Opinion: Is There Really A Housing Crisis?

Published on: 5 May, 2015
Updated on: 7 May, 2015

Ben Paton, an Ockham resident who has campaigned against proposals to build on Wisley airfield, argues that an uncritical acceptance that there is a ‘housing crisis’ does not stand up to analysis.

By Ben Paton

In some recent comments it is claimed that there is a housing crisis and that high house prices constitute an “exceptional circumstance” which justifies building on the green belt.

But is this really true? Developers have all sorts of tricks of their trade.

The building industry argues that there is a “housing crisis” which justifies building on green fields. This is propaganda designed to gull local politicians into granting planning permission. They should not fall for these tricks.

If the definition of a housing crisis is that there are fewer houses than households then the census statistics show that there is not and has not been such a shortage as this article explains.

It is not objectively true that the high price of houses around London is mainly explained by a shortage of supply of new homes. Other elements are much more important:

Firstly, there is investment demand. Houses are capital goods not a consumable. The stock is huge in relation to annual new supply. International investment demand is therefore a very big determinant of price.

International capital from parts of the world where property rights are relatively insecure by comparison with the UK finds the combination of London and British rule of law extremely attractive. The Great Property Race, a television programme broadcast by the BBC, illustrates this point.

Secondly, there is the cost of borrowing. Governments can borrow ten year money for less than 2% per annum. Borrowing secured on a house carries a commensurately low rate of interest. As interest rates fall the price of capital assets rises.

It is not true that the cost of land is the main determinant of house prices. Green field land can be purchased for prices which are benchmarked off agricultural land values.

To keep the arithmetic simple suppose you acquired an acre for £50,000, at the top of the range, and got permission to build 10 houses the land per house would cost £5,000.

The Caymans company which owns the farmland at the former Wisley airfield paid £7m for it. It has put in outline planning application to build 2,100 dwellings. The cost of the land per dwelling is therefore only £3,333. So it cannot be argued that the cost of this land determines the values of the properties which will be built.

Agricultural land with permission for development is worth at least £1m per acre; an increase of up to a hundred times the £10,000 per acre price for farmland without planning permission. Developers therefore have a colossal incentive to fight with no holds barred for permission to build.

Whilst we may all be armchair experts in parts of the law the council does not have the right to make up its own interpretation of what constitutes ‘exceptional circumstances’ as it goes along. The council should be subject to and accountable for following planning law.

The meaning of the two words “exceptional circumstances” is for the courts to determine. The Court of Appeal has ruled on the meaning in a number of important cases including COPAS & Anr v Royal Borough of Windsor and Maidenhead February, 2001 (Court of Appeal) and Gallagher v Solihull April, 2014 (High Court England & Wales).

On any reading these cases make it clear that high house prices, even a putative housing crisis, do not of themselves constitute “exceptional circumstances”.

It is misleading and unprofessional for GBC to issue a Draft Local Plan which proposes building on the green belt without setting out a housing target or a single exceptional circumstance which satisfies the legal tests.

The social, moral and economic appropriateness of housing policy should be questioned. Although house prices are high if every couple in the UK had two children, not far from the average, and passed on their housing wealth to them, their children would be able to afford the same type of home as their parents – assuming that inheritance tax did not bite.

The shortage of social housing is caused by a political failure not market failure. Guildford Borough Council (GBC) has built no new council houses in the twenty years up to 2014 Cllr Creedy, lead councillor for social housing in the last council, has said so and GBC’s own records show that the number of houses owned by the council has fallen 16% since 1999.

Is there justification for increasing the stock of housing in the borough by 25% over the life of the next local plan? If the public were properly informed and were aware of the consequences of such a building spree on local infrastructure it would vote against it.

Responses to Opinion: Is There Really A Housing Crisis?

L Grant Reply

May 5, 2015 at 3:38 pm

Of course there is a housing crisis, how many families of my generation (I am almost 70) still has a child at home, plus his wife and three children because there is no affordable housing?

My son works hard, has never claimed benefits but earns too much for social housing but not enough to get a mortgage and certainly not enough for private rent.

This has been caused by demand outstripping supply enabling builders, estate agents and private landlords to escalate prices beyond the reach of ordinary families. We need more houses in order to restore sanity and enable families to have homes of their own.
- Dominique Kelly Reply
  
  May 6, 2015 at 12:04 am
  
  What is L Grant’s solution?
  
  Go along with the developers’ massive housing proposals based upon a rigged market? That won’t solve the problem described.
  
  The real problem is that councils have failed to build social housing over the last 20 years, as admitted by the head of housing for Guildford Borough Council.
  
  Lots of executive houses and no truly affordable housing, with delivery based upon on “viability” issues, will not solve it.
  
  The provision of housing need needs to be done in a controlled, strategic way rather than left to developers whim and profit aspirations. Building lots of housing on our precious green belt will not solve the issues L Grant describes.
David Bilbe Reply

May 5, 2015 at 3:50 pm

A crisis in politics is defined as dealing with an issue as it arises rather than on a strategic or planned basis. If this is indeed what we are doing then we need to be very careful about the consequences.

As a candidate in the upcoming elections for my village of Normandy, I have and will continue to advocate that plan and evolution is far better than revolution. That means protecting out green belt and villages and looking at a carefully considered strategy which balances need and appropriate supply.

Numbers have whipsawed everywhere in the past two years and there is no doubt that all of that is driven by developer strategy which by definition will be at odds with a housing demand strategy.

We need to engage with our villages and communities and ensure that what we do decide has the best balanced approach both in terms of meeting need and protecting all that is good about our countryside.

We also need to avoid blanket eye catching statements as laid down by the Guildford Greenbelt Group (GGG). There simply is insufficient available ‘brownfield’ land to accommodate good well positioned housing where people would choose to live.

We have a problem to solve without resorting to crisis tactics. It is all of our backyard, not just that defined by the purist NIMBY element of GGG.

David Bilbe is the Conservative candidate for Normandy in the forthcoming GBC election.
Dominique Kelly Reply

May 5, 2015 at 6:26 pm

In response to Mr Bilbe a crisis is “a time of intense difficulty or danger”, nothing to do with the definition he gave.

Re the housing number, one of 652 houses per annum without windfalls was not whispered but put forward as appropriate by the conservative councillors in the draft local plan. When challenged, the head of planning said we could deliver that number because we had the land available from landlords. The current council and officers were clearly going along with the “developer driven supply number”. I don’t think they can be trusted to change their trajectory.

As there wasn’t a SHMA [Strategic Housing Market Assessment] this number effectively meant nothing in reality but clearly showed the leader’s “trajectory” of rolling back the green belt, something he put in writing. These were not whispers.

Other associations and groups put forward alternative suggestions but were shouted down and 652 was bulldozed through into the draft plan contrary to advice from the Joint Scrutiny Committee.

With regards to, “There simply is insufficient available ‘brownfield’ land to accommodate good well positioned housing where people would choose to live”, can Mr Bilbe please refer me and others to the actual NPPF [National Planning Policy Framework] paragraph which asserts this? Can he please define “good”, and “well positioned”.

We don’t know the housing target so there is absolutely no way Mr Bilbe can conclude that “There simply is insufficient available ‘brownfield’ land,” but it clearly shows Mr Bilbe’s predetermined view that building will have to go on the green belt. For all the promises can we trust this Conservative to protect the green belt?

Apart from not conforming to the NPPF (the Guildford Greenbelt Group (GGG) propose to honour the NPPF as a whole) Mr Bilbe doesn’t seem to be disagreeing with that GGG propose.

With regards to NIMBYISM I would draw Mr Bilbe’s attention to recent statements from Conservative prospective councillors stating they will not support developments in their area. That is NIMBYISM in its purist form. GGG say not in anybody’s backyard as defined by the legal protection afforded to the green belt, ANOB, SSSI, SPA etc.
Stuart Barnes Reply

May 6, 2015 at 7:49 am

Stop all immigration, remove the illegals already here, deport the foreign criminals, get out of the corrupt and hated EU – job done. No more housing crisis.
- Ray White Reply
  
  May 9, 2015 at 8:45 pm
  
  I agree with Stuart Barnes’ comments. British membership of the EU and uncontrolled immigration is the elephant in the room. It’s not so much a housing crisis that we have as a population crisis. All these people coming here have to live somewhere don’t they?
  
  The newcomers tend to have more children than average so the problems will only get worse unless we build more homes to accommodate the families of the future. Why put the cart before the horse. The solution is population control not uncontrolled development in the green belt or anywhere else.
John Robson Reply

May 6, 2015 at 9:46 am

There is a housing crisis… in London. Dave, George and Boris’s city chums need to unlock the equity and move to the stockbroker belt. They don’t want brownfield they want a nice view of Surrey’s rolling hills.

The Lib Dem/Con’s will only build 68 council houses between 2012 and 2015, but manage to find £5 million for vanity projects at Millmead and Stoke park. This tells you where their priorities lie.

If you’re happy to be encircled by Milton Keynes, vote them back in.
Tony Edwards Reply

May 6, 2015 at 11:24 am

The unsavoury truth about the “emerging” Draft Local Plan is that it has been developer-led.

The notion of a ‘settlement’ of 2,100 houses on a green belt site at ‘Three Farms Meadows’, the former Wisley airfield, was presented to Guildford Borough Council by Wisley Property Investments and then welcomed in to the Draft Local Plan, lock, stock and barrel, by council executives.

It has since become a formal planning application from Wisley Property Investments – confirming its commercial origins.

But, at no point, has Guildford Borough Council identified or specified housing requirements. This is all about commercialism and nothing to do with any so-called housing crisis.