So, we now have a new Prime Minister – the first one ever to sit on a planning committee. Maybe she shares our pain too? Is this experience good or bad news for the residential development sector?
Free Markets
It’s worth stopping for a moment to consider what a free marketeer is? What is the political philosophy that will underpin the Truss Government’s policy formation and decisions? The free market was an economic idea espoused by Adam Smith in 1776 which determines that markets work best when governments leave them alone and allow the laws of self-interest, competition and supply and demand to prevail. Looking at the prospects for the sector through the prism of supply and demand let’s consider what Truss and her supporters have been saying recently.
Supply
The standout comment from her leadership campaign was in relation to her wanting to abolish “Stalinist” housing targets issued from Whitehall. Looking at the House of Commons library briefing (click here) upon first impressions is it does indeed look like a top-down edict, especially if one cares to review the spreadsheet “housing need for figures for local authorities”. However, these figures are simply based on a new method for calculating housing need and this is intended to push more development into the urban areas. However, by giving LA’s more control over these housing targets Truss is effectively giving wannabee councils a NIMBY’s charter. The result is that we should expect less development to be allowed in the greenfield Tory shires and more in pro-development authorities.
One interesting idea is relation to brownfield sites where it has been muted that it would be quicker and easier to obtain planning permission in those type of locations. Indeed, the concept of brownfield sites being “full-fat freeports” with tax incentives for development has been floated by her supporters. Will greenfield land be taxed more and developers of brownfield land be rewarded for the extra effort? It would make sense for the industry to have its own financial self-interest reorientated towards more brownfield development and make more of the brownfield opportunities available on each LA’s registers (click here). In this context if planning red tape and regulation can be cut all the better. This will spur supply.
Demand
Truss has also made the point that younger people are struggling to get on to the property ladder. She has talked about delivering more affordable homes on brownfield sites. She is a believer in home ownership and would therefore be a natural advocate for shared or discounted home ownership where outright ownership is not possible. You can see the dots being joined up with the supply ideas.
She has also pointed out that 50% of renters can afford a mortgage but due to the mortgage rules only 8% ever get a mortgage – so homeownership is being held back. Easing the availability of credit will unleash further demand from first time buyers thus creating the property-owning democracy craved by the right.
New Opportunities
Politically, Truss needs to curb what locals perceive as ‘over-development’ in their constituencies – hence the abolition of ‘Stalinist’ targets – a nod to the real politics of the 2021 Chesham and Amersham by-election result. Meanwhile she wants the free market to create homes for the young to own – thus enlarging the natural conservative constituency (as Thatcher did with the right to buy council houses)
Whatever new policy decisions are made it is clear the housebuilding industry and the housing association sector will need to re-orientate yet again to take advantage of the new opportunities – once the 10th incumbent in the last 15 years is appointed to the position of Secretary of State for Levelling Up, Housing and Communities.
Comments above by
Karl Timberlake
Director – V10 Homes
