Sir David Davis writes for ConservativeHome about how to solve the housing crisis


As published on ConHome

Rishi Sunak has inherited a number of difficult issues from his predecessors, but one of them, housing, is a gordian knot he needs to slice through in the interests of the whole younger generation.

For decades, housebuilding has lagged behind the demands of a growing population. The UK population has grown by nine million since 2000. That means we needed more than five million new dwellings. In fact, we built less than five million – more than a million short, and the deficit is growing.

The attempt to meet this shortfall means that houses today are 20 per cent smaller than they were in the 1970s, and far less affordable. The present generation faces a huge uphill struggle to get onto the housing ladder.

When I was younger, two thirds of my generation were able to buy and own their own home. Today, that privilege is only open to a quarter of the modern generation. The ones who can afford it are those who can rely on the bank of mum and dad. In the 1970s, less than 20 per cent of first-time buyers received financial help from their parents. In the last decade, it was over 50 per cent.

The housing market is undeniably in a crisis – albeit one that leaves big housebuilders very comfortable. If the Government can resolve it, it has an enormous opportunity to win back young voters, but more importantly to reignite the dream of home ownership in future generations.

Yet housing policy seems to face an intractable problem. On the one hand, we have a housing crisis that demands a significant expansion in housebuilding, and on the other, local objections seem to stifle any attempts at large-scale development near existing towns.

But there is a way that the Government can take a knife to the gordian knot of housing, both to build more homes and steer clear of the NIMBY problem.

And it is a pathway that has proved successful in the UK before: garden towns and villages. New towns built on land that is predominantly rural, rather than expanding existing urban areas.

Many local communities, quite legitimately, reject traditional local developments, since their roads and public services would be put under greater strain. That problem can be solved with this model.

And if there is a small hamlet on a potential site, then some of that money can be set aside for buying those homes out at a premium if the owners did not want to stay, perhaps at 20 per cent over market value. We will also be able to use some of the surplus to make the homes both larger and cheaper.

Not only are we building too few homes, but the homes we are currently building are far too small – as I point out above. Indeed, the UK has some of the smallest homes anywhere in Europe.

The average home in the UK is now a tiny 76 square metres, while German homes average at 108 square metres, French homes average at 112 square metres, and Americans enjoy homes that are an enormous 201 square metres. Indeed, in London the minimum standard for a one-bed flat is a mere 37 square metres.

Because our ambition has been limited to expanding existing towns, the available space for development has been small. Garden towns and villages will provide the funds and the space for larger homes and a higher quality of life.

Relatedly, there is nothing stopping us from ensuring that these towns are designed in the sorts of ways that people like, rather than in the style of a bland, soulless, concrete estate. New towns must fundamentally be places people want to live. These towns need green and open spaces, playgrounds, schools, gardens, and recreational facilities.

The garden towns model will allow us to build villages with around 1,500 homes centred around a primary school, sports hub, small shops, and a parish hall with small office and meeting spaces to promote flexible working. Or it could be a larger village of 5,000 homes, which would allow a secondary school, medical centre, more social space.

And they should be built in such a way that crime is ‘designed out’ from the start. For decades, we have had a very good understanding of the enormous impact that design can have on crime, vastly improving the quality of life at zero extra cost. Whilst we are doing this, we should also take action to prevent the land-banking that is holding back the planning system.

It is a familiar story across the country. Large developers will acquire as many permits as they can, sit on the land and build fewer homes than promised – with the resulting supply shortage enabling the developer to sell the land or the homes at a higher price than before.

If the land in these new towns is not developed within around three years, developers should be subject to compulsory purchase at zero premium over the original purchase price, since what is going on is simply anti-social exploitation of land price inflation.

This land-banking is one of the consequences of a failure to promote competition in the industry. Before 2008, small and medium-sized enterprises (SMEs) built almost three quarters of new homes. Today, SMEs provide just a third of new homes. When we build new towns and villages, we should seek wherever possible to use local SMEs and tradesmen.

This would be an opportunity to re-stimulate small and medium-sized developers, and thereby bring greater competition into the entire housing sector, and employment to new areas.

And the houses we do build should reflect the diverse needs in the housing sector. Homes should primarily be available to buy, but for those who enjoy the flexibility of renting, allowing build-to-rent development in garden towns can enable them to do it much more cheaply.

The garden towns model would slice through the gordian knot. It may sound too dramatic to be workable, but it is no more dramatic than Margaret Thatcher’s Right To Buy scheme, which faced similar objections at the start.

If you fly in a helicopter over the UK, outside the massive conurbations you could almost be flying over a golf course. The UK is covered in open space. It is time we took advantage of it.