I put it to Duncan that the incredible cost of housing is down to the planning system and we’re unlikely to get any disagreement on that. Duncan agrees and uses a fantastic analogy with the car market to demonstrate just how overplanned and overcontrolled the system is and how this leads to shortages and spiralling prices. The audience cannot help but laugh, but of course this is real and has serious consequences for the housing market and the “countless” people that have been “Priced Out” of the house market.
Priced Out is the name of the campaign Duncan works on, one that favours house building programmes as the means to achieve a zero house price inflation target, and caps on the amount of a mortgage relative to income, both policies that would have proved controversial had they been discussed.
Duncan moves on to talk about the Green Belt claiming that the Green Belt (an area of restricted development around London and other towns) represents some of the best land to build houses on but this is not permitted. He says there is little hope of these restrictions being lifted.
Turning to mortgages Duncan did not mention his plan to cap lending but did argue that plans to help people afford homes by subsidising them would only raise prices still further. Yaron Brook volunteers a comparison with US institutions “Freddie Mac and Fannie Mae” which ran subsidy programmes in the US and which collapsed and (as I recall it, though it is rarely mentioned) precipitated the collapse of the entire US banking industry and lead to the global Credit Crunch, or which “contributed” to it according to Duncan.
Feeling a bit more combative than to earlier segments I turn to Ian Dunt and ask him about Ed Miliband’s plan to simply overrule all of the market distortions and malincentives already discussed by simply setting the price of rents. I ask Ian whether he believed this widely supported.
In fact, Ian tells us, the Labour Party would prefer something more radical, and more redistributive such as changing Council Tax bands. He doesn’t say whether this means penalising the owners of larger homes (one assumes it would, in order to be redistributive) nor what the effect would be on house prices for first time buyers. According to Ian, the main issue is a lack of supply and it is well understood internally in the labour party and across the political spectrum.
Ian explains one barrier to progress is that there are no tory party policies that are not targeted specifically at the election. He attributes this to the appointment of the chancellor George Osborne as the election co-ordinator, it is this, he believes, that motivated the Chancellor to put “the entire economy of the country at risk so that people in the South East can find it a little easier to buy houses” – referring to the Help To Buy scheme.
Ian regrets a political culture which is which has stifled the communication of Labour Party policy saying “no interesting ideas have come out of the party”. In fact, in their 2 year policy review, ideas were stamped on very hard to make sure that nothing could be used against them in the media.
I ask Kristian why, if there is broad agreement within parties the problem cannot be solved immediately. The answer: full time NIMBYs. There is a culture of complaining about housing development in your own back yard, so to speak, and the people involved often do nothing else with the rest of their time. We all seem to have an idea of what needs to be done but no one does anything about it because there are these groups who purely work against any housing development. In fact it’s like an industry. Kristian talks about how they egg each other on on twitter, encouraging each other to sign petitions, contact planning officials, and write articles with the objective to stop housing development.
Duncan Stott agrees with the above and mentions the presence of these groups in places like Oxford. He says it is understandable as one would imagine that when you have already put the majority of your savings into a house, you would do everything you can to ensure the prices did not drop in value.
According to Yaron, the fundamental issue is the disregard for property rights – a term which seems to cause Ian Dunt some amusement. Yaron explains that once the government controls how individuals use their property, then various entities come into the scene and influence how things are run. You as the owner have very little say over how your property is used. The solution is having a property rights regime, so only the owners of the property have complete control over how that property is used and / or disposed.
I challenge Yaron to the effect that given complete freedom some property owners might build ugly homes, but Yaron believes the fact that people besides the owners want houses to look or be managed a certain way is not a reason to give give them that control. “You do not have a right to a view” of the green-belt or smart homes or anything else and peoples’ “wishes and wants” is not where the proper standard of rights or the standard of truth are derived from.
Kristian talks about a potential market solutions to the problem of preserving views. He recalls that before the Town and Country Planning Act individuals or groups bough restrictive covenants or development rights. This did not involving physically buying the plot of land or property but gives an “exclusionary right”. Such a system would allow neighbours to ban all or certain types of development – at an appropriate price. Such a solution would mean that an entity like the CPRE would have to buy these development rights. Instead of signing petitions then, they would have to collect money from their members in order to purchase what they wanted. Kristian was hinting that this would neatly and fairly disincentivise NIMBYism.
Yaron makes a more general point that all of the problems discussed so far are caused by markets not being allowed to function, and that when they do they can be incredibly innovative at finding solutions.
While wrapping up Duncan makes the point that anarcho-capitalist solutions are a long way off, but in the meantime he would like help ensuring that councils are as ambitious as possible with targets. He says that Councillors are sensitive to the letters they receive so the next time you witness NIMBYism in action, send a snotty letter.