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17 September 2018updated 08 Sep 2021 1:42pm

Why it’s time to burst housing developers’ bubble

Local communities must be at the centre of the planning decsisions which affect them.

By Jo Platt MP

Over the past few years there has been widespread agreement that we are facing a developer-led housing bubble, but there’s been little analysis into the social impact this is having on our communities. We have become well aware of the housing shortages, the rising house prices and falling home ownership, but in my own constituency of Leigh, a post-industrial town situated between Manchester and Liverpool, our residents have fallen victim to a housing crisis which is threatening the future prosperity of our town.

The truth is that the developer-led bubble is manifesting itself in multiple ways. The first, and most obvious is our housing stock. The housing we need is quite simply not there. The Conservative government frequently heralds the fact that total housebuilding is rising, but the crisis manifesting is not the quantity of development but rather their cost and location.

Our current planning system is dictated by the profit margins of the developers instead of the social needs of the community. This means that the giants of the building sector promise to invest millions of pounds in return to produce high-end apartments in the rising tower blocks of our city centres. With such enormous investment it is impossible to reject such plans, but these risk being at the expense of our outer town centres with the greatest social need.

In these post-industrial towns across the country we have seen the gradual decline of our manufacturing base whilst investment, jobs and big businesses have flooded into our nearby cities. With our towns left with the crumbling infrastructure, poor connectivity and inferior development decisions it is no coincidence that social mobility in our outer towns is on the decline. But it is not the case that the talent is not there, we have great schools in our area – but without the opportunities to thrive at home, the only option for our young people to succeed is to leave and sadly never return.

As a local MP I see the resilience, resolve and passion to thrive in the community, but with businesses and developers attracted to the safe investment of our booming cities, our towns have been forced into a downward spiral. The result across the country is pockets of enormous prosperity at the detriment to our towns. The bottom line is that the existing developer driven market which seek quick returns and fails to address the access and affordability to housing leaves our towns are at a fundamental disadvantage.

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Across the country we have also seen the lowest number of social rented homes built on record. In Greater Manchester we have therefore been working towards a Spatial Framework to help guide housebuilding across the inner city and its suburbs. The plan aims to not only identify land for housing up to 2035 but also the social infrastructure requirements of those new homes because without a comprehensive plan that considers schools, healthcare, transport and jobs the plan cannot meet its “brownfield first” ambitions.

But this requires bold intervention from the top. Unfortunately, consecutive governments of every colour have failed to recognise the role of infrastructure investment as a catalyst for private sector development. In doing so, they have effectively been holding our towns back. However, housebuilding, when managed properly, can act as that driver rather than just a passenger of economic growth and prosperity.

The developer-led bubble is also manifesting itself in other significant ways. In the North West especially we are witnessing a new scandal affecting leaseholds. Residents may own their home but effectively rent the land on which the house is built. For decades this has meant nothing more than a peppercorn rent of as little as £1 per year, but landlords have started inserting new clauses which double ground rent every 10 years. This will mean that some homeowners will pay up to £10,000 per year by 2060 despite owning their own home.

Whilst it is welcome that the government has now banned such practices in new contracts, this offers nothing to the countless families with existing contracts getting in touch with me who are suddenly paying a £400 rent each year on top of their mortgage.

Absentee landlords are also on the rise. With the housing bubble ever inflating and interest rates at a record low those with money to invest understandably purchase homes to rent out without any desire to take on the responsibilities of a landlord. It is even obvious to the eye which landlords are absent and have no regard to their properties, with boarded up windows, broken doors and fly tipping commonplace.

It is therefore no surprise that locally we see that the areas with the highest private rented sector housing also have the most social problems – as the housing deteriorates so does the social cohesion in the community.

Both of these emerging scandals are only possible in a system which places the power in the hands of the developers and landlords with a lacklustre government only willing to utilise expensive sticking plasters which only serve to feed the ballooning market.

Help to Buy is just one of those expensive sticking plasters which the government last year fed a further £10bn into. This enormous sum of public money is only inflating developers’ profits and analysis shows it is too often being used by non-first-time buyers and households earning over £100,000. Time and time again the Government refuses to take bold action, instead opting for an ideologically based hands-off approach.

The most worrying aspect of this approach is that we have been in this situation before. Firstly, with the financial industry in 2008 and then with Carillion earlier this year we all know the result of an under-regulated industry where we place the power in the hands of the few who are expected to deliver for the many. Their interests, their profits, their targets will always override the social needs of our communities.

Therefore, with an industry as important as housing, where the interests of developers rarely overlap with the interests of residents, we need intervention to get our housing sector working for the many once again.

This starts with a planning system that has real teeth. Putting local communities back at the heart of our planning system, providing the funding to transform areas and tipping the balance in the favour of new affordable homes judged by social need rather than the spread sheets of speculative developers.

One fantastic example of this is a local developer who has built affordable town centre houses by utilising Leigh’s old, derelict tax building to house adults with SEN and support them through independent living. My plea to developers across the country is to take a leaf out of this developers’ book and utilise our existing outlying town centres. Build more affordable homes. Kick-start our local economies. We have amazing architecture and an even better community. Take a look – we don’t bite!

Our housing sector needs a complete revolution that recognises its importance to society, recognises the potential for the sector to be used as a driver of economic growth and recognises the extreme dangers if we carry on allowing the bubble to inflate. Development need not be for the few. I really believe that it can be for the many.

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