little bit more than a fifth in the same decade.
So why did they nearly double in the UK? The answer is simple. We’ve built too few houses […]
We have to accept that we are going to have to build on previously undeveloped land. […]
[S]ome [councils] are dragging their feet. And a few are looking for ways to evade their responsibilities”.
This was a very clear-sighted analysis, which explicitly addressed, and rebutted, the usual excuses from the anti-development lobby: imaginary empty homes, imaginary brownfield sites, the myth of “landbanking”, the idea that it is all just due to immigration, and so on.
But then nothing happened.
Similarly, Sajid Javid, Housing Secretary 2016-2018, also started with the correct diagnosis and the right intentions:
“The housing market in this country is broken, and the cause is very simple: for too long, we haven’t built enough homes. […] This isn’t because there’s no space, or because the country is “full”. Only around 11 per cent of land in England has been built on. The problem is […] not enough local authorities planning for the homes they need”.
But then nothing happened.
Robert Jenrick, Housing Secretary from 2019 to 2021, was another reformer who started with the right diagnosis and the right intentions:
“[The planning system] simply does not lead to enough homes being built, especially in those places where the need for new homes is the highest. […] The result of long-term and persisting undersupply is that housing is becoming increasingly expensive […]
In Italy, Germany and the Netherlands, you can get twice as much housing space for your money compared to the UK”.
But again – nothing happened.
I suppose the good news is that this cycle of grand ambitions, followed by capitulation to NIMBY interests and disappointment, has finally been broken.
The bad news is that it has ended, because the government decided that they can no longer be bothered to even try.
14 thoughts on “Housebuilding targets: Britain becomes a NIMBYocracy”
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Nothing to do with adding over 10 million (that we know about) to the population in just a few short years and people arriving in their thousands annually?
It is of course correct that house prices have risen due to an imbalance between demand and supply. This has been exacerbated by a significantly increasing population. It is incorrect to state that it is a myth that immigration has nothing to do with it. The most recent statistics are unequivocal that at least 80% of population increase is due to immigration.
People who are opposed to housebuilding are mostly also opposed to the mass migration which government seems to be keen on. I suggest that unless or until there is a brake on migration any government is going to find it hard to build more houses without very significant opposition.
It is another situation where the people’s representatives want to do something which people don’t want. Small wonder that ‘populism’ is thriving.
The British public want less immigration (acc to YouGov last week well over 50% thought immigration over the last 10 years had been too high). Why on earth would they support more house building to accommodate newcomers?
It is far too superficial to declare that NIMBYism is solely to blame. I have seen far too many ‘Bad’ planning applications approved that fly in the face of local Planning Policy because housing targets have to be met. Developers would not encounter fierce local opposition if they stopped chasing the last penny of profit and responsibly proposed more modest and attractive projects. Put more bluntly, too many Developers know how to restrict housing supply to create favourable conditions for approval of their ‘Bad’ schemes.
A core problem is that the major house builders and the local government planning offices have done such a terrible job since 1945 that nobody trusts them to build well and build sensibly. The town centres that have thrived are, by and large, the ones that avoided being subjected to extensive planning-led development post 1945. Likewise, houses built since 1945 are largely soulless and unloved while pre-1945 housing has moved steadily higher up the pecking order. Similarly, in the countryside people want to live in the villages that have not been subjected to terribly thought-through and badly implemented housing estates – and the value of those properties has therefore skyrocketed, simply because they have avoided the blight caused by modern bad housebuilding. The one-dimensional analysis in this article, which simply resorts to insults and has no feel for the subtleties and specifics of the problem, will not help.
Yes, but the real objections are to inappropriate development, not development per se. Where I live, in East Sussex, the need for housing is one/two/three bed starter homes, so that local workers can afford them. Instead, what gets built are four and five bed ‘executive estates’, houses priced upwards from £750000, because that’s where the profit margin is best (and the majority of those who buy them are not local and do not work locally). And when permission is granted, since the ‘use it or lose it’ element is wishy-washy, houses are only built and released into the market at a rate which keeps the prices where the developers want them. In the Wealden District, there are currently over 8000 permissions granted where building is delayed and delayed, while all the while rafts of new applications are being put in. Simply abusing people who understand the system and why it doesn’t work as NIMBYs is a gross simplification and frankly unpleasant. And there are two conflicting ‘rights’ here: those who want to buy a new house, and those who chose a rural lifestyle and do not want it suburbanised. I’m grateful I don’t have to make that decision. But, please, understand that there is a difference between objecting to all development and objecting to inappropriate development. We all want to see the right houses at the right price in the right places – and many of us have looked at the current standard method system and concluded that it does not work.
Excellent post. Great Britain is truely doomed. There is a boffin out there who observed that lack of housing permits upwards and outwards leads to socialist but I can’t recall the name.
In my Borough ( a unitary authority in the South East), the government-imposed target requires the council to identify housing sites for 800 dwellings per year for 5 years ahead (a rolling 5 years).
The actual number built over the last 5 years has averaged 1300 per year, as once the council publishes its plan, developers can apply for planning permission on any of the sites identified for the next 5 years. This then eats into the 5-year supply and so the council then has, every year, to replan to identify sites for 800 more houses per year for each of the next 5 years. This makes it easy for developers to ‘game’ the system (by building more than 800 houses per year) and then making speculative planning applications. If refused, they then appeal to the government planning inspector to overrule the local planning authorities because they then no longer have an identified 5-year land supply for 800 houses per year ahead. This means that the centrally-imposed targets are simply used as a lever to build much greater numbers of houses.
It’s a complete nightmare, as practically all the countryside around my town is now subject to speculative planning applications. If granted, they would completely close the gaps between the town and other local towns and villages, producing one big urban sprawl with totally inadequate infrastructure. The population of the town has already risen by 30% in the last 10 years. It’s not NIMBYism to say that this cannot continue without ruining the quality of life of residents.
Attacks on ‘NIMBYs’ are invariably the way that the Housebuilding lobby seeks to discredit its opponents and distract attention from the facts about housing in this country.
In reality, the UK is already building houses in huge numbers: the ONS figures show that more than 4 million homes were built in the UK during the first two decades of this century, an average of more than 200,000 per year.
Demand for housing has been artificially created through:
• Second home ownership which accounts for 3% of the market (about 772,000 households);
• The emergence of ‘buy-to-let’ as the best way of investing spare cash: during 2001-2014, nearly 3 million new homes were built, but the proportion that were private rented grew from 16% to 30%. The proportion that were owner occupied fell from 69% to 63%;
• Fiscal and monetary policies which make property investment more lucrative than investment in other forms of production, especially the inflationary pressures of quantitative easing and consequent assets bubble;
• The expansion of higher education (how many new homes in most cities are student accommodation?).
As Ian Mulheirn of the LSE demonstrated a couple of years ago, house price inflation is not a result of under-supply: from 1996 to 2019, the number of new homes built consistently outstripped the creation of new households. He calculated that there was actually a housing surplus.
London property has become the investment of choice for the global rich, making the poorest citizens of the Capital poorer and encouraging internal migration of the lower middle classes out beyond the M25. That is hugely damaging to London’s social fabric, as well as contributing to house price inflation.
And the problem of housing affordability is not a national one: any internet search will identify dozens of homes on the market for less than £100,000. The problem is that we have failed to shift economic activity away from the places in which it is currently concentrated and back to places like Redcar, Rotherham and Rochdale. We could do much more to make it attractive to create decent jobs in the North and other areas that have de-industrialised, where housing is within the reach of people on average salaries.
And whilst house prices and big shed prices increase, we have an over-supply of office and retail space in many urban areas; converting that space to housing could increase supply without consuming more of the green belt.
So we should be celebrating the scrapping of housing targets as a victory for democracy and real conservatism, but also as the end of the wrong policy solution to a problem that has been entirely (and wilfully?) misunderstood and misrepresented.
Re: Jim White
“Put more bluntly, too many Developers know how to restrict housing supply to create favourable conditions for approval of their ‘Bad’ schemes.”
This could explain why car manufacturers restrict the supply of vehicles to facilitate sales their ‘bad’ cars – or, perhaps, the (admittedly generally shabby) quality of residential developments is a consequence of the regulatory regime and the stiffling of competition via ‘excess’ supply?
The lack of affordable housing across high demand/price areas as well as obsolescent poor quality housing is the key problem/policy issue.
Nimbyism is one cause along with public policies that have undertaxed land and housing (think of regressive council tax and the treatment of speculative planning gain and of housing capital gains generally) during the period of reducing and then low interest rates post-1995 that meant that rising housing monetary demand was crystallised in rapidly rising real prices across much of the south and east.
Political and policy focus should be on enabling appropriate locally affordable housing for local people acting to dampen land prices directly.
Increased public investment on affordable housing could be partly financed from higher stamp duty on high value properties especially when purchased for investment purposes and capital gains and other taxes on buy to rent.
I would be interested to know what you make of Ian Mulheirn’s findings. He lays out and provides analysis to support a position that whilst there’s definitely a problem with the affordability of housing, there is not a physical shortage of housing, and even if very ambitious building targets are hit, the effect on price would not be enough to mitigate the affordability issue sufficiently. I hope I summarise him accurately.
https://medium.com/@ian.mulheirn/part-1-is-there-really-a-housing-shortage-89fdc6bac4d2
I understand now why most authors ignore the comments. I expected better from the iea comment section, but apparently not.
I’ll respond to the most idiotic points in order from dumbest to not so dumb:
– Yes, I know some of you have an axe to grind against elites forcing immigration on you, but you are missing the point. Yes, population growth is outpacing supply, so the obvious solution is to increase supply, not ban foreigners. Don’t get me wrong, there’s an honest conversation that needs to be had about immigration, and a strong argument that immigration (in the case of low-skilled immigrants) mostly favours the immigrant and not the rest of the population, but that is not that important when we are talking about housing. For better or for worse, low-skilled immigrants from Pakistan can’t afford London’s rent.
– Just because new housing ‘ruins the vibe’ of where you live is not a good reason for vetoing housing being built at every opportunity. I don’t like people who leave their dog shit in local parks, but I would never vote to stop non-locals using those parks because that would be extremely selfish and benefit only a few at the expense of the thousands of other people who may want to use the park at some point.
– Housing developers want to restrict the supply of housing the same way adidas want to restrict the supply of Yeezy’s trainers: they might have thought about it, but then realised they could make a lot more money at scale by increasing supply. Would you rather make 20k profit off seven houses? Or 70k profit on one hose? Do the math.
– Housing speculation, buy-to-let, and second home ownership are only prevalent because NIMBYism provides incentives for it. If you allowed developers more freedom to build where they want and put less restrictions on what they could build, yes BlackRock and JPMorgan may still buy a shitload of those properties, but you would still get lower prices because the law of supply and demand still applies. Moreover, people only buy these properties because the potential profits to be made from housing in this country are enormous. Just look at the dramatic increases in housing equity in places where supply has been most restricted over the last decade https://www.centreforcities.org/publication/capital-cities/. Increase supply, and the incentives change.
– Those referencing Ian Mulheirn are unfortunately putting their faith in someone who is either knowingly lying or is just so poor at quantitative analysis that he has fooled himself- but at least you NIMBYs are trying to find evidence-based arguments so props to you.
As John Muelbauer already pointed out, Mulheirn’s work highly non-robust. His findings rest on counts of homes and households that are misleading, as composition changes in both are large, and the number of households is endogenous. Much better, at the aggregate UK level, is to use the ONS residential capital stock for the supply side, which includes conversions and improvements, and to use population and include some measures of the age structure on the demand side (and of course, a bunch of other variables such as real income per head, nominal interest rates, credit conditions etc).
His second point is just an assertion that supply hasn’t constrained household formation. But this is irrelevant, as it would be better if it acknowledged that household formation is endogenous and replaces it by population and age structure which are far less endogenous. John Muelbauer’s 2018 paper (https://ideas.repec.org/p/oxf/wpaper/855.html) does just this, and his findings suggest that since 1980 around 2/3 of the rise in real house prices is due to income and population growth outpacing growth in the stock of housing.
Mulheirn is popular because he has political clout, and he has political clout because he is saying things that those currently power quite like. Ignore him if you can.
Congratulations – the most commonsense uttered on this subject, quite possibly ever. Maybe a small part of the solution is to take planning issues (beyond the small issues of extensions or not) out of the hands of councils (the problem here being councillors too subject to their NIMBY voters) and into the hands of a body like the old Health Authorities which used to exist.