Diversity - Developers need incentives to deliver it!
Published: 1 July 2014 | Author: Bernard Clarke
In this article, Stephen Noakes argues that it’s not just about increasing housing supply – we need the right balance of tenure, too. Of course, there’s a chronic shortage of housing but, in particular, of affordable housing.
Where developers are responding to demand, Stephen argues, this tends to be in the owner-occupied sector, because that offers the best returns. So, he puts a case for planning subsidies to encourage the provision of housing in other tenures.
Questions remain as to whether we are seeing the beginning of a house price bubble or not. But irrespective of individual views on this question, the key issue remains the imbalance between housing supply and demand.
If we’re looking to address the question of housing supply, it is critical that we have a housing stock which will accommodate the needs of the population. The key challenge at the moment is that the majority of the new-build market is for owner-occupied housing or for rent at market value. Analysis from organisations such as Shelter is telling us that, for a significant proportion of the population, these properties are not affordable, either to buy with a conventional mortgage, or to rent.
There's no silver bullet, but we need more affordable homes. To make this happen, there will have to be incentives for developers, potentially in the form of subsidies…this works effectively overseas"
So what is the solution? Well, there is no silver bullet in this case. But there is a greater need for affordable homes through a combination of more shared ownership, social rent and affordable rent, which have to form a certain percentage of new housing developments.
To make this happen, there will have to be incentives for developers. At the moment, they will always turn to the owner-occupied option as this offers greater returns. Such incentives could be provided through the planning framework, potentially in the form of subsidies.The model works effectively in overseas markets and we need to try to find a way to make this work here in the UK.