Land reform: the key to ambitious social housing

Land reform: the key to ambitious social housing

The next Prime Minister must put social housing at the heart of their solution to our housing emergency. The scale of the crisis demands serious ambition to build enough social homes for all who need them. But it’s not just a numbers game. As Shelter’s new Grounds for Change essay collection argues, alongside investment the government must learn from history and take action to reform our broken land laws. Only then will we build the high-quality, well-designed, genuinely affordable homes this country deserves.

Almost everyone now accepts that the housing market is broken. There are a range of factors behind the housing crisis we face today. But if the government is looking for a historically-proven way to provide homes to all who need them without crashing existing house prices, by far the most efficient, effective and well-understood vehicle is a major programme of social housebuilding.

Reporting earlier this year, Shelter’s commission on the future of social housing gathered a raft of evidence on the benefits of social housing for those who live in it today. Affordable by design, in much of the country social housing is the only tenure affordable to minimum wage earners, and the only tenure where rents are low and stable enough to give households on modest incomes the breathing room to save money each month. And – unlike in private renting – social tenancies are usually secure, so families can’t be turfed out on a landlord’s whim.

We then have to ask the question: why shouldn’t the millions now struggling with high rents and poor security in the private rented sector have this same opportunity?

Some would argue that it is simply too expensive to provide social homes for all who need them. Others might worry that social housing is not capable of providing high-quality homes people will be proud to live in and next to. But history – together with international experience – shows us it doesn’t have to be this way. By reforming the broken land laws at the heart of our housing crisis, we can reduce the costs of building homes and wrestle back control over where and how we build.

Breaking through the land barrier

Land is extremely expensive – especially in the places where new homes are most needed. The total value of residential land in the UK has exploded in recent years, rising by 583% between 1995 and 2017. Little wonder that new Shelter-LGA research reveals the high cost of land is the single biggest barrier councils face in getting social housing built. Elsewhere, housing associations also cite access to land as their biggest barrier to building more.

But things weren’t always this way. Social housing providers in the immediate post-war period benefited from legislation which allowed them to access land at an affordable price. As a result, they achieved high-quality, well-planned developments that were able to build out at record speeds and are still well-loved by their residents today.

The Land Compensation Act 1961 changed all this. This Act – together with a raft of problematic case law arising from it – enshrines a landowner’s right to ‘hope value’ in cases of compulsory purchase by a public body. This means the price of land reflects the likelihood that it might one day have been used for lucrative market housing, creating a floor on the price of land based on the most profitable uses imaginable.

We know we can’t meet the government’s target of 300,000 new homes a year by building only the most profitable kinds of schemes. There are not 300,000 households a year ready, able and willing to buy homes at current unaffordable prices – meaning these homes will not get built, and more and more people will be without a home of their own.

Yet alternative forms of development, including social housing, struggle to break through the financial barrier of the 1961 Act. A council, mayor or community group wanting to build an ambitious new settlement in the style of Letchworth Garden City would find themselves paying for land at a price which then made it impossible to deliver the scheme as planned – at least not without ever-increasing public subsidy. The slow progress of Ebbsfleet ‘Garden City’ demonstrates the problem well. Twelve years on from the start of construction, and despite multiple tranches of taxpayer funding, it has eked out only around 1,400 of its planned 15,000 homes.

Affordable land for ambitious social homes

While public money has built many social homes over the years since the modern land market was defined by the 1961 Act, providers have been forced to compromise on quality, design and density to cope with escalating land prices.

The system-built tower blocks of the 1960s were in part a way of coping with rising land prices by fitting as many homes as possible on the same amount of land. In 1963, Hackney Council pleaded that the ‘lack of building sites and the ever increasing cost of site purchase left the Council with no alternative but to build higher’. Compromises on conditions and quality – and, most tragically, on safety – were made to bridge the gap between land sold at market prices and the need to deliver homes at affordable prices.

For decades, our ambitions for social housing have been boxed in by land traders’ rising profit expectations. ‘What is needed’ has been less important than ‘what is possible’ in a broken market. In a world where the price of land reflects what will be built on it – the world set out by Shelter’s new essay collection – communities will have far more freedom to define development outcomes for themselves. These social homes will then become the foundations of strong communities, replacing a failed generation of revolving-door private tenancies.

Join our campaign. Ask your MP to end the housing emergency by reforming our broken land market.