Are housing zones the foundations of a sustainable housing policy?

Posted: 01/07/2014

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The UK is facing a chronic shortage of housing supply and the issue continues to be a political hot potato ahead of next year’s general election. A recent report by the Home Builders Federation estimated that up to 260,000 new homes per year need to be built in order to ease the pressure on the housing market, with 320,000 required to ‘improve the housing market’. This is three times the number of new builds completed in 2013.

Lighter-touch planning regulation

However, the plans outlined by George Osborne, in his recent Mansion House speech,  to kick-start the development of brownfield sites via the use of ‘housing zones’ could help to tackle this housing shortage and provide the foundations of a sustainable housing policy. Housing zones will be areas of lighter-touch planning regulation designed to encourage the construction of new homes and ancillary facilities such as schools and commercial units. Local authorities will identify and package together brownfield land for development and remove all “unnecessary” planning restrictions before partnering the land with a developer.

Central government will support ‘housing zones’ by providing loans to local authorities for necessary infrastructure and other remedial and clearing works required on the brownfield site. In London, up to £400 million funding from a mix of the Treasury and the Greater London Authority will be made available. For those outside London, up to £200 million of government funding will be available for 10 zones. Bids are due to start at the end of this year.

In addition to the above, if a developer believes that a council has not done enough to remove planning obstacles, it will be able to apply directly to central government for a lifting of the ‘unnecessary’ restrictions.

Although it is not entirely clear what the Chancellor means by “unnecessary” planning restrictions, his statement that “local authorities will be able to specify the type of housing, not whether there is housing” suggests that local authorities will retain some control over the style, appearance and form of the housing.

Development in urban areas cheaper and easier

The announcement has the potential to benefit all those involved in the supply of housing from developers and consultants to contractors by making development in key urban areas cheaper and easier. Developers will particularly benefit from it being more cost-efficient to build new homes in densely populated city areas close to target customers.

But the policy is not just good news for those directly involved in the building of houses. More housing brings greater pressure on utilities and infrastructure from roads to schools to hospitals. All associated sectors have the potential to see long-term knock-on benefits as the government tries to tackle the chronic housing shortage and prepare the economy for life post-recession through public-private funding initiatives.

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