by James McSweeney
Tuesday, 26
July 2022
Idea
15:15

Want to fix Britain’s housing crisis? Look to China

We need radical state intervention to cut through our NIMBYist bureaucracy
by James McSweeney
How many shall we buy? (Credit: AFP/ Stringer/ Getty Images)

The tragedy of the Conservative leadership contest is that most senior Tories know an easy way to ‘level up’ the country but feel their voters won’t allow it.

Britain’s house-price-to-income ratio is almost twice that of the United States. This isn’t a London-centric phenomenon — a host of cities, including Manchester, Cardiff, Leeds and Plymouth, are now less affordable than New York (Birmingham just about ties). Young Britons must save for five more years than their 1990s predecessors for their first (increasingly tiny) property. Cities are stifled by their inability to expand. Would-be factories face years of consultations with no guarantee of success. Infrastructure projects which aren’t cancelled are the world’s most expensive and can take decades to green-light.

Yet, for all its potential, reform is a no-go. Tories are clear that ‘blue wall’ voters won’t abide change. For their part, ‘NIMBYs’ know newbuilds are rarely accompanied by necessary investment roads, schools, or sewage (developments in Surrey have faced repeated flooding). How to square economic necessity with political reality? Stopping the import of the equivalent population of Hull every year would be a good start. For the rest — look to China.

Chinese local governments have the power to sell ‘ready-to-go’ permissioned land to developers. Their eagerness to do so is driven by profit: despite broad tax powers, they derive a third of their income from selling land. Applying this system in a sentimental democracy like Britain would take three steps.

The first is to empower local authorities to side-step planning laws and grant open-ended (but time limited) planning permission on land they acquire, allowing them to sell ready-to-go land with whatever caveats they desire. Profits on this would be immense — permissioned rural land can see a value mark-up of 30000%. Second: replace pitiful developer contributions to local infrastructure with a mechanism allowing authorities to transfer their profits to voters. This could take the form of tax relief and/or a more localised dividend. Part of the profit should also be siphoned off for the necessary infrastructure.

Finally, we should improve the quality council officers. Chinese central government officials must first work their way up through local government – ensuring a high quality of local administrator. The Civil Service could adopt a similar system. An alternative solution — one which may better align incentives — would be to create well-paid development teams who share some of the dividend from land sales.

Together, these proposals side-step the political minefield of centrally-imposed targets, with local voters empowered to weigh their desire for continuity against financial gains. The system would also be more responsive to demand, with residents in high-potential areas standing to gain the most. Crucially, open-ended permission would clear aside the barricade of bureaucracy preventing regional development.

These proposals are transferable. Fracking has the potential to economically transform much of England and Wales, yet projects have been held up by local protests and nervous MPs. A dividend would allow communities to cash-in on expanding global demand. The same can be applied to other hampered projects, such as onshore wind.

Britain isn’t doomed to stagnation. Empowering communities to control their destinies could radically transform the lives of millions. The alternative is an increasingly bitter, zero-sum conflict between the haves and have-nots. For a prosperous tomorrow, Conservatives must look to the People’s Republic.

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Andrew D
Andrew D
13 days ago

As with dealing with a pandemic, looking to China is not the answer. Modern Chinese housing is hideous to behold and (as with all cheap, quickly built high volume construction) will probably need replacing in about thirty years time. Roger Scruton had the right idea – make new housing beautiful, and the objections will in large measure go away. And we also need to stem the demand by adopting and enforcing a sustainable immigration policy.

Last edited 13 days ago by Andrew D
James McSweeney
James McSweeney
13 days ago
Reply to  Andrew D

I agree beauty is important. The below peice (which I cited in the article) does a good job of explaining how planning regulations incentivise ugliness:

https://im1776.com/2022/06/28/the-blob-next-door/

Jeremy Bray
Jeremy Bray
13 days ago

Many thanks for a link to a very interesting article. Well worth reading. I am pleased to see an Unherd author commenting in the comments section. I wish more would do so although I appreciate it represents unpaid work responding to unappreciative or confused commentary.

Beauty in whatever form is certainly not encouraged by the current planning laws.

In turn can I suggest that a listen to a YouTube presentation under the heading of ‘the Black Forest family – town planning’ gives some insight into the difference between US and German urban planning which could also give some idea as to why Germany has a very stable property market that suffers little of the sort of house price inflation that has bedevilled the UK and many other countries. An excellent and well informed presentation.

Last edited 13 days ago by Jeremy Bray
Jeremy Bray
Jeremy Bray
13 days ago
Reply to  Jeremy Bray

Of course you may feel my suggestion is akin to teaching grandmother to suck eggs as the old phrase had it.

Peter B
Peter B
13 days ago
Reply to  Jeremy Bray

Germany certainly has house price inflation in recent years. Berlin is a good example. And do not believe that house prices are “low”, just because they are “stable” (check house prices in Munich).

James McSweeney
James McSweeney
13 days ago
Reply to  Jeremy Bray

Will check it out – thanks.

James McSweeney
James McSweeney
13 days ago
Reply to  Jeremy Bray

My general hope was that the above scheme takes better account of local aesthetic concerns by incentivising engagement in local democracy.

An additional proposal – one which could be incorporated into the above suggestions – would be to create aesthetic commissars to sit on development teams. They would issue guidance to bidders + hold a veto.

They could be selected via a general survey asking people to rank the beauty of buildings (with candidates having to closely match the opinions of the general population) and be susceptible to popular recall.

This would be less burdensome and constraining than current regulations but would incentivise developers to propose schemes which people would want to occupy.

Last edited 13 days ago by jrmcsweeney1
Jeremy Bray
Jeremy Bray
13 days ago

I agree that there needs to be a change in the current sclerotic planning system to one that makes cities more liveable in – particularly in view of the likely warmer weather we face in the UK and CO2 reduction targets that are unlikely to disappear even if modified – which will need a modification in house design and a greater emphasis on vegetation in cities.

However, I am not sure how much faith I have in local control fuelled by a development dividend in the light of the sort of devastation wrought by TD Smith in Newcastle as outlined in today’s article by Nicholas Boys Smith and the limitations of local democracy in practice.
I suspect you have more faith in local participation than I do as in practice local decisions tend to be captured by small politically motivated groups. The idea of aesthetic commissars might be appealing in theory if the commissars actually had decent aesthetic sense, but again is it not more likely the commissars will be captured by aesthetic bigots of one strip or another and the dismissal of one school of thought replaced by another producing an aesthetic discontinuity in the cityscape.

Sorry to be somewhat negative over imaginative thoughts as to how to move on from the current wretched system. I suspect looking at planning systems in countries that have been more successful in designing habitable spaces might be worth while, something I have not done but hopefully some of those involved in to town planning may have done.

Last edited 13 days ago by Jeremy Bray
Jeremy Bray
Jeremy Bray
13 days ago

I upvoted your comments but for some reason someone has negated that. As far as I am concerned I would upvote you simply for having the curtesy to reply. I tend only to downvote if a comment is completely idiotic rather than something I disagree with.

Andrew Fisher
Andrew Fisher
13 days ago
Reply to  Andrew D

I think Scruton makes some good points, but I’m very unpersuaded that ‘beautiful’ (as if we all agrees what that means) rather than ‘ugly’ development will make a significant difference. In the 19th century people were decrying the march of red brick mansion blocks, which the middle classes now swoon over. Realistically people will always prefer no development to some, especially if it spoils ‘their’ views. They’d rather live in smaller rather than expanding towns. There is a huge degree of self-delusion over this. Well educated middle class people are just so good at coming up with plausible reasons why any development should be opposed – they do not always get their way, but they almost always try.
And then there is the fact that if it suits them, they are perfectly happy to add ugly attic rooms, conservatories, garish lighting, garages, ripping out front gardens etc etc on their own properties!

Last edited 13 days ago by Andrew Fisher
D Glover
D Glover
13 days ago

The UK has an extremely high population density. A rising population needs more housing, but it also needs more food, more water, and more electricity.
You can build on land, but that sterilises it as farmland. So you’ll be importing more food to compensate for the lost production. You will be wanting reservoirs and solar energy sites, but they take up more land too.
That’s not to mention ‘re-wilding’ of farmland to improve the diversity of wildlife.
I’ve just finished ‘Fieldwork’ by Bella Bathurst and I recommend it for an insight into real rural life in England.

James McSweeney
James McSweeney
13 days ago
Reply to  D Glover

Only 6% of UK land is developed and 70% is agricultural. Itching out just 1% of existing farmland would expand our housing/industrial stock by roughly 12% (enough to solve the current crisis).
In terms of lost agricultural production – the fact that farmland becomes up to 300x as valuable when permissioned suggests the potential value of new factories, homes, roads, power plants ect. would more than outweigh the value of lost agri-food.
Lost agriculture could be compensated-for several times over by closing the productivity gap between our farms and those of the likes of New Zealand. Subsidizing unprofitable farmers to sit immense, inaccessible wealth is no recipe for prosperity.

D Glover
D Glover
13 days ago

We import about half the food we eat. Imports could be disrupted by war, pandemic, natural disaster, or financial collapse. The last decade should have taught us that these are not impossible.
The Environment Agency has just urged people to ‘use water sparingly’ because England is facing a drought in August. I rest my case.

Billy Bob
Billy Bob
13 days ago
Reply to  D Glover

We import half the food we eat because our climate isn’t good for growing that particular foodstuff, or other countries are producing it much cheaper. It doesn’t mean we couldn’t be self sustainable in an emergency with a much more basic diet

Jeremy Bray
Jeremy Bray
13 days ago
Reply to  Billy Bob

Indeed in an emergency a lot of food could be grown in urban and suburban gardens. Currently most of us don’t need to. Or those who do need to don’t think to.

Peter B
Peter B
13 days ago
Reply to  Billy Bob

Apparently it’s “getting warmer”. So we’ll be able to grow an ever wider range of stuff.

M. Jamieson
M. Jamieson
12 days ago
Reply to  Peter B

That does not follow so simply, unfortunately. Warmer may mean some crops are more viable, while others may be less so. But drought, seasonal flooding, and extreme weather events will also become factors that limit production.

James McSweeney
James McSweeney
13 days ago
Reply to  D Glover

I agree we should improve our agricultural output, but I don’t agree that this will be resolved by squabbling over 1% agricultural land.

The UK is a net importer of most things we need to survive, including fertiliser, metals, fuel, plastics, clothes, machine parts ect. In this context, holding back general productivity out of a particular reverence for underutilised farmland makes little sense.

Christopher Chantrill
Christopher Chantrill
12 days ago

How dare you suggest there is room for development when “Everybody Knows” that UK is full up. Always was, always will be.

Peter B
Peter B
13 days ago
Reply to  D Glover

The UK has high population density in many places. Huge areas have very low population density – even within the South East. Is Cambridgeshire (as a whole) “over-populated” (check on a satellite map) ? Is Salisbury Plain ?
Here in South Cambridgeshire, there are entire fields left permanently unused. There’s a piece of so-called “permament pasture” in our village which hasn’t been used for years (yet is generating agricultural subsidies). Plus vast areas now used for solar farms – always on good, flat agricultural land.
I suggest the core problem is inefficient land use – encouraged by stupid planning laws and even more stupid agricultural subsidies. Land tax would sort some of this out.
However, do not copy as-is the Ponzi scheme that is Chinese housing development where 90% of properties are sold pre-build. This disaster is unfolding live right now.
Certainly do introduce proper (high) taxation on the land uplift when planning permission is granted on greenfield land. Landowners deserve some of the gains, but not the outrageous amounts they extract for no work.

Liam F
Liam F
13 days ago

Learn from China, really?
The previously red hot Chinese property sector has just shrunk 7 per cent year on year . Developers have run out of money because the Chinese system requires you to pay up front before the property is even bullt.! Due to widespread corruption many consumers have stopped paying mortgages for property they know may never be delivered- hence the recent reverse. The Chinese govt are aware of it to be fair – and currently doing all they can to avert a total property sector collapse . (property is about 25% of China’s entire GDP)
So I’m not sure we need look to them for guidance …

James McSweeney
James McSweeney
13 days ago
Reply to  Liam F

Don’t recall suggesting any of those things. China suffers from state directed lending and a shrinking population – Britain does not. We’re very far off worrying about having too many houses.

Peter B
Peter B
13 days ago

The Chinese population is not shrinking yet – but it is certainly about to. This effect has not hit the Chinese housing market yet. Same in Korea – very, very high housing prices relative to incomes. Beijing and Shanghai far more expensive on this basis than the UK.
You need to be very clear that you are not advocating the “selling off-plan” model (or even “pre-plan”) that dominates in China. I don’t think you are – but your article is open to interpretation here.

James McSweeney
James McSweeney
13 days ago
Reply to  Peter B

The number of Chinese people turning twenty halves every generation – making a real estate-driven growth model unsustainable. People living longer doesn’t significantly increase demand for housing.

Last edited 13 days ago by jrmcsweeney1
Peter B
Peter B
13 days ago
Reply to  Liam F

“The Chinese government are aware of it” !!! They caused the problems in the first place. They wrote the laws. The presided over the whole disaster. There’s no one else to blame.

AC Harper
AC Harper
13 days ago

Golf courses occupy around 2% of the land area in the UK. Plenty of room for houses, with nice lawns already laid. Now you might argue that lots of people play golf and would object, but that didn’t stop hunting with dogs from being banned against the wishes of many. Or perhaps the straggly areas of the Green Belt could be pressed into service?
There will never be a resolution as long as people don’t want to find a way forward.

polidori redux
polidori redux
13 days ago
Reply to  AC Harper

Just stop importing people: Learn to do without the cheap servants.

D Glover
D Glover
13 days ago
Reply to  AC Harper

It’s telling that you target golf courses. Not football pitches, or Rugby League?
The key point is that the UK population grows by about a million every three years. Even if you house everyone, in a few years time there’ll be another homeless queue.

N Forster
N Forster
13 days ago

Singapore has an excellent approach to housing which could be adapted to less dense housing schemes. 80% of Singaporeans live in state built high quality HDB blocks, these are not “right to buy” rather “you have to buy.” Priority is given to married couples, and extra points are given for living close to parents. You have to buy the property from the state but you are allowed to set a large chunk of your state pension pot (CPE?) to offset the price. There are conditions and restrictions on selling the flat within a short time period to prevent prices spiralling out of control.
Another great scheme they have is pensioners can sell their HDB on the open market and buy a cheap 30 year lease on a smaller pensioner HDB. A place designed for later life, with wheelchair access, wet room etc..If the occupants outlive the lease (they live to be over 95) the home is free until they die. But this allows them to significantly boost their pension fund when retired. It also encourages people to not sell their HDB in the first place as a ready made late life solution is available.
There are many ideas worth adapting. We just need politicians bright enough and energetic enough to do it.

Derek Smith
Derek Smith
13 days ago
Reply to  N Forster

CPF (Central Provident Fund)

Last edited 13 days ago by Derek Smith
N Forster
N Forster
13 days ago
Reply to  Derek Smith

ta

Peter Francis
Peter Francis
13 days ago

Upping the home ownership rate, as a policy goal, might be a vote winner, but take a look at the “league table” of home ownership rates. In the top 10, i.e. countries with the HIGHEST rates of home ownership, are Laos, Cuba and China. In the bottom 10, i.e. countres with the LOWEST rates of home ownership, are Switzerland, Austria and Germany.
To which end of the league table do we want our government to be nudging us?

D Glover
D Glover
13 days ago
Reply to  Peter Francis

Good point. In Germany people save with local savings banks (Sparkassen) which loan money to local, mid-size companies. Everyone benefits. Lots of people rent their homes, but don’t need to feel ashamed.
In the UK we save with national ‘building societies’ which loan the money out to mortgagors who eventually buy houses. Local industries don’t see the money, property developers get rich, pensioners own houses.

E. L. Herndon
E. L. Herndon
11 days ago
Reply to  D Glover

And what’s wrong with pensioners owning houses? (Quite sure I’m not the only one who wonders this)

Peter Dawson
Peter Dawson
13 days ago

To control the housing price hike emergency we need to very severely reduce immigration – as close to zero as possible – as well a removing as many illegals as we can get our supine police)birder force/navy etc – which also have massive impacts on
Housing
Education
Health
Ghettoisation
People trafficking
Social unrest
Child sexual exploitation
Knife crime and
social cohesion – which is rapidly disintegrating.

B Clark
B Clark
13 days ago

If you travel through China, you will see huge numbers of empty apartment blocks. The ones that are inhabited sometimes collapse. Following China on any measure which steamrollers through individuals’ rights is not a great plan.
What we need to be thinking about is how to reuse the uninhabited housing in this country. And if we have to build, build on brownbelt land and absolutely not on the greenbelt. We need to rewild as much as possible. Britain is very low down the league tables internationally when it comes to the quality of our countryside. This is a really serious environmental issue. Once it’s gone, it’s gone.
The last thing we need are more houses. We need more insects and wildlife.
I suspect, though I have no proof, that the ‘housing crisis’ is being whipped up far more than necessary by developers, who are some of the shadiest and least scrupulous types out there.

t.birkinshaw8
t.birkinshaw8
13 days ago

We build at far too low a density (supposedly 30 houses per hectare, but often far less) at rates determined by house builders who game the system to build largely where they want on the easy sites (good farmland) rather than brownfield. Local councils and central government are left to pick up most of the infrastructure costs. Nimbys rarely influence where houses are built unless the house builders’ armies of lawyers and consultants bodge badly.

Steve Elliott
Steve Elliott
13 days ago

I’ve no doubt that planning system needs change. I don’t know what it’s like in the rest of the UK but where I live the planning system is a mess. It’s arbitrary and illogical. The council ignoring their own rules and overriding decisions by the parish councils and their own planning officers. Different planning officers apply the rules differently and often it appears to depend on who you know on whether you get permission or not.
I haven’t been affected by adverse planning permissions but my neighbours and people in local villages have. I live in a rural area.

Linda Hutchinson
Linda Hutchinson
13 days ago

One way to “combat” NIMBY-ISM” among the resident population is to offer something to them. Too often houses are just dumped down in an area, and the people who have lived there for some time just suffer increased traffic problems and loss of green spaces, and more social problems from children/teenagers who don’t want to live in an area with absolutely nothing going on. If locals were offered, say, a regular bus service (subsidised, if necessary), or improved roads, or a community centre etc. this might go someway to get them on side.

Candace Bowen
Candace Bowen
12 days ago

Yep. Scratch a liberal, find a despot.

Sutton Manor
Sutton Manor
12 days ago

In my local area, they have just announced 500 new homes on farmland, within the green belt, because there is a ‘demand’ for these new homes.
However, they will be selling for upwards of £200k in a council that ranks amongst the poorest in the country.
They will not be sold to people from this area, so the ‘Demand’ will not be met.
The local GP surgery is in special measures.
There is only 2 local primary schools open to everyone and they are full whilst the secondary school is rated Good after being in Requires Improvement for years….and that is full as well.
The local Tesco has just closed down.
All the traffic will use a B road that’s just been shortened to include bike lanes so the traffic is as tight as it can get.
The train station is having extra car park facilities added due to the number of people living here but working in Liverpool or Manchester.
These 500 new homes will NOT improve the lives of the local community or provide new homes for the population
So… Yes.. go down the Chinese route but it’s never for the benefit of the local people.

E. L. Herndon
E. L. Herndon
11 days ago

It doesn’t matter if spread out, or stacked up, if the environmental carrying capacity is exceeded there will be damage.

M. Jamieson
M. Jamieson
13 days ago

I’d be interested to know, before following the lead of China, what their neighbourhoods look like, how they function, and the long term outlook for the things that get built. Because while I appreciate (and have myself dealt with) the frustrations of long planning processes, in my experience local governments expediting building and being allowed to subvert planning guidelines leads to crap building projects in areas that are subsequently unpleasant for everyone, often have negative environmental consequences, and which ultimately seem to benefit only the developers.

John Urwin
John Urwin
12 days ago

Surprised to see no mention of the way volume builders restrict the supply of housing to maximise prices, which also happened when land was bought by compulsory purchase as with the.new towns. They also offer a very limited range of designs, so are able to buy windows, bricks, tiles etc in huge volumes at rock bottom.prices. The book Home Truths by Liam Halligan sets out the many problems with the housing market, but in my opinion it is a bit tedious and repetitive. However, it is all there…