This report from the UK think tank the Institute of Economic Affairs looks at how to solve the UK’s housing crisis.
The United Kingdom’s housing costs are now among the highest on earth, the economic and social impacts severe. Since 1970, the average price of a house has risen four and a half-fold after inflation. No other OECD country has experienced a price increase of this magnitude over this period. London is virtually the most expensive major city in the world for renting or buying a home (per square foot). People often avoid moving to work in productive sectors because nearby housing is too expensive. The proportion of Britons who need financial support for housing is almost unique. The 1947 Town and Country Planning Act put land use under unprecedented statutory control, and the resulting regulation has caused at least half the rise in house prices over the last generation. The ‘green belts’ the Act created have grown far beyond what was planned, more than doubling in size since the 1970s, taking in derelict and already developed land, leading to building on more attractive areas. The complex and bureaucratic planning system has favoured big housebuilding corporations over small builders. The resulting identikit estates have helped drive Nimbyism. Since the war, government has also centralised taxation. With 95 per cent of tax collected centrally, local authorities have little incentive to allow housebuilding in order to gain additional revenue from new residents.Read Full Report