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Greenbelt myth is the driving force behind housing crisis

Greenbelt myth is the driving force behind housing crisis

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by Paul Cheshire, Professor Emeritus of Economic Geography, LSE.

What a strange place the UK is – when the most important thing Britons spend money on becomes even less affordable, it’s received as good news. Because that is what “confidence returns to the housing market” really means. Young people will have to wait even longer to get any house at all, never mind a decent house with a bit of garden. Yet further house price inflation is always sold as good economic news. When it comes to houses and planning this is just one manifestation of the disconnect between reality and perception.

From one point of view – old people like me who have paid off our mortgages – rising house prices may seem good news, although I could only profit from the extortionate capital gains I have “earned” over 40 years by moving somewhere else (I don’t want to). Relative to other prices, house prices have gone up five-fold since 1955. In less than 20 years the price of houses has doubled relative to incomes; since 1997 lower quartile house prices have increased 80% relative to lower quartile earnings – even despite the crash of 2007-09.

There is a housing crisis in England, writ large in London, and it is a crisis of supply. On average over the past four years fewer market houses have been built than at any time since World War II – even as far back as the Edwardian era of 1910. It is not that there is not the space. Contrary to popular perception (a survey by economist Kate Barker for her 2006 report on land use planning showed that most people think 50% of England is built over) less than 10% of England is developed. And of what is developed much less than half is “covered by concrete”. Parks and gardens cover more land than houses in towns and cities. Yet land is rationed and cities strangled with greenbelts.

Planners (and newspapers) assume demand for housing is driven by the numbers of households, but analysis shows that this has surprisingly little impact on demand. What has really increased the demand for houses is rising incomes: as people get richer, they try to buy more space and bigger gardens – the supply of which is exactly what greenbelts restrict.

As proposed by the original visionaries of town planning – most notably Ebenezer Howard – greenbelts would be an extensive ring of parkland surrounding towns in which citizens could walk their dogs, stroll with their children and exchange civilised gossip in the shade of handsome trees. What they have turned into is a combination of sacred cow and juggernaut: unstoppable in the damage they do to the housing market and beyond criticism in the popular media. They cover half again as much land as all towns and cities put together – about 15% of the surface of England – and have become a peculiarly English form of exclusionary zoning to keep unwashed urbanites corralled in their cities.

Of course parts of the greenbelts are real environmental and amenity treasures, such as the beautiful bits of rolling Hertfordshire, the Chilterns or the North Downs. Or rather, the beautiful bits to which there is public access. Such areas really need to be preserved against development. But almost all greenbelt land is privately owned, so the only access is if there are viable public rights of way.

Most privately owned Greenbelt land, however, is intensively farmed with limited rights of access and has no amenity value at all. Recent studies have shown that its value is captured only by those who own houses within it, and that intensively farmed land has a negative environmental value. Apart from its value for producing food (and much greater value for dodging inheritance tax) the UK National Ecosystem Assessment in 2011 found that intensively farmed land generates more environmental costs than benefits.

Yet whenever there is some public debate about reforming the planning system or building a few desperately needed houses on Greenbelt land, the bits we see on TV belong in some romanticised English Tourist Board poster. They are not representative of the reality of most greenbelt land.

So rather than building on school playing fields (can’t be done in my borough – they’ve all been built on already) or brownfield land such as on the Hoo Peninsula, where the largest concentration of Nightingales in the British Isles survive, there should be selective building on the least attractive and lowest amenity parts of greenbelts. Not only are they close to cities where people want to live but only a tiny fraction of their vast extent would solve the crisis of housing, housing land and housing affordability for generations to come.

Paul Cheshire is a researcher at the Spatial Economics Research Centre, London School of Economics.

This article was originally published at The Conversation. Read the original article here.  

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It is clear that there is no real shortage of land in the UK - even if you take out the vast tracts of privately owned green belt. Many inner cities also have boarded up streets which should be refurbished, rebuilt or whatever.

But all of this has been worsened by a policy of subsidising or underwriting mortgages up to £600k, the clear object of which is to promote the 'feel good' in the economy which Osbourne fervently hopes will return his party to sole office in 2015.

A more sensible policy must be to promote building in this way but only for new (or change-of-use multi-units) starter homes - less than £150k for example. This will also help by enabling working families to own their own house rather then rent and therefore save from the growing monstrosity that we call housing benefit as HB is I believe only payable on interest.

At 3% mortage rates (with 75% equity from 5% deposit and 20% guarantee) the interest component on a £150k house is £375/month when the house would yield £6-800 a month rent to a landlord. Interest only mortgages for the first 5 years would enable young people to buy and satisfy a demand without breaking any bank.

This will eventually create demand up through the housing 'ladder' as people aspire to better housing so it could prompt more house building without really damaging the market. The only sufferers would be recent landlord entries who may find it difficult to get tenants at a price that gives them a decent yield if they have bought the property at full market price.

A good article, and one that I agree with a good number of the points made.
-Rising house prices are good for a very small number of people, and for the UK economy as a whole are disastarous.
-Green belt land is a sacred cow that is damaging to the country.
What is needed is major reform in land: in the way it is zoned, owned, and taxed. Can I recommend the superb work of Andy Wightman on these topics- especially with respect to Scotland, but equally valid in England and the rest of the UK. Land reform is the unspoken elephant in the room, that no political party will touch, but that is required to remove the suffocating burden from our citizens, economy and country to make any lasting or meaningful progress.

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