The stitch-up that keeps homes unaffordable

The public is fooled by a conspiracy that always blames the ‘planning system’

(Getty Images)

The Government’s 20 per cent subsidy to new home buyers (aka Help to Buy) is only weeks old and prices in the South-east are already up by 8 per cent. The number of new mortgages has ballooned; more money chasing fewer new homes can only lead to prices rising to even less affordable levels. So what is to be done? “Build lots more houses,” I hear you cry. And you and you, too.

But I have bad news for all of you: it won’t happen. The reason is simple. Housebuilding is not a social service, and it’s not controlled by the Government. It’s a business, and it is controlled by the profit motive. The only priority is to sell the product for the highest possible price, and you don’t do that by increasing the supply.

Ministers are perfectly aware of this, but pretend otherwise. Firstly because “Minister to build 100,000 new homes” sounds good (although it never happens). Second, because the housebuilders give the Tories far too much money to be dictated to.

In February 2012, the Electoral Commission found that construction and property firms had given £510,000 to the Conservative Party between July and December of the previous year. In return, in the first 15 months after the general election, senior property industry figures had 28 official meetings with the Government over planning reform. Environmental groups got only 11 such meetings.

So how does a government which has to pretend to be promoting housebuilding and an industry which wants to keep homes in short supply fool the public? By conspiring together to blame the “planning system”, that’s how. This has been going on for decades and the “planning system” has been an easy target. After all, it can’t answer back.

But the argument is rubbish. The proportion of planning applications approved by councils is more than 80 per cent. Of the rest, around 80 per cent are approved by the appeals inspectorate. So under the present arrangements, 95 per cent of applications get through. And at any time, there are sufficient planning permissions out there for around three years’ supply at the current dismally low rates, set by the builders. Hardly a broken system in need of radical reform, but let’s not let the facts get in the way of a good excuse.

Easing planning restrictions in the Green Belt, which the builders are baying for, will not increase supply either: it will just enable the building of the same number of homes – at the same high prices – on less challenging sites.

The bottom line is that the only winners in this game are the housebuilders, who keep their profit margins, and the Government, which keeps up the pretence that it is doing something about the housing crisis.

The losers, as usual, are the rest of us.

Mira Bar-Hillel writes on property for the ‘London Evening Standard’