"In the near future, it could be the home of a new town, one within reach of Oxford, Cambridge and London. Tempsford should be built in one of the traditional styles that people generally prefer to modernist buildings; think of the charm of Bath, for instance."
Which part? Queen Square, or Twerton? There's a lot of Bath that isn't Jane Austenish.
The simple answer is that planning is best left to local authorities, who also collect the rates and that is most of their income. They then have to balance things like aesthetics against other things. Like I'd say it would be very sensible for Bath to demand that the centre adheres to the general aesthetic because Bath gets tourists. It would make the place worse off. But Swindon? It's a "doing" place. We have WHSmith, Nationwide, companies that design the power management in an iPhone, parking meters. It's fine to knock down an office building and put a newer one in its place. It's also a family place, so people prioritise housing that is larger and cheaper.
And if you want the aesthetics, if you want to screen people out, well, you're going to get poorer as a town because of less revenue. Maybe the people of some fancy place accept that trade off. But many other places wouldn't. They'd rather accept in more people that would bring more prosperity. At the moment, councils gain nothing from housing. The existing residents hate it and they don't get much revenue, but they also have to do various things for those residents. They side with NIMBYs, where back in the era when they mostly ran on rates they opposed them. It's this shift to grants that is the bigger problem than the 1947 act.
It depends on the council. I know a couple who bought a dilapidated farmhouse with land. They renovated the farmhouse. The land had existing access to roads, electrical, water and drainage. They applied to build several homes. Their application was rejected by the local authority. The grounds? We don't want people living out from the city (all of six miles, for goodness sake), because when they're elderly it's easier to service them as clients. With that sort of creeping authoritarian mindset it's little wonder Britain is becoming so dystopian. The most precious concept in British culture is negative liberty- freedom from interference without justifiable cause.
“Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”
― C. S. Lewis
There is an easy way to get organic plentiful housing. The technocratic planner has not had a single line of authorship in the most beautiful towns and villages dotted around Britain. All the best ones grew up organically over decades and centuries. The easy way to continue this proud legacy is to raise the VAT threshold on small builders to £200K so they can employ apprentices, contract plumbers and electricians, without hurting their own take-home. The reason why the builders won't do it is because a 20% VAT cost prices them out of competition with other small builders. Not everyone wants to run a business with 200 employees. Many would be happy with five, with contract jobs for plumbing, electrical and other, thrown to people they know and trust.
And there is another reason why this is entirely necessary. Because the crap PAYE jobs working for large building companies (working in a living example of Adam's Smiths pin factory, in which no skills are acquired) is hardly enticing to young people as a vocation or in terms of pay, the building trade is haemorrhaging workers at a rate of only one new entrant replacing 10 retirees. The only way to save British building is make small builders the primary suppliers of housing in Britain.
The 1930s are widely considered to be the last period when houses built were high quality. 25% were built by the public sector. Of the remainder, 70-80% were built by small firms employing under 10 people.
Today only 10-12% of houses are built by small firms. The banks don't like them because they want housing undersupplied. Larger mortgages as an asset class make them more money. The last thing they want is young people being able to pay off a starter home in 10-15 years.
My great uncle Ivor, a master carpenter (and grammar schoolboy) and long since deceased, always used to claim that accusations of jerry-built homes took rare anecdotes and inflated them. It turns out he was right. Both Labour and Conservatives wanted planning laws. The Ribbon Development Act was passed in 1935. Building societies faced scandals over inflated valuations and used jerry-building rhetoric to deflect blame onto builders. NIMBYs like the Council for the Preservation of Rural England used the rhetoric to protect elite interests from from working-class influx (rather like the good people of Henley not wanting the kids of white van man attending their children's schools- refers back to your comment- greenbelt).
90% of 1930s homes remain habitable today (per Historic England).
I lean heavily libertarian, and would love nothing else but to completely remove planning, but houses do not exist in isolation. You need roads, sewage, policing etc. So how do you balance competing rights? Best done by government, and at the most local level that you can. Bin English Heritage and let the town hall decide what can be done with the Corn Exchange.
And this has nothing to do with the 1935 or 1947 planning acts, because the chart of house building shows that there was no decline in house building after 1947. From 1955 to 1980, we had over 200,000 houses built per year, sometimes reaching 350,000 per year. Often, by councils, the same people who now oppose housing being built.
Which tells us that something else happened. And what happened from around the 1960 onwards? The centralisation of government, the shift of funding from local to central. Councils getting most of their money from grants, not rates. If a council allows more people in, there is zero benefit to the council or its residents, until the government adjusts its grants.
I lean heavily libertarian myself, but I think something else has been happening at the same time. The shift from 70-80% of private sector builds being churned out by small firms with less than 10 employees to 10-12% is suggestive of an oligopoly, and given that the top 6 firms control 40-45% of the market for new builds, it's also technically true.
And I don't disagree with you on the council issue, but my point would be that the market functions better when it's more iterative, composed of lots of smaller parts, rather than large cogs- with the obvious exception being industries which face barrier to entry costs like cars, or chip manufacturers.
The other issues is land banks. I know many people persist in the myth that they don't exist, but the big six control 600,000 plots at any given time. They also operate arms-length methods like separate land-holding subsidiaries and Special Purpose Vehicles. JVs with major Banks and private equity are commonplace.
In effect, through the operation of an oligopoly which is far tighter than it's outward 'loose' appearance, housebuilding in the UK has bifurcated into the housebuilding itself, which operates with tighter margins, and building plots as an asset class over which the major players are guaranteed speculative price rises.
Since 1991, the period when the oligopoly began to form, building plot asset prices have enjoyed an 8-10% compound annual growth rate, after inflation- all specially controlled by a cartel of interests including the Big 6, banks, the finance sector and private equity. The only exception was the 2007-2012 period, during which they experienced a rare period of real net negative growth of -4-5%, after inflation.
The Americans have been up in arms about it, because huge firms like BlackRock paid close attention to how our finance sector and specific interests had gamified the housing market for guaranteed supernormal profits.
Gamification began in 2013. It began to mature in 2019.
"The shift from 70-80% of private sector builds being churned out by small firms with less than 10 employees to 10-12% is suggestive of an oligopoly, and given that the top 6 firms control 40-45% of the market for new builds, it's also technically true"
What's are the legal restrictions that someone becoming a builder? None. You could hire me, with no qualifications to build a house for you. So where's the oligopoly?
Let me suggest an alternative hypothesis: firstly, that navigating planning rules leads to people that are experts in it and secondly, that like making anything, there are benefits of scale. We no longer have many small firms making cars like we did at one time or many independent butchers like we did at one time.
Again, I don't disagree with your point about added bureaucratic process. In 1988, 39% of builders were small, and added red tape has been a major factor in the decline. There is also evidence of ideological laziness. Small-site approvals are down to 11%, despite the fact that such sites tend to result in superior homes and more organic beautiful communities. It's probably true that planning authorities prefer the large sites, because they are more visible for PR purposes (creating jobs and homes) and create less hassle from local residents.
There are a couple of barriers to entry for builders as housebuilders. The first is VAT thresholds. This doesn't relate just to builders, but small businesses more generally. In real terms, the optimum year to be a sole trade or small firm employing under 5 people was 1981 when in todays money the firm wouldn't have to pay VAT until they earned the equivalent of £237,000. These microfirms are vital for SME genesis and creating the opportunities of tomorrow. It's not just builders, but very small businesses more generally. Our tax system is sacrificing our future prosperity, in the desperate desire to squeeze out pennies for the public purse. The VAT threshold was one of the things which massively aided new business growth in the 1980s and 90s. It was so successful other countries copied us.
The second barrier to entry is secured lending on building plots to build houses. Banks don't like it because it increases supply, which directly conflicts with about half of their profits. Mortgages might seem like a small part of their profits, but as asset class they are ideal for leveraging. Then there is the lending to commercial interests involved in the sector, and well as the investments side. If the UK has become a rentier economy, then the finance sector is its chief beneficiary.
And I agree that one cannot blame others for specialising and pursuing their own self-interest. It's the way the market is supposed to work. But the land-banking side is an exploit and oligopolistic. Officially, the land-bank is only £27 billion, but when ones includes lands not fed into the pipeline yet for planning, the fragmentary nature of SPVs, and the opacity of private equity it's substantially larger than that.
But I don't blame them in their position I would do the same. But a country cannot survive if the scarcity costs of building land continue to compound. Housing costs as a greater share of income are the road to stagnation. The discovery process of the market is highly dependent on disposable income. All those lovely restaurants, boutique businesses and leisure venues will slowly disappear from the landscape- because they will lack their one existential need- customers.
Besides, I don't resent them making money. It's the sheer lack of imagination. There are plenty of ways to monetise in healthier directions and create real value for Brits. The main problem is that they've chosen the wrong partners- our finance sector is stagnant, lethargic and unimaginative, as witnessed by the American VC advantage. The big firms could make a lot more money if they partnered with Amazon, and in so doing revitalise Britain's towns and cities. But I will leave customer ecstasy and nudged generative anchor ecosystems for another time.
What I would say is that the large firms should take a long-look at an inhouse franchising model for small builders. They could offer a range of low-cost, high profit services to builders. They're not competing in the same space in terms of land. The only argument against it is overall supply. First to market would make a killing. They could probably even convince government to take the hit on the risk, given they're desperate to build more homes, and it's not as though the demand is going anywhere.
At this stage their assets probably wouldn't even depreciate in the event of another 2008, although their growth would obviously stall.
I agree we need to release the rocket of capitalism but I also think we need to think carefully first about how we are going to steer it. Because all else being equal we will just see more of what is already happening: huge estates of scrimp-built housing that will directly house illegals on the taxpayers bill, with a handful of even-scrimpier hovels for the Brits to fight over at 50:1 over-subscription. That is “actually existing capitalism” in the Ukay housing sector.
But yes both of those two political groups you mention are delusionally wrong, and the straitjacket of Planning has to go.
Have you heard of GFRG panels, and are they suitable for housebuilding use in the UK?
"In the near future, it could be the home of a new town, one within reach of Oxford, Cambridge and London. Tempsford should be built in one of the traditional styles that people generally prefer to modernist buildings; think of the charm of Bath, for instance."
Which part? Queen Square, or Twerton? There's a lot of Bath that isn't Jane Austenish.
The simple answer is that planning is best left to local authorities, who also collect the rates and that is most of their income. They then have to balance things like aesthetics against other things. Like I'd say it would be very sensible for Bath to demand that the centre adheres to the general aesthetic because Bath gets tourists. It would make the place worse off. But Swindon? It's a "doing" place. We have WHSmith, Nationwide, companies that design the power management in an iPhone, parking meters. It's fine to knock down an office building and put a newer one in its place. It's also a family place, so people prioritise housing that is larger and cheaper.
And if you want the aesthetics, if you want to screen people out, well, you're going to get poorer as a town because of less revenue. Maybe the people of some fancy place accept that trade off. But many other places wouldn't. They'd rather accept in more people that would bring more prosperity. At the moment, councils gain nothing from housing. The existing residents hate it and they don't get much revenue, but they also have to do various things for those residents. They side with NIMBYs, where back in the era when they mostly ran on rates they opposed them. It's this shift to grants that is the bigger problem than the 1947 act.
It depends on the council. I know a couple who bought a dilapidated farmhouse with land. They renovated the farmhouse. The land had existing access to roads, electrical, water and drainage. They applied to build several homes. Their application was rejected by the local authority. The grounds? We don't want people living out from the city (all of six miles, for goodness sake), because when they're elderly it's easier to service them as clients. With that sort of creeping authoritarian mindset it's little wonder Britain is becoming so dystopian. The most precious concept in British culture is negative liberty- freedom from interference without justifiable cause.
“Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”
― C. S. Lewis
There is an easy way to get organic plentiful housing. The technocratic planner has not had a single line of authorship in the most beautiful towns and villages dotted around Britain. All the best ones grew up organically over decades and centuries. The easy way to continue this proud legacy is to raise the VAT threshold on small builders to £200K so they can employ apprentices, contract plumbers and electricians, without hurting their own take-home. The reason why the builders won't do it is because a 20% VAT cost prices them out of competition with other small builders. Not everyone wants to run a business with 200 employees. Many would be happy with five, with contract jobs for plumbing, electrical and other, thrown to people they know and trust.
And there is another reason why this is entirely necessary. Because the crap PAYE jobs working for large building companies (working in a living example of Adam's Smiths pin factory, in which no skills are acquired) is hardly enticing to young people as a vocation or in terms of pay, the building trade is haemorrhaging workers at a rate of only one new entrant replacing 10 retirees. The only way to save British building is make small builders the primary suppliers of housing in Britain.
The 1930s are widely considered to be the last period when houses built were high quality. 25% were built by the public sector. Of the remainder, 70-80% were built by small firms employing under 10 people.
Today only 10-12% of houses are built by small firms. The banks don't like them because they want housing undersupplied. Larger mortgages as an asset class make them more money. The last thing they want is young people being able to pay off a starter home in 10-15 years.
My great uncle Ivor, a master carpenter (and grammar schoolboy) and long since deceased, always used to claim that accusations of jerry-built homes took rare anecdotes and inflated them. It turns out he was right. Both Labour and Conservatives wanted planning laws. The Ribbon Development Act was passed in 1935. Building societies faced scandals over inflated valuations and used jerry-building rhetoric to deflect blame onto builders. NIMBYs like the Council for the Preservation of Rural England used the rhetoric to protect elite interests from from working-class influx (rather like the good people of Henley not wanting the kids of white van man attending their children's schools- refers back to your comment- greenbelt).
90% of 1930s homes remain habitable today (per Historic England).
I lean heavily libertarian, and would love nothing else but to completely remove planning, but houses do not exist in isolation. You need roads, sewage, policing etc. So how do you balance competing rights? Best done by government, and at the most local level that you can. Bin English Heritage and let the town hall decide what can be done with the Corn Exchange.
And this has nothing to do with the 1935 or 1947 planning acts, because the chart of house building shows that there was no decline in house building after 1947. From 1955 to 1980, we had over 200,000 houses built per year, sometimes reaching 350,000 per year. Often, by councils, the same people who now oppose housing being built.
Which tells us that something else happened. And what happened from around the 1960 onwards? The centralisation of government, the shift of funding from local to central. Councils getting most of their money from grants, not rates. If a council allows more people in, there is zero benefit to the council or its residents, until the government adjusts its grants.
I lean heavily libertarian myself, but I think something else has been happening at the same time. The shift from 70-80% of private sector builds being churned out by small firms with less than 10 employees to 10-12% is suggestive of an oligopoly, and given that the top 6 firms control 40-45% of the market for new builds, it's also technically true.
And I don't disagree with you on the council issue, but my point would be that the market functions better when it's more iterative, composed of lots of smaller parts, rather than large cogs- with the obvious exception being industries which face barrier to entry costs like cars, or chip manufacturers.
The other issues is land banks. I know many people persist in the myth that they don't exist, but the big six control 600,000 plots at any given time. They also operate arms-length methods like separate land-holding subsidiaries and Special Purpose Vehicles. JVs with major Banks and private equity are commonplace.
In effect, through the operation of an oligopoly which is far tighter than it's outward 'loose' appearance, housebuilding in the UK has bifurcated into the housebuilding itself, which operates with tighter margins, and building plots as an asset class over which the major players are guaranteed speculative price rises.
Since 1991, the period when the oligopoly began to form, building plot asset prices have enjoyed an 8-10% compound annual growth rate, after inflation- all specially controlled by a cartel of interests including the Big 6, banks, the finance sector and private equity. The only exception was the 2007-2012 period, during which they experienced a rare period of real net negative growth of -4-5%, after inflation.
The Americans have been up in arms about it, because huge firms like BlackRock paid close attention to how our finance sector and specific interests had gamified the housing market for guaranteed supernormal profits.
Gamification began in 2013. It began to mature in 2019.
Coincidently McKinsey published this in July 2019: https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/pricing-the-next-frontier-of-value-creation-in-private-equity
@kevinerdmann
"The shift from 70-80% of private sector builds being churned out by small firms with less than 10 employees to 10-12% is suggestive of an oligopoly, and given that the top 6 firms control 40-45% of the market for new builds, it's also technically true"
What's are the legal restrictions that someone becoming a builder? None. You could hire me, with no qualifications to build a house for you. So where's the oligopoly?
Let me suggest an alternative hypothesis: firstly, that navigating planning rules leads to people that are experts in it and secondly, that like making anything, there are benefits of scale. We no longer have many small firms making cars like we did at one time or many independent butchers like we did at one time.
Again, I don't disagree with your point about added bureaucratic process. In 1988, 39% of builders were small, and added red tape has been a major factor in the decline. There is also evidence of ideological laziness. Small-site approvals are down to 11%, despite the fact that such sites tend to result in superior homes and more organic beautiful communities. It's probably true that planning authorities prefer the large sites, because they are more visible for PR purposes (creating jobs and homes) and create less hassle from local residents.
There are a couple of barriers to entry for builders as housebuilders. The first is VAT thresholds. This doesn't relate just to builders, but small businesses more generally. In real terms, the optimum year to be a sole trade or small firm employing under 5 people was 1981 when in todays money the firm wouldn't have to pay VAT until they earned the equivalent of £237,000. These microfirms are vital for SME genesis and creating the opportunities of tomorrow. It's not just builders, but very small businesses more generally. Our tax system is sacrificing our future prosperity, in the desperate desire to squeeze out pennies for the public purse. The VAT threshold was one of the things which massively aided new business growth in the 1980s and 90s. It was so successful other countries copied us.
The second barrier to entry is secured lending on building plots to build houses. Banks don't like it because it increases supply, which directly conflicts with about half of their profits. Mortgages might seem like a small part of their profits, but as asset class they are ideal for leveraging. Then there is the lending to commercial interests involved in the sector, and well as the investments side. If the UK has become a rentier economy, then the finance sector is its chief beneficiary.
And I agree that one cannot blame others for specialising and pursuing their own self-interest. It's the way the market is supposed to work. But the land-banking side is an exploit and oligopolistic. Officially, the land-bank is only £27 billion, but when ones includes lands not fed into the pipeline yet for planning, the fragmentary nature of SPVs, and the opacity of private equity it's substantially larger than that.
But I don't blame them in their position I would do the same. But a country cannot survive if the scarcity costs of building land continue to compound. Housing costs as a greater share of income are the road to stagnation. The discovery process of the market is highly dependent on disposable income. All those lovely restaurants, boutique businesses and leisure venues will slowly disappear from the landscape- because they will lack their one existential need- customers.
Besides, I don't resent them making money. It's the sheer lack of imagination. There are plenty of ways to monetise in healthier directions and create real value for Brits. The main problem is that they've chosen the wrong partners- our finance sector is stagnant, lethargic and unimaginative, as witnessed by the American VC advantage. The big firms could make a lot more money if they partnered with Amazon, and in so doing revitalise Britain's towns and cities. But I will leave customer ecstasy and nudged generative anchor ecosystems for another time.
What I would say is that the large firms should take a long-look at an inhouse franchising model for small builders. They could offer a range of low-cost, high profit services to builders. They're not competing in the same space in terms of land. The only argument against it is overall supply. First to market would make a killing. They could probably even convince government to take the hit on the risk, given they're desperate to build more homes, and it's not as though the demand is going anywhere.
At this stage their assets probably wouldn't even depreciate in the event of another 2008, although their growth would obviously stall.
I agree we need to release the rocket of capitalism but I also think we need to think carefully first about how we are going to steer it. Because all else being equal we will just see more of what is already happening: huge estates of scrimp-built housing that will directly house illegals on the taxpayers bill, with a handful of even-scrimpier hovels for the Brits to fight over at 50:1 over-subscription. That is “actually existing capitalism” in the Ukay housing sector.
But yes both of those two political groups you mention are delusionally wrong, and the straitjacket of Planning has to go.