Will localism raze or raise the roof?
July 24, 2019
The Institute of Economic Affairs (IEA) report, titled ‘Raising the Roof’, is thankfully not claiming to be the silver bullet to solve the housing crisis but, instead, earnestly builds on industry proposals.
Penned by Jacob Rees-Mogg MP and Radomir Tylecote, the report focusses on enabling a more competitive house building industry through more appropriate taxation and supply mechanisms.
Taxation is a problem for the industry. The IEA’s recommendations to more easily use corporation tax relief to clean up derelict or contaminated land are welcomed, but silent and unfair taxes charged through the development process must also be reformed.
House builders pay many fees and taxes, two of them being the Community Infrastructure Levy (CIL), a standardised development charge, and Section 106, an affordable housing contribution assessed on expected profits. CIL was initially introduced to replace the complex and delay-ridden Section 106. Yet, in practice, developers are paying both.
An assessment of tax is therefore desperately needed but, before considering any changes to stamp duty, the likelihood is that further exemptions will push house prices up further and discourage councils from granting more permissions, even if the tax is regionalised with more money going directly to local authorities.
This is because councils already have a similar growth mechanism through the new homes bonus, a grant paid by central government to incentivise more homes. Many councils have not used this mechanism to increase revenues and, instead, have preferred to err on the side of localism or, as is it is more commonly known, NIMBYism.
It is highly unlikely that personal tax reductions will increase supply and, while lowering corporation tax and reforming of other levies will help make smaller house builders more resilient to the broken planning process, it will not physically increase supply.
To stimulate supply, the IEA has made four key suggestions:
- Build It Yourself (BIY) policy, operating under the presumption that people can build their own homes;
- granting permitted development rights to ‘build and beautify’, even at very local levels such as individual streets;
- reassessing the greenbelt and its appropriate release, such as when it is brownfield or land near train stations;
- reverse compulsory purchase orders.
BIY is absolutely necessary, because councils have barely delivered any homes through their self-build registers and certainly not in England’s most expensive regions. However, this policy should favour those who truly need housing, not just those who can afford land or the build risk.
Councils can already release or reassess greenbelt, but they are not doing it. Neither are they using local policies to speed up permissions when new homes meet local need or build expectations.
The reverse compulsory purchase orders are perhaps the most interesting recommendation, as they place localism at the heart of decision making by allowing local people to force public land to be released. This would certainly enable more true localism, especially with the growth of community land trusts.
The IEA therefore makes some very sound planning reform recommendations, which will help increase supply and encourage culture change. However, many work on the premise that more local control is the answer, defining it as ‘choice not bureaucracy’. This is despite councils already having powers that they are not using successfully enough, such as being in control of their local plan site allocations, running a self-build register, or properly assessing housing need.
Unfortunately, when there are great challenges, localism often stifles success. The housing crisis is one strong example of this but if we take another national crisis, renewable energy, we can see that the Government’s ambition to let councils decide where commercial onshore wind and solar farms are built has resulted in councils rejecting them almost out of hand.
Localism has had such an impact that even Green Party councils have been dissuaded from implementing renewable energy solutions.
Industry has beseeched the Government to work with them to analyse and understand how the supply of the right housing is actually delivered. It is therefore positive to see many of those discussions making their way into this report and further highlighting that house builders are not to blame for the shortfall of housing.
You May Also Enjoy
How Technology is Changing the Prime Property Viewing Experience
The world of luxury real estate has always been about delivering a premium, personal experience. But in today’s rapidly evolving digital landscape, even the most traditional sectors are being reshaped by technology—and prime property viewings are no exception. From augmented reality to AI-driven virtual tours, the way buyers interact with high-end properties has changed dramatically.…
Read More 
Average two-year fixed mortgage rate for 60% LTV now cheaper than five-year rate
The average two-year fixed mortgage rate for those with a 40% deposit (60% LTV) is now cheaper than the average five-year fixed equivalent, the first time this has happened since the mini-Budget The average two-year fixed, 60% LTV mortgage rate is now 4.18%, while the five-year equivalent is 4.19% The gap between average two-year fixed…
Read More 
How UK Property Investors Can Manage Exchange Rate Risk When Buying Off-Plan Overseas
Off-plan purchases are especially common in developing overseas property markets with a high proportion of international investors. In these less mature markets, a significant share of stock is sold directly by developers, making off-plan transactions a natural sales model. These opportunities appeal to international buyers because they typically require less upfront cash due to extended…
Read More 
Foxtons Lettings Market Index – March 2025
London rental market gains momentum as new rental listings surge, Foxtons data shows March saw a 14% increase in new rental listings across London compared to February Applicant registrations rose by 11% month-on-month in March. Year on year, demand was stable, tracking just 2% below March 2024 levels The average rent in March stood…
Read More 
UK’s mid-market firms show improved business growth in March but economic uncertainty continues
Key findings: NatWest’s Mid-market Growth Tracker shows improved business growth in March, led by a strong service sector performance SMEs register a softer decline in output levels during March Market conditions remain challenging and we could see continued challenges in the coming months Mid-market businesses continued to outperform the wider UK economy in March,…
Read More 
ONS Private rent and house prices UK – April 2025
The Price Index of Private Rents (PIPR) measures private rent inflation for new and existing tenancies. The UK House Price Index measures house price inflation. Main Headlines Average UK monthly private rents increased by 7.7%, to £1,332, in the 12 months to March 2025 (provisional estimate); this annual growth rate is down from 8.1% in…
Read More