Natalie Evans: Radical changes needed to ease homes crisis

Home ownership is falling for the first time since modern records began in 1918. From 1953 to 1991, the rate of home ownership rose at around nine per cent a decade. Between 1991 and 2001, however, it rose only a further three per cent, peaking at 71 per cent, before falling back in 2008 to 68 per cent.

Between 1995 and 2009, the average real term house price rose by a historically unprecedented 120 per cent, and currently sits at around five times more than average earnings across each region in the UK.

The aspiration for the coalition Government should be to create the conditions whereby those who want to become homeowners are able to realise their ambition.

The change in government really does offer an opportunity to break from some of the obstacles of policies past, and set a new direction for housing.

One very clear priority that must be tackled from the off is the severe shortage of new homes in the private sector which has caused the sharp spiking in house prices (which in turn knocks on to cause the twin ills of longer social housing waiting lists and rising housing benefit costs).

Each decade since the 1960s has seen fewer new homes built, and under-supply has been an issue for years now. However, is the answer as

simple as building more homes? In part yes, but with the understanding that it is as much the quality and type of development that is

important as the number of properties built. We need to make sure we get the right homes in the right places.

As the Yorkshire Post reported this week, that is at the very nub of the issue if the controversy from local residents over the proposed development in Sands Lane, East Riding, is anything to go by.

In this case, despite agreement from the residents that more affordable housing was required to meet the needs of young families who could not otherwise compete in the housing market, their ire has nonetheless been stoked by the decision to locate the development on the very edge of

the village, on a greenfield site.

It's a pattern largely reflected throughout the country. Opposition in and of itself to development appears far less hostile than one might think.

Surveys show that nearly three- quarters believe that the UK does need more homes, and at present, only around 10 per cent of England – the most populated nation in the UK – is developed. So we do have real options where increasing housing supply is concerned. But why then in practice do we have this development shortage?

People want to live in and near high quality homes with gardens – not in cramped, cheap housing and flats. This is where recent housing policy has had the perverse effect of strengthening opposition to development, not weakening it.

On top of this, the lack of land being released for home building has resulted in high land prices that have pushed new homes toward being poorer quality – the value of the property being derived from the value of the land it sits on, as opposed to any intrinsic features of building and design. And, due to low turnout in local elections, it is the so-called "Nimby vote" that shouts with a disproportionately loud voice to block building.

The answer at least in part lies in "real localism" – a radical shift to community-controlled planning and direct democracy. All of these have in the recent past become popular political "buzzwords", but what might they translate into for local communities and people on the ground? In the first instance, it means scrapping density and affordable housing targets – by making new homes fit with what local residents want, removing immediately any sense of imposition by Whitehall diktat.

Secondly, home owners directly impacted by a proposed development

should be balloted. This provides a huge incentive for developers to propose homes that local people approve of. The "Nimby" element here is negated by the bar of 50 per cent – whereby unless more than half of those balloted object, the development is automatically approved.

Developers should be free to offer financial incentives to households being balloted (with the aim that some of the increase in land value arising from the granting of planning permission blows back to the community). They could, for instance, offer to improve local amenities such as a new park, or school playing field for allowing building or redevelopment of an old industrial site.

This is the sort of radical thinking we need if home ownership is to become something more than the castle in the air it is for so many at present.

Natalie Evans is deputy director of the think tank Policy Exchange. Policy Exchange's report Making Housing Affordable can be found on the website www.policyexchange.org.uk