David Davis MP writes for ConservativeHome on how to meet Britain’s housing needs

As published on ConservativeHome

Without question, housing is one of the greatest challenges facing the country.

The average UK house price is now £285,000. In London, it is £523,000. During the 1990s, a home would cost you three times your income. Now, it costs eight to nine times your income – and more than twelve in London.

Most mortgage providers onlylend four to four-and-half times your earnings, which for many 20-somethings means a gap bridged by the bank of mum and dad.

And the rental market is just as painful, leaving people up and down the country with a Catch 22: they can’t afford to buy, so they have to sink eye-watering amounts in rent, making it impossible to save up a deposit to buy in the future. Unsurprisingly, a growing number of young people are living with their parents for longer and longer.

Like everything, housing is a matter of supply and demand. During the past 20 years, England’s population has risen by around 7,000,000. A lot of that growth has been down to immigration. Successive governments of all stripes have come nowhere near meeting increased demand, with annual building rates of around 183,000 and a peak of 243,000 in 2019-2020.

We are not even covering for the projected population increase, let alone making a dent in the huge backlog of housing needed to houseour existing population. Estimates vary, but the backlog is certainly in the millions.

On the face of it, the answer is simple: build more houses. But the real question is not whether to build, but where: it’s a matter of location, location, location. In many places, and often for very legitimate reasons,local communities are opposed to large developments.

There is way around this issue, however. One that has succeeded before.That solution is garden towns and villages.

In the early twentieth century, the garden city movement led tothe creation of Letchworth and Welwyn Garden City. And after the Second World War, dozens of new towns were created all around the country. Today, around 2.8 million people live in the 32 towns created under the New Towns Acts.

Reviving these ideas may hold the key to solving the housing crisis. Building entirely new settlements –especially smaller ones of around 3,000 homes each – will not meet the same opposition as adding more homes to existing towns.

Building new settlements allows us to design developments in a way that minimises so-called NIMBY opposition. The current incremental development of villages and towns, by contrast, maximises opposition to the minimum number of new homes.

The opposition to development stems from often legitimate concerns that existing infrastructure and services will not be able to cope with the new homes, or that a new development will provide quantity without any regard at all for quality.They also dramatically alter the local environment, which many people think of as improving the value of their own home. NIMBYs are rational. Their homes are their most substantial investments and anything that undermines that has a massive impact on their life.

So we must ensure that new developments have the funding needed to make them nice places in which to live and to stop local infrastructure from becoming overwhelmed.

Part of the problem is that  funding can quickly disappear. As soon as a hectare of farmland gets planning permission, its value can shoot up a hundred-fold. In England, outside of London, the average hectare of agricultural landgoes for £21,000, rising to an enormous average residential land value of £2.1 million per hectare after planning permission.

The vast majority of that uplift goes to the landowner and the developer. Research suggests that 27 per cent goes to the various arms of Government, and there is no guarantee that the money will be used to the benefit of the community in question.

The solution lies with the example set during the twentieth century. The construction of the New Towns was possible because the law allowed New Town Development Corporations to buy large tracts of land at their value as agricultural land.

Consider an example of a 1000-hectare garden town – a little smaller than Welwyn Garden City. Purchasing 1000 hectares of land at agricultural value might cost £ 21 million. But after being granted planning permission, it would rise to £2.1 billion. With the right legislation, the Government could buy the land at its agricultural value, grant planning permission, then sell it on to developers at the higher price.

It could then split the surplus between the original owners – giving them say one tenth – and the new communities, providing them with good infrastructure, as well as ensuring the new homes are affordable and high quality.

Landowners right now have no prospect of making this kind of money on their land. So in many cases they will be happy to sell.

What’s more, we could use a small amount of the surplus to compensate any local residents who want to move away because of the garden village development. Offering them 10 per cent above market value for their home –on average nearly £30,000 – as well as a tax-free moving allowance will reduce the negative impacts they experience.

Of course, the aim is to make new villages and towns places that everyone wants to live. New communities need to have character. So rather than plonking soulless tower blocks on the outskirts of cities, we should ensure the new settlements have GP surgeries, good schools, modern community centres, pedestrian walkways and cycleways, world-class fibre optic broadband, and designs that reflect the best in the country today – including designing out crime.These settlements should be placed close to good transport links – highspeed rail, motorways – to enable residents to get to work.

There is plenty of land to build on. Only 8.7 per cent of England’s land is developed, and that includes things like businesses –not just housing. When you flyover this country, the view is remarkably green. As Liam Halligan points out in his book Home Truths, we could build another five million homes on just a tiny fraction of our land.

Building garden towns and villages will also allow us to address the fact house sizes have been going down. According to one estimate, between 1980 and 2020, the average house size in the UK declined by nearly a fifth. Instead of shoehorning tiny properties into any nook and cranny we can find in and around our cities and towns, we can build good-quality, spacious homes in new developments, using funding from the land sales.

All this is very achievable. It is not a silver bullet; it will not end the housing crisis by itself. But it represents the best balance of affordability, ambition,and respect for local residents of any mass housebuilding proposal currently on the table. And it is based on a proven model of success. Let’s get building.