To What Degree Is UK Housing Affected by Land Use Expansion?

The UK’s greenbelt policies hugely affect land planning. But the experiences of other countries show flexibility can favourably impact home affordability.

An important tenet of land planning in the UK for more than 60 years has been preservation of “greenbelt” areas, institutionalized in the Town and Country Planning Act 1947. The intent and result is to control urban sprawl, maintaining areas dedicated to forestry, agriculture and outdoor recreation.

While deemed largely successful in its goals, the greenbelt movement and dictates for land planning have come under question as the population continues its increase in England and Wales. The current and future housing shortages – the number of people living in the UK is expected to rise by 27 per cent from 2008 through 2033 – are debatably related to these restrictions.

A purist approach to greenbelt preservation would be to continue developing only within the urban confines, building up and not out. But this is happening only to a certain degree, and the sharp increase in home prices is a critical, unintended result. Home purchases have been so inaccessible that the proportion of people in the UK who now rent has risen by 17 per cent since the 1990s.

This is a large part of why the National Planning Policy Framework, established in March 2012, has taken a more nuanced approach to greenbelts. The NPPF still checks unrestricted sprawl from occurring, while it seeks to retain agricultural, forested and recreational lands in their optimal state. But it concurrently allows local authorities (empowered by the Localism Act 2011) to go through a process that can weigh special circumstances, for example re-purposing for development greenbelt acreage that fails to serve its original intent.

There will always be some degree of public resistance to all development, much of it well placed. But because home construction and land availability are tied to the economy, often a factor when employers seek to establish new workplaces, the business community, land investors and builders are naturally interested in expanding development beyond urban centres.

But this development push isn’t solely from the business sector. Advocates for social justice and affordable housing at the Joseph Rowntree Foundation (JRF) assembled a Housing Market Taskforce to study the matter of land supply and how it affects housing market price volatility and affordability. The task force sponsored a report, “International Review of Land Supply and Planning Systems” (Monk, Whitehead, Tang and Burgess, University of Cambridge, March 2013), which looked at data in 24 countries, at literature from 11 countries, and consultations with stakeholders and country experts in England.

The report concluded that residential land supply is indeed a contributing factor to housing affordability problems in the UK. Some key findings in this report are as follows:

• The idea of controlling urban sprawl to protect agricultural land is nearly universal. All countries prefer to accomplish this, but England lacks a “strategic level of decision-making between national and local.”

• Effective planning policies in other countries tend to share core elements: “Incentives and mechanisms to bring forward land for development; responsive growth management policies that recognize both the benefits and costs of growth; and a secure source of funding to provide infrastructure” were deemed as pluses in sensible development.

• There is “no new magic bullet,” but in fact many of the effective mechanisms identified in other countries exist in some form in the UK already.

From this, JRF states that the “key to long-term reform to land supply in order to reduce volatility in the housing market is for planning authorities and their partners to become more proactive in the land market, especially in the case of publicly owned land.”

Land investors are already becoming involved in joint venture partnerships or investing in UK property funds to develop land where the market need calls for it and where local planning authorities enable it. Those who provide this financing clearly do so from a profit-motive perspective. But as the community-wide benefits of development become more clear – even to the point of achieving more affordable housing within a social justice framework – the profits become effectively shared across communities.

Individuals who look to join in land investment schemes should do so under advisement of a qualified and independent financial professional.

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