The Joseph Rowntree Foundation set up its Land Inquiry to raise the profile of debate on questions of land supply for housing in England.

While the report – published in March – contains information which is likely to be new to many readers and is informed by current research, it is not primarily a research document. Rather it aims to address the tensions inherent in current policy and suggest positive and proactive ways forward.

This background paper provides a summary of the findings of the Inquiry members.

The main issues
A broader debate on housing land supply is urgently required because of a number of serious problems:

• The difficulty of recruiting staff for essential services in cities because homes are unaffordable.
• Inadequate provision of housing land in key locations to allow macro-economic needs to be met.
• Concentration of economic expansion in the South inflating house prices beyond the reach of local populations.
• The failure of the planning system seriously to address strategic spatial planning issues, such as polycentric urban development.
• The decline in housebuilding in the face of the continued growth in the numbers of households and in housing aspirations – output in 2000 was the lowest since 1924.
• High cost housing and enforced commuting involving unacceptable personal and social consequences for families.

This inquiry follows the publication over the last two years of a series of government or officially commissioned reports. The starting point for the Inquiry was a consideration of the key assumptions in these reports, the context they create and the consequences and implications of the recommendations they contain. The reports contain valuable analysis and important proposals, but the Inquiry considers that the policies which have emerged for meeting housing supply needs over the next 20 years seriously understate future demand and further narrow land supply options.

The focus of current policy is short term; it does not address the endemic problems making shortage of housing land a recurring and increasing problem over the last few decades. A wider debate is required; first, to consider how to provide sufficient homes, in the right location and at an affordable price; second, to address the root causes of land shortage for housing and how they can be addressed.

The next 20 years
We are concerned that in a number of critical areas, the emerging policy framework is based on unrealistic assumptions. We question whether it will in practice deliver the necessary supply of houses to meet the UK’s economic and social requirements over the next twenty years.

The assumptions most open to question are:

• the level and nature of demand – numbers, location and affordability.
• the lack of appropriate mechanisms to address the impact of higher land costs.
• the capacity of the chosen options to meet housing demand in the timescale required. This relates particularly to the narrow focus of the current debate on brownfield versus greenfield development and also the lack of an appropriate system for wider territorial management.
• The capacity of land use planning institutions to respond rapidly enough to the strategic requirements – including land supply – associated with globalisation and economic transformation.

Numbers. We believe that the demand for additional housing over the next two decades has been seriously underestimated. The grounds for our belief are the existing shortage of housing in key areas in the South and the level of immigration – again predominantly in the South and now around 100,000 per annum – which is essential if the future employment needs of this country are to be met. Over 20 years, a population increase at this rate – or to this level – cannot be ignored. However, the demographic analysis detailed in the inquiry report, and consistent with all the evidence over the last decade, has never been accepted by government. On the contrary, officials have implied that the forecast level of demand has never actually occurred. In fact, the 1996-99 household formation out-turns show that household formation is running ahead of the official projections.

Location. Two-thirds of the growth in household numbers is projected to be in southern England, with 20% concentrated in London. This pattern is very different from the actual distribution of building over the last few years – when close to 50% of new housing has been developed in the North and the Midlands. If needs and demands are to be met where they emerge, over two-thirds should be in the southern part of the country. The alternative cannot simply be to try to constrain mobility but to make other areas more attractive.

Affordability. Projections of household formation in England in 2006 and 2016 show that somewhat under two-thirds of demand (63%) could be met by the market sector, while the rest will require varying amounts of government assistance if homes are to be affordable. The alternative is lower standards. Governments of both persuasions over the last decade have cut back direct subsidies and placed strong reliance on providing affordable housing through the planning system. So far, the evidence suggests that the amounts of additional affordable housing produced in this way are small and can often be in places where both housing demand and employment possibilities are relatively limited. Fundamentally, there is a need for government to explore ways of supporting affordable housing in a more proactive manner. To date, government has shown itself as ready to increase the funding available for new affordable housing to perhaps 50% of what is required.

Government has not accepted the case for raising the level of provision or for taking seriously the case for increasing the number of dwellings in the South and the resources required to provide affordable homes. The reality of shortfall is primarily experienced not by ‘roofless’ people or people on very low incomes, but by people on low to medium earned incomes – on whom the viability of both urban and rural areas depends.

It is unacceptable for government to refuse to address these arguments because of the political difficulty of achieving higher levels of provision, or the unwelcome public cost of funding a much wider range of affordable homes. The indirect consequences can now be seen in the disruption to public services and the social and economic costs to other sectors of inadequate and excessively expensive housing.

Moreover, there is increasing evidence that the relationship between housing and labour markets in the UK is producing inflexibilities, including labour supply and cost, which impact both upon the UK’s international competitiveness and its abilities to deliver the environmental improvements required under EU membership obligations.

Broadening the options – a longer term approach
The outstanding characteristic of housing land supply in England is the limited nature of available options, characterised by the use of a single quantitative target – largely unrelated to local conditions, but broken-down spatially – and now virtually confined to brownfield development and the reluctant use of greenfield land. When this approach is applied to areas of excessive economic and housing demographic concentration like the south of England, there is little opportunity to provide housing to match expanding labour markets.

Critical opportunities to widen land supply by deliberate spatial territorial management within and across regions, the replacement of low density low-grade housing, and the general renewal of the housing stock, have not been addressed.

This limited approach has created the impression that there is a genuine shortage of land for new households. In reality, there is plenty of land, much of it occupied by poor quality houses, offering potential for redevelopment to provide better homes for existing residents as well as newcomers, simultaneously upgrading the urban environment.

It is no accident that these other sources of land, regularly used in comparable European countries, are not used so effectively in the UK. The inquiry identified the following key factors currently standing in the way of a wider approach:

• There is currently no political imperative for the spatial dispersal of labour and housing markets across regions – rather there is concern that such dispersal will undermine the economy.
• The recently announced reconfiguration of central government ministries carries the possibility of an unwitting divorce between urban and rural Britain which the two White Papers hoped explicitly to avoid.
• Current policy is based on the traditional typologies of enclosed city systems and an urban/rural split, rather than understanding cities as functional systems, with flows and linkages into and out of rural areas
• England lacks a proactive planning culture, where planners can facilitate land assembly for development and take the lead in determining land use. Equally, they have only very blunt instruments by which to constrain decisions. These may limit development in pressure areas but also give little capacity to intervene in situations where values have fallen to the point where individuals cannot help themselves and need statutory intervention to put together a collective solution – such as land pooling – to recreate value.
• England lacks effective mechanisms, and institutions, for land assembly. Germany and France have mechanisms, based on land pooling principles, by which all owners are given an incentive to participate and not to withhold ‘ransom’ parcels of land. Creating increased value – so that the resulting site in which the owners have an interest is more valuable than the interests they pooled – is a fundamental prerequisite for success. The relevance of this principle to the redevelopment of poor quality areas in multi–ownership, needs no further emphasis.
• The UK lacks structures which enable the value of land within the community to be protected and made available for the long-term benefit of that community. Community Land Trusts, widely used in the USA, could operate effectively within existing law in England and Wales to achieve this. There are major opportunities to use such structures in the redevelopment of local authority estates.

New short-term opportunities
The full realisation of the wider options listed above requires a combination of political commitment, primary and secondary legislation, although a number of opportunities are already accessible under existing law. Two examples of potential quick hits are:

• The creation of new areas where people are happy to live by the deliberate improvement of transport links. There is considerable potential for improved public transport services to make previously unattractive areas desirable.
• Development in the suburbs, particularly by building houses on back land and other unutilised sites. This concept was explored in a recent Rowntree report.

Summary of key issues
Government targets for new homes are less than required to meet demand, not located where need arises and under–provide by perhaps 50% the number of affordable homes required. New approaches are required to meet both housing demand and the macro-economic agenda.

Houses will have to be built in areas of pressure where they will bring benefits to the community – even though they may be politically unwelcome.

To achieve appropriate levels of output, government will need to inform, educate and lead, rather than follow public opinion. Essential powers and mechanisms will be needed to replace the current reliance on exhortation.

The proactive territorial management of space must be placed on the political agenda. Policies need to be developed which encourage spatial balance in development and economic opportunity, both within and between regions.

The housing supply system faces three critical challenges:

• To redesign the planning system to work proactively to link housing and labour markets
• To begin the process of renewing Britain’s housing stock and raising overall housing quality by replacing outdated homes.
• To provide affordable housing for those unable to secure homes in the open market or ineligible for social rented housing.

In high-value areas, intermediate housing markets will be required to provide affordable homes for lower and middle paid staff. Such homes are likely to be based on equity-share rather than rented tenure, and may need to be facilitated by land pooling or community land trusts, which provide the potential for separating the land element from the costs of building.

New types of agency are needed to deal with the strategic use of land within a national structure for strategic territorial management. Such agencies must have clear social objectives, a culture which emphasises long-term strategy rather than the shortterm deal, powers to invest over the long-term and to take longterm commercial risk and be credible partners for local authorities.

The price of inaction
Current policy understates demand and narrows the options for land supply. In the long term, this will result in further pressure on house prices and exacerbate affordability problems for many people on moderate incomes. This will threaten the viability of cities and increase the proportion of people who need government aid for their housing. Short term falls in inflation may well reduce this pressure.

However, the absence of a political imperative for dispersing labour and housing markets across regions means that these structural problems within the UK’s housing supply system will persist. Moreover, the lack of either policy or mechanisms for the replacement of the housing stock suggests that the general quality of housing in England will continue to decline.

The way forward requires a strong lead from Government to promote effective use of land within and between regions, justified by the national priorities of meeting social and macro-economic needs. This demands integrated transport policies, a proactive planning culture focussed on land use rather than development control, land assembly mechanisms, and a range of interventions to assist people experiencing problems in areas of very high or very low values.

The full report, Land for housing: Current practice and future options, is published for the Joseph Rowntree Foundation by York Publishing Services Ltd. (Price £10.95 plus £2.00 p&p)

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