The year is 1351. Two-fifths of the people of your village have perished from the Black Death – a toll repeated across the country. The labour shortage has forced employers to give labourers better conditions. Many workers are moving to towns to benefit from higher wages.
The Earl of Stafford and his peers are outraged at workers holding out for double the rate of five years ago. Parliament under Edward III passes the Statute of Labourers, seeking to hold down pay and banning workers from moving to a different employer. You are stuck working for your miserly lord at the old rate.
That could never happen in today’s democracy, you think?
The Statute of Labourers ultimately failed, but our modern-day equivalent is far cleverer and more insidious. Like the hukou system in China, we have found a way to stop people from moving to towns and cities with better opportunities – often without them even realizing.
We have hidden those permits inside houses and called them planning permissions.
Since planning permissions were first required in 1947, we have never grown the nation’s housing stock at the net rate of the 1830s, let alone the far higher rate of the 1930s. We have not built nearly enough homes for decades.
Those permits to live within reach of good jobs have now become so scarce, and so expensive, that these “planning permissions” account for some two-fifths of the entire net worth of the UK: roughly £4 trillion. The buildings would cost less than £2 trillion to rebuild. The land, without planning permission, is worth far less. Farmland is fairly cheap – some ten thousand pounds per acre.
Most of the value of the housing in this country lies in the unnecessarily rare permissions for housing to exist.
That is a mind-blowing distortion of the economy: a totally needless scarcity, like an Elizabethan monopoly or New York taxi medallions, hurting almost everyone except a lucky few. UK rents are probably four times higher than they need to be.
That dwarfs the deadweight losses from any other barrier to free trade. There is no British productivity “puzzle”.
The shortage drives down wages in places with more homes than jobs, and keeps people away from higher wages in places with more jobs than homes. It holds down incomes, destroys lives and opportunities, damages growth, and creates a monstrously unfair system where many have seen their living standards after housing costs stagnate or decline over the last fifteen years.
And not for want of land: most of London is unremarkable two-storey sprawl. The gorgeous squares of Bloomsbury have five times the homes per acre of most of the rest of the city. We could easily add five million more homes within London alone, and make it look better – even before you start looking at pesticide-soaked golf courses next to tube stations. The facts for many other cities are similar.
Population growth is not the main reason why we need to build homes. Rising incomes drive demand for more living space. If you don’t build enough housing, the poor get squeezed out by others looking to upsize, even with an unchanged population. In any shortage, the poor suffer worst of all.
So if you want to defend free markets, our housing system is very far from one. People who have seen their standard of living stagnate are unlikely to rally to your banner unless you help to fix their problems – good luck explaining how well free markets work when all they see is decline.
Their problem is your problem, unless you want ever more of them to turn to populist, unworkable solutions.
Under a better planning system, most people in this country would earn more – probably by a double-digit percentage, by comparison with US studies. The young would have far lower rents and a broader range of opportunities. People are much more likely to start a business when they aren’t struggling to make ends meet.
If you want more entrepreneurs, we need a better planning system.
The challenge? That shortage of homes is a feature, not a bug. The government helpfully spelled out to the Letwin review that it wanted houses to keep on getting more expensive. Some two-thirds of voters are homeowners. Homeowners feel happier when their house price goes up. Happy voters tend to re-elect governments.
Fifty years of clever and well-meaning people studying housing have resulted in ever more unaffordable homes. If we want to win, we need a way to hack the system.
That led us to two ideas we published in 2017. Within a year, the government adopted the core of one of them.
The other – much more powerful – gives another way to build a winning alliance to get change, by getting many homeowners onside.
How do we gracefully add plenty of homes within existing cities? We should let residents of a single street vote to set a design code and give themselves planning permissions, subject to rules to protect other streets. That can add five times the housing on a single suburban plot, while making a prettier, more walkable, and fairer city. The original homeowners love it. The renters will love it as they see rents start to go down at last.
Our campaigns have a plan to win – to end the housing crisis, by building a mass movement for change. If there is a YIMBY group near you, please join it. If not, please get in touch and we will help you set one up.
We can make housing secure and fair again, if we work together.