We need more than a cold remedy to cure our ailing housing policy

11 Jan 22

Whilst the low-hanging fruit of surplus industrial land was voraciously swallowed up long ago, the pubic continue to believe that it can rely on the reuse of employment land in perpetuity


The law of unintended consequences. It’s not debated in any house of government; it needs no Royal Assent, nor consultation. It’s immune to challenge.  It can change and evolve as it pleases. Yet it is capable of dictating the implementation of policy with profound consequences. 

The pandemic is the epitome of the law of unintended consequences.  It has triggered many social and economic impacts.  Much has been written about the rapid recalibration of consumer habits, with the resultant effect being a boon in on-line shopping and a decline in physical retail.  However, whilst in abstract form, commentators have highlighted the unprecedented demand that now exists for warehouse and distribution space, less has been said about the effect this is having on the nation’s favourite land use – namely housing, and by association, housing policy. 

To recap the profile of the country, and in particular, London and (but not exclusively) the South East since the mid-1990s, effectively when London’s population started rising again as the effects of the ‘Big-Bang service economy of the 1980’s fully took hold:  More homes need to be built to keep up with jobs and population; those in homes object to homes being built; politicians react to this by tightening policy, focusing on brownfield land and protecting the sacred cow that is the Green Belt; former industrial land gets redeveloped for high-density housing; more homes required; those in homes object; further tightening of policy…. And so on.   

Whilst the low-hanging fruit of surplus industrial land was voraciously swallowed up long ago, the public continue to believe that it can rely on the reuse of employment land in perpetuity, notwithstanding the fact that even a service economy needs some physical places to work.  A succession of London Mayor’s have demanded London authorities adopt ever more creative and complex ways to deliver homes, increasingly with an expectation that jobs can be retained through mixed-use developments.  And for a while, this was sometimes feasible – provided the land value uplift for residential development warranted the planning risk profile.  And what starts in London often spreads: the same phenomena is probably playing out in a metropolitan area somewhere near you.

The pandemic has put this strategy into draconian isolation – potentially for the long term. Accidental landowners that were once being seduced by residential agents and residential developers, are now inundated with phone calls from industrial agents and shed developers.  Corporate landlords that were previously envisaging the repurposing of assets to residential are pivoting back towards employment, where both rental income and capital growth makes a nonsense of changing use.  Whilst town centres – particularly of the covered roof, mono-cultural type – are often underutilised, industrial estates are a thriving mix of last mile delivery, film, tech and media, data storage, creative industries, recycling and sustainable manufacturing.  These assets are simply not available for residential because they are not viable for residential.  Yet national and local policy continues to rely on them for housing supply nonetheless.

The Secretary of State, Housing Minister, Mayor of London and leaders of other metropolitan areas, need to take ownership of this issue.  Focusing on building beautiful is futile if the sites local authorities rely on have no prospect of materialising.  Masterplans envisaging the managed release of employment land will stay just that – plans – if landowners have no incentive to redevelop.  And why should they? A site redeveloped for residential typically only happens once; whereas a managed employment site delivers income, capital growth, and the future prospect of redevelopment.  How many emerging local plan allocations are deliverable if the underlying assumption that the value uplift from employment to residential, particularly taking account of affordable housing, CIL, and other financial contributions, is patently wrong? Are local authorities realistically going to compulsory purchase such sites for redevelopment, particularly if the existing use value is greater than residential, not to mention the political fallout of evicting vital and vibrant businesses, the loss of business rates, and systematically making people redundant for good measure?

An unpalatable as it may be, there are only two options for politicians if they are serious about delivering housing in a post Covid-Britain, and in particular, our city regions.  Firstly, town centres, where further pain will hit the value of assets before analysts can say with any degree of confidence what the bottom of the market looks like.  Residential-led development in those locations, particularly for higher density development (notably build to rent, co-living, third age living, student housing) should be a fillip to be welcomed.  And secondly, the sacred cow; the Green Belt.  If we want to build houses rather than flats, with gardens, and space for families to grow, there really is no alternative to greenfield development.  We know it, and the politicians know it.  But do they have the leadership qualities to deal with it? Because the law of unintended consequences will not tolerate procrastination. 

Ian Anderson Chief Executive,Planning