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Planning, regulation, the local state and the housing crisis in England

Posted by on February 8th, 2023 · Guest appearance, Housing

By Assoc Prof Ben Clifford, University College London. This post comes out of Assoc Prof Clifford’s September 2022 presentation in the City Futures Seminar Series.

In England, as in Australia, the housing crisis, and its links to planning reform debates, has remained high on the political agenda for many years. Recent months have seen tensions within the Conservative Party about housing targets in local development plans and an associated Parliamentary backbench rebellion. Much of this debate comes back to an over-simplified representation of housing unaffordability being due to planning systems unreasonably restricting new housing supply. Linked increasingly to so-called ‘YIMBY’ arguments, the solution to the housing crisis here appears deceptively simple: remove or reduce planning regulation and let the market do the rest.

Whilst there is a seductive appeal to this argument, and certainly planning regulation does play a role in restricting supply, it is overly reductive. As UCL colleagues have argued, the housing crisis is much more complex, involving issues not just of housing availability but also affordability, type, location and quality, and with an important factor of demand as well as supply: housing has increasingly become an investment vehicle and a variety of initiatives such as buy-to-let mortgages have fuelled this trend. At the same time, ever since the Thatcher administration in the UK, local government has hardly built any housing, when prior to that it was often responsible for around a third of new supply each year, as affordable council housing. This complexity is overlooked, particularly by politicians of the right but seemingly also increasingly by politicians of the left, in favour of a mantra of reducing planning control as the ‘solution’ to the housing crisis.

In the UK, such deregulatory approaches have been particularly pushed by right wing think tanks as influential players in planning reform debates over the last decade. One instructive example has concerned the deregulation of the change of use of commercial buildings to residential use.

In short, ever since 1948, the change of use of existing buildings in the UK has generally required planning permission from the local state. In England, in 2013, the government deregulated so that changing an office building to residential use was considered ‘permitted development’ not requiring full planning permission. In 2015 this was extended to cover retail and light industrial buildings being converted to residential use, and in 2021, further expanded to cover a yet wider range of building uses including restaurants, gyms, clinics and day centres.

With colleagues, I studied the implications of this deregulation through key reports in 2018 and 2020. Comparing conversions allowed under the deregulated permitted development route with those allowed under a traditional full planning permission revealed a number of problems. Firstly, there was the absence of any requirement for the commercial buildings to be actually be empty first, leading to examples of tenants being kicked out to allow for conversion to residential use, and in some cases then struggling to find suitable alternative premises, impacting the mixed use and viability of urban economies. Secondly, since schemes required no planning permission, the traditional routes to secure planning gain such as affordable housing and infrastructure contributions, could not be levied, harming local communities.

The most concerning outcomes were, however, around housing quality. Much of the ability to require decent design for housing has been secured through planning regulation. Without it, we were finding tiny units, e.g. 15 square metres for a studio flat compared to a government recommended minimum of 37square metres.I In 2020, we found just 22% of the housing units created under permitted development would meet recommended national space standards. There was a predominance of studio and one bed flats (77% of the units we considered in 2018), as developers tried to maximise the number of units per scheme for profit even when mixed communities might better be established by including some family sized units in a scheme and when this may be a key part of unmet local housing demand.

There were examples of flats with no windows at all (rare but some existed) or, more commonly, flats with little natural light or no windows you could easily see out of. Flats were far less likely to have dual aspect windows (29.5% of the units we examined allowed under permitted development had these, compared to 72% allowed under full planning permission), to have access to outdoor space (just 3.5% of the units we examined under our 2020 study had such private amenity space) and were sometimes in unsuitable locations such as the middle of industrial estates or business parks cut off from suitable amenities and without provision of things like play space for children. In some cases, the issues were so bad that we suspected they were having a negative impact on the health and wellbeing of occupiers.

The government did introduce some additional safeguards in 2020 and 2021, such as a requirement for adequate natural light to all habitable rooms and a requirement to comply with government space standards. Other issues, such as access to outdoor space and possible locational issues and issues related to thermal comfort as well as affordable housing provision remain, however. The whole experience has served to show that planning regulations are not just an unnecessary burden restricting new supply of housing but can have a vital role to play in actually ensuring housing is fit for habitation.

There is also an interesting question about whether this deregulation was even necessary in the first place. It has certainly boosted the number of housing units developed through conversion of commercial buildings (now more than 100,000 across England since 2013), but it was not unknown before. A comparison with the Netherlands showed an equal uplift in conversions achieved not through deregulation but rather a proactive role for local government, identifying possible buildings for conversion, acting to help developers navigate planning regulations, and with central government producing best practice guidance to promote the possibility of such conversions to landowners and developers.

People deserve decent housing, and if the only way to increase market supply is to reduce requirements that uphold a decent minimum standard, then perhaps that points to the fact that market supply alone is not sufficient to resolve England’s housing crises. Indeed, local authorities in England have increasingly come to realise this. At the same time as central government has been further reducing the ability to exert influence through the planning system, the local state has been reengaging with direct delivery of housing itself. With my colleague Janice Morphet, I have studied this with reports charting our findings published in 2017, 2019 and 2021. From a base of almost complete disengagement through the 1980s to 2010s, we are now at a point where 80% of English local authorities report they are directly engaged in delivering housing again.

This activity responds to a number of different motivations and is being conducted through a range of different mechanisms. Some local authorities have considered housing development as a possible solution to the challenges of austerity, with the ability given them to have what are in effect private companies in which they are the sole shareholder. Some 55% of local authorities now report having such a ‘local housing company’ which may, for example, be using council owned land to develop market housing.

Those local authorities which retained some of their own housing stock, primarily built before 1980, are able to use this as an asset against which they can borrow to fund the development of new affordable housing, and this is becoming increasingly popular again. There are concerns with demonstrating the possibility for higher quality design through the council’s own activity than the market volume housebuilders are delivering in some instances, and a real drive for the council’s own activity to try to boost affordable housing supply (which is now specified as a corporate priority by 80% of local authorities in England).

This activity is often starting from a low base, with challenges around funding, land availability and the fact that local authorities have been unable to retain development skills in-house. There have been some challenges, particularly where development has most been focussed on profit motivations such as the Brick-by-Brick company in Croydon which effectively went bankrupt. Nevertheless, other local authorities such as Birmingham, Bournemouth, Brent and many others are more quietly getting on with things and making them work. The mantra seems increasingly that ‘planning is not enough’ in so far as central government has weakened planning through successive reforms, but also relying on the ability through planning gain to try and secure affordable housing purely as a residual of market housing delivery seems an impossible ask.

Reducing planning control is perhaps favoured by governments where it may align to ideological predispositions sceptical about the role of the state and might seem a zero-cost solution to increasing housing supply and so apparently resolving the ‘housing crisis’. In some cases, opposition to new housing development has been so extreme that it seems common sense that planning deregulation might be the solution. Densifying suburbs and converting surplus commercial space to residential use when there’s a need for additional housing, and considering the embodied carbon in buildings, all seems sensible. However, there’s an important question as to whether such positive goals are best achieved by planning deregulation. There are potentially positive reforms that can be made to the planning system but as the example of permitted development in England shows, a straight leap to deregulation may have a range of disbenefits (and doesn’t’ seem to have delivered more affordable housing).

Such apparently easy solutions to the very real challenges of housing affordability are something to be extremely wary of. The planning movement grew out of particular concern in the nineteenth century with the impact on health and wellbeing from the output of unregulated urban development. Such concern should still exist today, alongside the need to increasingly consider sustainability and the implications of the climate crisis. Those who think removal of planning control will enable everyone to be able to afford to live exactly how and where they want to live are promoting a fantasy which, when unrealised, will likely just drive calls for further deregulation, with the potential to cause further harms. Liveable future cities require a proactive role for local government, which might positively influence development both through regulatory levers such as planning control, but also through direct action such as developing housing directly.

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