Housing supply lags behind as rents soar ahead


Yorkshire's crisis in housing affordability has its roots in highly inefficient and misguided planning regulations.

Article Image


By Josh Cole

All York students will be familiar with the problem of soaring rents, with the pace of change occurring over the past three years catapulting York into the inevitable position of being the sixth most unaffordable student city. Whilst this increase has been spiked due to interest rate rises, which increase the size of landlords’ mortgage repayments who then pass it onto tenants, soaring inflation and for York specifically, the uncoordinated massive expansion of the student population, there are deep structural factors that have left us in this quagmire.

Britain’s planning system is at the heart of the crisis. Put simply, as the population has expanded, not enough homes have been built in any part of the country which has caused house prices to soar far above any commensurate growth in wages. In York, the building of new houses has not kept pace at all with the ever increasing demand. According to the York, North Yorkshire & East Riding Housing Strategy Review, from 2015-2021 the region aimed to build 9600 new affordable homes yet built only 6217. This failure to build enough houses has caused house prices to rocket over the past few years and pushes the average house price in York ever higher. In 2022, house prices increased by 23.1 percent, or an average of £69,348, which moves the dream of home ownership out of reach for an ever larger number of people. As more people stay renting until they can put together larger deposits, the healthy dynamism of people moving in and out of the rental market breaks down and inevitably leads to greater competition and higher costs. With this basic reality, why is it that the planning system cannot deliver enough houses?

UK planning laws are incredibly complex, with tight environmental regulations and the entrenchment of anti-development voices all playing their part. Importantly, planning proposals are decided on a case-by-case basis in councils across the UK which means that no standard criteria of what a successful proposal might look like can be developed, turning the application process into a remarkably sclerotic system.

Recognising the seriousness of the situation, Sir Keir Starmer’s Labour Party have set up housing to be, potentially, one of the biggest dividing lines at the next election with his promise to shake up the planning system. One of his big-ticket reforms is regarding how local authorities buy land for housing development. Under the current system, in place since the 1961 Land Compensation Act, authorities are not allowed to buy land intended for development at the price of that land if it remained under cultivation. When buying land, councils have to factor in the potential rise in the value of a plot of land instead if planning permission was to go ahead. According to the Center for Progressive Policy, an average hectare of agricultural land valued at £22,250 can rise on average to £6.2 million. This makes it extraordinarily expensive for councils to purchase land.

Labour’s planned new compulsory purchase orders will force landowners to sell their holdings on limited occasions at their current value instead, rather than at the price which includes the potential value of a parcel of land if it had received permission. In addition to also restoring the housing construction target of 300,000 new homes per year and forcing all councils to present five year housing strategies to central government, Labour also touched on, arguably, Britain’s biggest and most misunderstood sacred cow; the green belt.

The Green Belt is a highly emotive topic for many people, with most imagining it is something akin to Hampstead Heath. Indeed the original purpose of the first green belt laws passed in the 1930s were designed to provide accessible outdoor spaces for town and city dwellers to enjoy the countryside. Since then, 1,638,150 hectares of land has been designated as part of the green belt in which development is restricted. Looking at the map of York inset, the belt encases York as it seeks to limit urban sprawl and protect the character of rural communities. But most of this land is actually intensely farmed mono-culture agricultural land, closed off to the public given its private status and significant portions of the green belt across the country are places of scrubland and disused land.

Despite being far from areas of outstanding natural beauty, a misleading environmental argument is frequently deployed by pressure groups such as The Campaign to Protect Rural England (CPRE). Labour’s policy of allowing greater development on the green belt will cause outrage to those who continue to believe that, in the words of the CPRE, this would amount to concreting over “pristine countryside.” But research commissioned by The Times has shown that developing just 1 percent of the green belt could deliver an extra 737,000 homes nationally.

In places like York, where the green belt wraps around the city, these changes could well incentivize the greater levels of house building that the city needs in order to make its housing market much more dynamic and affordable. From the Housing Review first mentioned in this article, there is a clear need to address the significant shortfall in housing in the local area. The cost of renting, especially for students, is eating further and further into people’s incomes and having a housing market able to respond at greater speed to changes in demand would help make the city become a more affordable place to live.