Why the Chancellor must be bold on land in next week’s Autumn Budget

It’s not often that one policy change has the power to transform a national crisis, and improve the lives of people all around England.

Kate Henderson is the Chief Executive of the National Housing Federation

Kate Henderson is the Chief Executive of the National Housing Federation

24 October 2018

The housing crisis might just be on the brink of such a change – if the coming Autumn Budget does indeed, as reports suggest, commit to radical reform of the country’s land market.

Because our land market is broken. It’s devastatingly expensive, which makes it tough for housing associations to buy land and build affordable homes on it. And, as the Federation reported in September, the profits the land market generates don’t benefit wider society. In just one year, landowners made more than £13bn in profit from planning permissions granted on their land, and none of this value is captured for the benefit of the wider economy and society.

We’re asking the Government to change this. Land reform is the cornerstone of our submission to this year’s Autumn Budget on behalf of housing associations. We’ve identified three key steps that would make England’s land far more accessible to affordable homebuilders – leading to far more affordable homes.

Those steps are:

  1. Share a fairer proportion of the rise in land value after planning permissions are granted with the community, partly by delivering affordable housing.
  2. Ensure that 50% of homes built on public sector land are affordable, up from an expected 20% now.
  3. Create a transparent database of land ownership.

Some of these changes are substantial, yes, with the first requiring reform to the 1961 Land Compensation Act – but they are not unreasonable. In fact, capturing more value from land profits could generate £1.6bn a year to put towards new affordable homes.

And these steps are doable. With political will, with the leadership promised by the Prime Minister when she spoke at our National Housing Summit this year, they can happen.

To be clear, a lack of affordable land isn’t the only cause of the housing crisis. Far from it. There are many reasons why it’s been incredibly difficult to build anything like the number of affordable homes we need over recent years. These include a lack of funding, lack of political support, and a lack of flexibility in government housebuilding programmes.

The Government has taken action on these areas, though, putting forward funding and thinking more strategically and flexibly about how we deliver affordable homes. Challenges remain, not least a slowing housing market, and social housing in particular is still underfunded if we are to reach the levels of new homes we know we need. But housing associations are clever, committed and creative, and they can take the recent government measures and fly with them.  We have a sector-wide ambition to deliver, and recent commitments by the Government will help us do so.

If I were to point to the one thing holding them back – the one big outstanding thing that stops us building more of the homes people can really afford – it would be land. All the funding and flexibility in the world doesn’t really help when you’re outbid, again and again, for the plots of land to build homes and create communities.

So my message to the Chancellor ahead of Monday’s Autumn Budget is simple. Be bold. Take action on land. It would be transformational to this country’s housing crisis.

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