We all agree — the country needs more houses that people can afford.

Government thinks that the solution is to build more houses faster. They think the main impediment to this is the slow speed of the current planning system. So they are proposing changes to take away some of the local decision making. One of their previous ideas was to allow disused office space to be turned into housing without need for planning permission. That led to greedy developers across the country producing tiny box-like flats where people are crammed into spaces with no windows. Govt recently changed its mind and now requires habitable space to have natural light. The planning system adds value; it makes spaces liveable for human beings.

Let’s look at the problem in a systematic way. In any system, when you don’t get the outcome you expect, you can assess three things:

1. Make sure you are doing things right. Govt says local planning authorities aren’t giving permissions fast enough. This assumes faster movement through the planning system will bring more houses that people can afford.
2. Make sure you are doing the right things. Govt says there should be more schemes allowed under permitted development, assuming that if developers have a free hand in what they build, unencumbered by the local planning authorities’ processes, there will be more houses that people can afford.
3. How do we decide what is right? Make sure you are aiming at the right thing. Govt thinks that developers are the answer to the problem of not enough houses that people can afford.

I think Govt is aiming at the wrong target.

Developers are in the business of making as much profit as possible though the houses they sell. That’s OK; it’s what they do.

• Our objective in Vale is to provide more houses that people can afford. We have a policy that requires a percentage of each major development to be ‘affordable’. (The Govt definition of ‘affordable’ is a house available at 80% or less of market price. In Vale, that still isn’t affordable to a person on a median income, so even the best intentioned policy is ineffective. Today we must think in terms of ‘houses that people can afford’.) But developers claim the policy lessens their profits. They’re right; it does.
• So developers sit on permitted plans, because they know land values and therefore house prices will continue to rise, and they will build their houses when the profits are high.

I’m not distracted by the harm that is forecast to come from the various proposals in Govt’s Planning for the Future. (But there is a lot of harm.) I’m focussed on how the overall proposed solution doesn’t solve the problem.

Government thinks that the reason we don’t have enough affordable houses is that developers don’t get planning permission fast enough to build the number of houses we need for prices to come down to an affordable level. However, I think that expecting profit-hungry developers to solve our problem of a shortage of affordable housing on ever increasing land value is doomed to fail because it’s the wrong solution.  

It’s the wrong solution. It makes no sense to say that the way to provide more houses that people can afford is to rely on for-profit developers to provide them for us.