The big question: How many new houses do we need, and where are we going to put them?

Click to follow
Indy Politics

Is Tony Blair going to concrete over the south of England?

A commission on affordable houses in rural areas reported yesterday that 11,000 new affordable homes need to be built each year in villages with populations of less than 11,000 in order to meet demand. The commission's chair, Elinor Goodman, a former political editor of Channel 4 News, insists that this would not mean "concreting over the south of England".

Her report concludes that only about six extra houses a year in every rural ward would make a difference. However, that is misleading. The main lever to produce affordable housing in rural areas is an expansion of private housing around market towns. The developers have to be given planning permission to build sufficient numbers of private homes so they can cross subsidise cheaper, affordable housing as part of the package. That is where the Nimbys will start to man the barricades.

The risk is that the Goodman commission report will lead to more "executive style" detached houses on greenfield land around market towns, and no help for the farm workers desperate to exchange life for their family in a caravan on the farm for a house - as depicted in one of the current plot lines from the The Archers

But isn't there a lack of affordable homes right across the country, not just in rural areas?

The commission began its inquiry thinking just that, but found affordability is actually a greater problem in villages such as Tideswell in the Peak District, because of the wide disparity between house prices and rural incomes. And it has been getting worse: rural house prices rose by 73 per cent between 2000 and 2005, compared to only 68 per cent in urban areas over the same period.

The problem, says the commission, is more acute for the first-time buyer in rural areas, with the cheaper homes 12 per cent higher in the country than in towns. Median house prices are 6 per cent higher in rural districts, at about £172,500, compared to £162,500 in urban districts. Average earnings in most rural areas are only £17,400, compared to £22,300 in major urban areas. The result is an affordability gap which means that to buy a house even at the lower end of the market, people living in the countryside would have to pay more than the 3.5 or 4 times their earnings, which mortgage companies and building societies usually take as "affordable".

In parts of the South-east, the West Country, and the West Midlands, local people need more than 10 times their earnings to buy a house. In Yorkshire and the North-east, they need between 8.5 and 10 times. In large swathes of rural England, first-time buyers would need to find 7 to 8.5 times their income to buy themselves a home.

In a few pockets of the rural areas in the North-west and Yorkshire, there are a lucky few who need only four times their earnings to buy a home, but they are probably in competition with sheep.

Does the shortage really matter?

It's a fair question: what's wrong with people following the jobs to the city? The Poles are showing us what a flexible labour force is all about, aren't they?

The Government became alarmed because key workers - such as teachers, nurses, fire fighters, and police officers and their families - were being forced out of the South-east due to the high cost of housing. Kate Barker, in a report for the Chancellor in 2004, said house building in 2001 was at its lowest since the war, with 129,000 completions. This rose to 160,000 completions in 2005, but to bring house prices down to the trend in the rest of the EU, an extra 120,000 homes a year would have to be built. She said more greenfield land would have to be released in the South- east, where almost 60 per cent of the land is protected from development, mainly by the green belt. However, Ms Goodman was asked to review housing "affordability" in rural areas.

She acknowledges that there is no future in keeping rural England preserved like some make-believe Disney theme park. However, if the low paid leave rural areas to the second-home owners, the elderly who got in early and a few rich land owners, the villages will wither and die.

"Townies" who like to spend their weekends in the country would find that none of the low-paid workers on whom they depend are available. The corner grocery and rural pubs that give villages their character will shut and revert to second homes. And the schools will close because there are no children to teach, and the army of health workers, childminders, gardeners and stable staff will disappear.

The commission says that more affordable housing is desperately needed to reverse that trend: "The emphasis has been on conserving the landscape at the expense of the social and economic needs of the communities which live in them."

Why not scrap the green belt, and allow house development free rein?

Post-war planning controls to stop urban sprawl and the loss of council housing due to the "right-to-buy", which started under the Conservatives and has continued under Labour, contributes to the problem. But allowing hills and dales to be built on would destroy the very thing that the commission says we should protect by allowing only a limited increase in housing.

Just 3,166 affordable rural houses funded by the taxpayer are planned each year for the next two years - down from 7,437 in 2004-5, so the private sector will have to play the major role. To do that, house builders have to be told to include more affordable housing whenever they are allowed permission to build in rural areas. A minimum of 30 per cent of affordable housing per development, rising to 60 per cent in areas of greatest need is becoming the norm for regional strategies. Public subsidy and cross-subsidy by developers is seen as the key.

What about a fresh tax on second homes to take the pressure off rural communities?

Ms Goodman says second homes are a problem in only a few rural areas, such as Cornwall and the Lake District. She recommends that Sir Michael Lyons should include a "negative impact" tax on second homes in his review of taxation. "You wouldn't be talking about the whole of Cornwall, but you might be talking about a particular village such as Rock or somewhere like that. Similarly in the Lake District, there are areas there where they [second homes] are very high." Other ideas, such as the residential planning rule used in the Lake District - restricting sales to people who live locally - can work, but they also push up prices.

Will the report's recommendations be implemented?

Rural affairs has a low priority on the Government's radar but affordable housing is high on the Blair/Brown agenda. And then there is an attraction to allowing more building on greenfield sites: it's quick and it's cheap.

However, with the Tory leader, David Cameron, pushing "green" issues - "vote blue, go green'' - building on greenfield sites will be controversial. The Tories also seized on the second homes tax as a new "stealth tax". And building the recommended new homes depends on local councils releasing the land - if the planning laws are changed. So far, they have been reluctant to do so, even where they can, knowing they will get voted out of office if they do.