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9 February 2017updated 30 Jul 2021 11:03am

The solution to the housing crisis is under our feet

If we can bring down the price of land, homes can be built at lower costs and sold at lower prices.

By Anne baxendale

The recent housing White Paper won’t solve the housing crisis but it does represent an important shift in terms of housebuilding in one key area – land.

The reason millions of families across the country are struggling with a lack of genuinely affordable homes comes down to problems with the land market. It’s popular to say ‘there’s no silver bullet’ in fixing our housebuilding crisis but there is one key solution, and it’s right under our feet.

Currently, housing developers are forced to compete for land – which is scarce – and so pay huge amounts of money for it. This can only then be retrieved if the homes also sell for huge amounts. This is why it’s called the ‘speculative system’ of housebuilding – because it relies on the developer to speculate on the price of houses in order to buy the land.

And in a double blow to people suffering at the hands of the housing crisis, these homes will often not only be expensive but they’ll be built very slowly – as fewer houses means higher prices. That means developers can eventually make back the whacking great costs they paid for the land, plus a tidy profit on top.

When set out like this, you can start to see why there’s so much nimbyism (communities who don’t want new housing in their area). With land prices so astronomical, developers have to compromise on quality, affordability, parks, roads and other infrastructure from the get-go.

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In a nutshell, if you can bring down the price of land this allows for homes to be built at lower costs and sold at lower prices – while being better quality.

The government haven’t quite nailed this in the housing White Paper but they have changed tack and started to take some action on land.

For example, they’ve said that public land will no longer have to be sold to the highest bidder, a practice that just creates higher land prices. This means local authorities could now have the opportunity to invest in projects for the long term including better-planned new homes, built primarily for communities rather than profits.

The White Paper has also started to look at giving more powers to local authorities to take land off developers who are hoarding it rather than building on it.. But we need to keep making progress on this for it to really make a difference.

Finally, there are some really promising suggestions around making data more widely available on land: who owns it, who’s interested in it and what its boundaries are. Because, believe it or not, much of this is really hard to find out – the land registry system is inefficient with different bits of information stored in different places and you even have to pay to access it. This stifles competition from smaller building firms and makes the land market opaque.

These proposals are still pretty tentative but they represent the government rightly starting to connect the need to fix the housing crisis with the need to fix the land market. The two are inextricably linked. 

We at Shelter will be continuing this conversation in March when we will set out an entirely new model of civic housebuilding which is focused around building homes for communities, not as investments. Only by transforming the land market can we build the genuinely affordable, high quality homes that communities actually want and need. 

Anne Baxendale is head of policy, public affairs and research at Shelter.

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