Dominic Lawson: There's no need for everyone to buy a home

A shortage of accommodation is almost entirely a problem confined to the South-east
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The Independent Online

Just as the Conservatives will be relieved to see the back of Tony Blair at the end the month, they will be sorry to see John Prescott go. They will miss making fun of the Deputy Prime Minister's malapropisms - even those he never said.

I have lost count of the number of times the Tories quoted Prescott as having said: "The Green Belt is a Labour achievement and we intend to build on it." Well, I suppose it was quite funny the first time - or would have been if it had been Prescott who said it, rather than one of his political opponents misquoting the old brute. If only it were not a joke. If only New Labour had had the courage, just for once, to challenge received opinion.

Two days ago the Government launched the National Housing and Planning Advice Unit. It marked its first day of existence by pointing out just how much the supply of newly-built homes had been lagging behind demand - and, as a result, just how difficult it had become for many first-time buyers to acquire property without crippling levels of indebtedness. It was, of course, not necessary for the Government to create yet another quango in order to discover this, or for us to know it.

Although there has been a sharp increase in house prices across the nation over the past few years, an actual physical shortage of accommodation is almost entirely a problem confined to the South-east of England. Groups such as the Green Party and the Council for the Preservation of Rural England frequently point out that the alleged shortfall of homes - around 700,000 - is roughly the same as the number of empty and abandoned dwellings. Their argument, essentially, is that it is a myth perpetrated by avaricious developers that we need hundreds of thousands of new homes.

They would be right if people were willing or able to commute daily in large numbers from, say, Newcastle to London. In the real world there is a limit to the amount of travelling to work that we are prepared to endure. At the same time, it does not follow that because someone has a job in the metropolis that he or she has an inalienable right to a home in central London. Previous generations discovered the perfect compromise between affordability and proximity: it was called suburbia. Now this is an unmentionable word. For one thing, the suburban sprawl is deemed to be "unsustainable" and for another, it is plain unfashionable.

This cast of mind is not merely British. In his latest book, More Sex is Safer Sex: the Unconventional Wisdom of Economics, Steven Landsburg deftly satirises this phenomenon: "In one recent survey, 37 per cent of New Yorkers said they'd leave the city if they could. Of course, since none of them had left the city, and since all of them could, the only proper conclusion is that 37 per cent of New Yorkers lie to pollsters."

There is a difference, though: the Green Belt around London is proportionately much bigger than the equivalent areas designated as purely recreational around New York. Of England's 1.65 million hectares of green belt, just 0.02 per cent is lost annually to residential development - and half of that had previously been devoted to some form of urban use.

Building More Homes, a pamphlet published by the Politeia think-tank, points out that Defra's own figures show a total of about 59,000 acres of agricultural land within a radius of 16 miles from Trafalgar Square. Under the Government's "density guidelines" this land could accommodate at least 700,000 new homes - the entire national shortfall. The authors further point out that this land currently supports "a grand total of 25,000 farm animals and some arable crops. Eleven per cent is set aside, producing nothing at all."

It's true that if infilling within the M25 was attempted, then a large proportion of the homes built might be outside the price range of first-time buyers: not every home can be a starter home. Yet unless the laws of supply and demand do not apply in the South-east of England - and they surely do - we could expect such a plan to have a dampening effect on prices.

The cynics might argue that such developments would be snapped up by the buy-to-let brigade - as such investors have already demonstrated by acquiring "off-plan" many other new homes in the South-east. So, indeed, they might: but why would this be such a disaster? The only way that the vast majority of buy-to-let borrowers can make financial sense of their acquisitions is by fully letting their properties. When we say that there is a housing shortage, we do not mean just that it is difficult to buy a home in a particular area: we also mean that it is very difficult for the aspirant young to find a home to rent.

The "Money Editor" of one national newspaper recently described buy-to-let investors as "locusts, who consume everything in their path". Leave aside the fact that barely 3 per cent of our housing stock is owned in this manner: is this a fair way to describe people trying to fund a pension free from the day-to-day uncertainties of stock market investment, while simultaneously regenerating the quality of housing in a number of run-down inner cities?

Above all, it is not obvious to me why everyone - especially the relatively young - should want to buy a home, rather than rent. There have obviously been enormous financial gains - on paper - for those who have bought over the past 40 years: but there is no guarantee that the next 40 years will witness a similar capital appreciation. As far back as I can recall, my paternal grandparents rented their home: my grandfather, who ran a little business, clearly believed that he would do better investing any spare cash in his company, than in such dull and inert things as bricks and mortar. For much of his life, that would have been right - and our national economy would be healthier if that were to become the case again.

No British government will dare to say this, however. It is close to an axiom at Westminster that house prices rising without interruption equals re-election: it was negative equity, after all, not "sleaze", which did for the Tories. Not surprisingly, Gordon Brown in his first Budget speech declared that: "I am determined that we never return to the instability, speculation and negative equity that characterised the housing market in the 1980s and 1990s ... I will not allow house prices to get out of control."

If Gordon Brown really believes what he says, and wants to prevent prices in the South-east "getting out of control", then he must give the housebuilders the tools to do the job. Go on, Gordon, do what Prezza never did: say that you will build on the Green Belt - and mean it.