Laying the building myth to rest

Here’s a brief summary of a brilliant and detailed article about the housing and development issues facing the Canterbury area. You can read in full here - https://cprekent.org.uk/planning/laying-the-building-myth-to-rest/

Researched and written by CPRE Kent Planner Richard Thompson, it resonates with our own situation here in the Lewes District and elsewhere up and down the country, where government policy and housebuilder attitudes are making homes unaffordable.

Thompson questions the simplistic notion, voiced by government and developers, that building more houses will provide more affordable homes. He argues that the current approach not only fails to deliver much needed affordable housing but also leads to the loss of greenfield land and environmental degradation.

He states that in the Canterbury area, the average cost of a new-build house has almost doubled in the last 10 years, to £317,381. Even with the Government’s flagship ‘Help to Buy: Equity Loan scheme’ only 2% of Canterbury’s renters could afford such prices to become homeowners and at best, across all assistance schemes, only 54% could afford the cheapest rent-to-buy homes. For the remaining 46%, renting, with its own set of problems, is the only option. Thus, the provision of affordable housing is essential.

Canterbury City Council estimates it currently needs 464 affordable new houses a year (for social rent housing, affordable home-ownership and affordable rent homes). As with most local authorities, the council does not build houses but relies on private developers who pledge that 30-35% of homes in any development will comply with the National Planning Policy Framework definition of ‘affordable’. However, in the last ten years, only 12.6% (770 of 6,097) of new homes built in the Canterbury area were affordable homes - way off the 30-35% target.

The reason for this shortfall is that current government policies allow the number of affordable homes to be reduced if a development is not deemed financially viable - i.e. if a developer would make less than 15-20% profit once all set costs are included. One bewildering set cost is an agreed premium of 20-40 times the value of the land! Revision of current policies might result in developers meeting their obligations, and local authorities achieving their affordable housing needs.

Significantly, Thompson notes that though the costs of land and building have changed little over the last 10 years, profits for the four largest house builders more than tripled (though the gap may now have narrowed due to recent increases in building costs).

The developers argue that there are too few permits for housing development; if they were given more, then more affordable homes would be built and, with more housing overall, the cost of market housing would fall. However, there is little evidence to support this and, for the reasons outlined above, no indication that affordable housing needs would be met.

Perversely, the greater the perceived need for housing, the less ability a council has to negotiate. Permits or an identified Local Plan land allocation have been agreed for 12,334 new homes in the Canterbury area. Of these 1,757 are ear-marked as ‘affordable’, more than double the total number of ‘affordable’ homes built in the area in the last 10 years. Despite this, Canterbury has recently failed the government’s Housing Delivery Test, meaning that planning permission is now likely even if it is in conflict with the adopted Local Plan. CPRE Kent has pointed out that this is absurd.

The numbers for Canterbury highlight a further fundamental flaw in government policy - the current standard method that is applied to calculate how many houses a district needs, is linked to housing affordability within that district. In simple terms, that means the bigger the gap between new-build house prices and median earnings in a district, the higher the housing number for that district. The government’s affordability data are released annually. On release of these numbers, housing targets for each council can change overnight. If the gap between house prices and earnings has widened in Sussex (as it was predicted to do in Kent), the consequences would be significant.

Thompson finishes by stating ‘The need to revisit the standard methodology ….. is urgent. The need to rethink how we deliver truly affordable housing in a way that doesn’t sacrifice greenfield land to bolster developer profits is arguably more urgent’.