If you aspire to one day own your own home, or for people you love to share in that ambition, Britain’s backlog of 4.3 million homes should concern you.
Homeownership is increasingly out of reach for many aspiring families. The current system is blatantly not working. This is unsustainable.
We urgently need to improve our system. To do so, we ought to look around the world for inspiration. To this end, the answers to the UK’s woes may lie in Japan.
The central challenge in building more homes lies in the structural shortcomings of the UK planning system. The key issue is its discretionary nature: planning permission is issued at the discretion of planning officers or locally elected councillors on a case-by-case basis. In theory, this allows local officials to weigh a plan not just against the aims of the Government’s National Planning Policy Framework, but also against any contextual ‘material considerations’ unique to the local area.
In reality, this system ensures a dichotomy between political gains and long-term planning objectives. Political support and voter appeasement are prioritised over well-conceived urban planning. Homeowners frequently agitate against nearby developments that they regard as a possible danger to the value of their homes. With homeowners constituting 63% of households, and only 37% supporting new housing in their area, there is a political incentive to listen to them.
What is needed is a more predictable, rules-based system that eliminates political considerations, like Japan’s. There, land within a local authority is divided into thirteen different zones, each allowing multiple uses. These range from exclusively low-rise residential zones to exclusively industrial zones.
Each zone has clearly defined regulations covering permitted uses and building codes. Land use is categorised on a scale of intensity, with the lowest intensity use being residential buildings, and the highest intensity use being industrial premises. Schemes legally must be granted planning permission if they comply with the national zoning code, meaning that low-rise residential buildings are permitted almost everywhere.
A consequence of Britain’s system is that development schemes are approved on a case-by-case basis. Public consultation on every individual development proposal is inexorably built into the system, as planning permission being granted solely at the discretion of local councillors necessitates each proposal being assessed individually. Not only does this have the potential to massively slow or even gridlock the system, but it creates an element of uncertainty that significantly influences the business model of developers.
This uncertainty centres on the fact that, in the UK system, there is no guarantee of planning permission. This creates an unstable and scarce supply of sites for development. Developers respond to this by ‘land-banking’ to create a pipeline of sites they know they can work on. Many potential development sites have been granted planning permission but no development takes place, as developers are forced to bank sites to ensure they always have land upon which they can operate, even if planning permissions dry up.
In contrast, the Japanese system front-loads public consultation. Land use consultations set the medium-term plan for urban growth: the zoning for the area is specified, and building specifications and appearance are determined. Residents get a say on this but have no further say on individual proposals once the local plan is approved. There are no further avenues through which development can be prevented from this point onwards.
The Japanese system therefore negates the need for land-banking, by providing assurances and certainty that the UK system cannot.
Removing discretionary approval and consulting the public earlier in the process means that developers are guaranteed planning permission on land before they purchase it, providing they meet the zonal criteria. Consequently, there is always a steady surplus of opportunities for development, rendering land-banking redundant. As a result, land is immediately developed instead of hoarded, work starts on a greater number of sites, and the number of new homes increases.
Certainty enables more houses to be built in Japan than in the UK. 174,000 houses started construction in the UK in 2022-23, whereas 404,000 houses started construction over the same period in Japan. As a result of this, while mean rents in London are upwards of £2,000, average rents in Tokyo are about £1,300.
If we want to see sustained increases in housebuilding, policymakers should take note of the simplicity, predictability and certainty of Japanese Land Use Zones. The Japanese experience should be an inspiration for the UK.
Nathan Stone is currently doing work experience at Bright Blue. Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Image: Su San Lee]
