What can we do to make housing more affordable? Well, you never know, building some more houses might help! This week Liam Halligan has been exploring why and how we should do that.
But just to be helpful, I’d like to throw a few spanners in the works – specifically, three reasons why improving supply is not the whole solution:
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- First, pushing more new homes through the planning system doesn’t guarantee greater affordability. In the previous decade there were building booms in countries across the western world that went hand-in-hand with massive price spikes.
- Secondly, even if we can translate additional supply into greater affordability (above all by cracking down on speculation) ‘generation rent’ needs houses that are a lot cheaper – and soon. Good luck selling that policy to the home-owning majority.
- Thirdly, we need more homes actually in our most productive cities and not so much in the outer outer outer suburbs. So never mind ‘greenfield’ versus ‘brownfield’ development, the real challenge is how to redevelop areas where people already live – and do it without screwing them over.
To tackle these challenges we desperately need new ideas. One approach that has a huge amount of potential is the community land trust or CLT. Some CLTs are already up-and-running, but we’ve barely scratched the surface of what they could achieve. There’s an excellent example in a recent pamphlet published by the Legatum Institute and Create Streets entitled A community-led future. The authors, Nicholas Boys Smith and Danny Kruger, propose that the Lancaster West estate (of which the Grenfell Tower is a part) should be transferred to the collective ownership of its tenants.
The Grenfell disaster was a truly horrific example of what can go wrong when social housing tenants aren’t listened to by people in power. The authors argue that tenant ownership, through a community land trust, provides the best way of ensuring that tenants become full participants in the decision making process – or, as they say locally, “nothing about us without us”.
The CLT model has already been successfully implemented nearby on the Walterton and Elgin estates:
“Residents and landlord are united into one body. There is no ‘us and them’, just one democratically accountable—and regulated—professional body, which makes decisions about rent levels, estate management and development.
“Jonathan Rosenberg, the local resident who founded and chairs WECH [Walterton and Elgin Community Homes – the name of the community land trust] sees the model as a template to be replicated wherever estate residents wish it. As he says, ‘the only way for communities to guarantee their future, and ensure their buildings are safe and their tenancies are safe, is to own the homes they live in’.”
Across London, large tracts of land are owned by the state in the form of housing estates (many of them built at low density and in need of regeneration). Redevelopment could provide thousands of new homes – and generate resources improve the lives of existing residents. However, tenants (together with former tenants who purchased their homes under Margaret Thatcher’s right-to-buy policy) fear that they could lose out in any wholesale redevelopment. The answer is to give them a real stake and a real say through a community land trust:
“The need for new housing represents an opportunity for CLTs to be established on housing estates across the UK. Residents do not trust local authorities or private developers, and so local consent for development and further densi cation is unlikely to be forthcoming under current ownership arrangements. Residents are, however, much more likely to trust themselves and each other. If proposals come forward for improvement of the estate, for instance, residents know that they will control the process and, as a community, share in the nancial bene ts the work brings.”
Elsewhere, CLTs could be used to secure local support for new development on greenfield land. Instead of sites being developed under the control, and to the primary benefit, of outside interests, the local community would be in the driving seat. For instance they could specify architectural styles that are in sympathy with the local built environment or insist that local people have first refusal on newly built homes. CLTs would also have the option of excluding buy-to-let investors and other speculators – a means of preventing the affordability-enhancing effect of new supply from being overwhelmed by opportunistic and unnecessary demand.
A further benefit of the CLT model is that it can be used to offer new homes for sale, while retaining ownership of the land they’re built on. This would enable home ownership at well under the market rate for the freehold of an equivalent property. The catch (for the buyers) is that the CLT, by virtue of its continuing ownership of the land, would be able to control the resale of the dwellings – for instance by pegging prices to an appropriate metric like local wage levels. Therefore, unlike the deeply flawed ‘Right to Buy’, those lucky enough to buy an affordable home wouldn’t be able make a windfall profit at the expense of future first time buyers.
The CLT model thereby enables ownership of a home (and asset), but outside of the conventional housing market. Politicians could therefore promote community land trusts to aspiring home owners, while remaining neutral as to house prices more generally. A growing CLT sector might be accused of siphoning-off demand from the conventional housing market – but whose demand are we talking about here? CLT homes would be of greatest interest to aspiring home owners who’d have difficulty getting onto the housing ladder any other way.
If there’s one market that definitely would lose customers from an expansion of CLTs, it’s the private rented sector; which wouldn’t be good news for landlords.