Housing: Affordability

Lord Borwick Excerpts

Wednesday 22nd January 2014 Lords Chamber

[Lord Borwick (Con)]

My Lords, first, I declare my interests, as shown in the register, in land and property development companies, developing houses and building social houses.

Private houses are so unaffordable in the south-east that we have to supply affordable houses or many people would be forced to move out of the area. Very, very few of the residents in many areas can afford to buy the houses that they live in. Their children become part of the demand side of this supply and demand problem. In addition, the rising levels of divorce will reduce the optimum size of a household. A couple with two children become, with divorce and shared custody, two households with three people each. All these family and demographic changes happen far faster than we can plan for them. The market can cope but only if it is freed from regulation.

What have we got wrong? As ever, it will be taxation and regulation. Home owners end up paying all the costs piled on to developers when homes are built. Property taxes, at 4% of GDP, are more than double the OECD average of 1.8%, yet certain other parties want to increase them still further. Added to that, regulation makes everything oh so slow. Supply is quite simply not meeting demand.

I am chairman of a property development business building a total of 2,500 houses on the outskirts of Bicester, including 700 social houses, but it will take 20 years from start to completion, despite having four housebuilders working simultaneously on the project. It took seven years just to get full planning permission on this uncontroversial site, and it was supported by the council. The Government should be applauded for the new planning guidance, led by my noble friend Lord Taylor of Goss Moor. That should certainly speed things up through magnificent simplification. However, the system is still rigid, with far too many officials involved.

I asked a social housing association whether it was going to change its proportion of four-bedroom houses to two-bedroom houses because of a change in demand as a result of the abolition of the spare room subsidy. It laughed, because the cost of changing the planning permission is so enormous.

I can buy an Apple iPad and get it made in China to my exact whimsical specification with my name printed on the back cover and get it delivered to me in London in less than a week. I can get a brand new Jaguar in any colour and specification I desire in less than eight weeks. Supply quickly meets demand. Why cannot the same be true for planning permission amendments? Surely this, along with numerous and burdensome taxes, is the real reason that we cannot build the homes we need to.