If architects think this way no wonder housing’s in a mess

Labour’s proposal to force cheap sales of land to the state for social housing (Report, 2 February) is laudable in so much as it identifies rocketing land values as the reason why social housing providers cannot compete with private developers, but it does not address the principal cause, which is the relaxation of planning guidelines over the past 20 years. This is no more evident than in London, where the Thames corridor skyline has sprouted a spiralling number of high-rise residential properties for sale, many of which are bought for investment rather than to provide homes.

This dramatic change can be traced back to the 1990s when planning densities were relaxed, so that it is now possible to see modest four-storey private estates built in the 1980s on the riverfront beside modern residential towers of 30 or more storeys. The increase in land values is a direct result of the increase in density and building heights now permitted in planning approvals, with developers claiming that the higher cost of land prevents them from providing the proportion of affordable homes that would otherwise be required. The way to bring down land values to a level where social housing providers can compete with private developers in the open market is to lower permitted residential densities. This would inevitably impact on the property investment market, but would increase the number of affordable homes available for rent or sale.
David Graham
(Architect) Richmond, Surrey

You can see what he’s trying to say. More housing upon a hectare means more can be charged for the housing on that hectare.

But really, an architect trying to insist that low density housing will be cheaper than high density? Doesn’t it take 7 years to become such a professional and if so what in buggery are they teaching them in that time? Hasn’t he even observed an actual property market?

28 comments on “If architects think this way no wonder housing’s in a mess

  1. The compulsory purchase plan is even funnier when you consider the council fail to build on the land they already own. In fairness this is because they struggle to figure out what they own.Neither would seem to support moving more land across to that set of managers.

  2. Has he ever wondered how just about every single large city in an advanced economy has very dense, high-rise buildings ‘downtown’? Did he ever stop to think why that would be?

  3. Heh-

    ISP- the mess Councils and RSL’s get into trying to understand their holdings is astonishing. One I worked for was still trying to get it’s title correctly recognised 5 years after it took ownership.

    Tim- in truth, Architects are no longer required to do much else beyond design the skyline. Structural engineers worry about whether it’ll stand up; QS’s (my training) about whether it washes it’s face, Building Services Engineers on whether the bits in it will work, and so on. Even details like curtainwalling/ fit and finish is subbed out to other trades/juniors.

    This guy can basically draw a picture of a house.

    No other knowledge should be assumed.

  4. Oh, and:

    “it identifies rocketing land values as the reason why social housing providers cannot compete with private developers”

    I think Social landlords aren’t competing with private developers at all- RSL’s are better funded, have access to more capital and have larger land holdings. There’s only every been a few (less than 5?) RSL’s go bust. They also only need to achieve smaller price targets per home (30 years@NPV of the social rent per unit), and there’s never a risk of a social house going untenanted (with that rent paid by the government, natch).

    Private developers fold every day of the week.

  5. ‘But really, an architect trying to insist that low density housing will be cheaper than high density?’

    It will be cheaper for the government, which has to provide schools for all the offsprings. My county is fighting high density housing.

  6. How exactly does the school funding play out? Is it the running cost or the capital cost that is the issue? Is there really no mechanism where funding follows the pupils and the council receive money from central government to reflect changes in pupil population? I see this argument on “burden” a lot and something smells wrong – e.g. do places with falling pupil populations get to keep all the money they no longer need?

  7. He seems to be confusing land cost per acre (which is lower if development is restricted to low density) with land cost per flat (which is higher in low density developments).

  8. To endorse Rob’s comment, has this guy never been anywhere outside of the UK’s south-east? Here in Spain, pretty well the minimum build for residential apartments is 8 storey. I regularly visit people at the bottom end of the earnings scale living in affordable accommodation would be beyond the dreams of millionaires in Central London.

  9. One other reason why the cost of providing social housing has rocketed is massive regulatory increases, particularly requirements for much higher environmental ratings for social housing. It’s getting to the point where it’s difficult to finance building housing for social rent even if you get the land free.

  10. Gamecock said:
    “low density housing … will be cheaper for the government, which has to provide schools for all the offsprings. My county is fighting high density housing.”

    Local councils get central government funding for schools, on a per pupil basis. They also get central government capital funding to build new schools, based on the expected increase in pupils in their area. So objecting to new housing on the basis of the cost to the local government of providing schools is nonsense.

    And nationally, housing density doesn’t change the number of school places that are needed (the parents’ decision about procreation was made several years before the children go to school), just where they are, so housing density doesn’t affect the cost, just which local authorities the money has to go to.

  11. Most RSLs rarely go bankrupt as they are like the old Friendly Societies where if one is failing the others gather around to dismember it and absorb the good parts and eject the diseased core.

  12. “The compulsory purchase plan is even funnier when you consider the council fail to build on the land they already own.”

    My local authority owns c. 500 acres of land which was allocated in the Local Plan in 2005 to provide thousands of houses, yet has not built a single one yet, due to its own massive incompetence (and greed) in managing the development process.

    You see in 2005 the housing market was firing on all cylinders and the council decided it didn’t need a developer to develop this site, it would do it all itself. So it borrowed lots of money, and started putting roads and infrastructure in, thinking it would then sell plots of land to housebuilders and reap the rewards of all the lovely moolah that they would otherwise have had to share with the developer.

    Unfortunately the 2007 crash kind of put a stop to this little idea, but not before they’d built lots of roads to nowhere (these roads are still there now, wending their way through green fields). So now they had tens of millions in sunk costs, but the market for housing land had crashed through the floor.

    Now over a dozen years later, they still have not sorted this mess out. They announced a ‘partnership’ with a big housebuilder several years ago, still nothing.

    The ultimate irony is that this site also had a private ownership section of about another 200 acres. Work also stopped here during the crash, but subsequently started up again, and now is entirely developed out.

  13. How do you buy a property for investment without someone using it as a home?

    Buying one and not renting it out is sometimes done, but not as an investment strategy.

  14. “How do you buy a property for investment without someone using it as a home?”

    Don’t you know. People are buying homes then withholding them from the market to drive prices up. I know, I read it in the papers.

  15. Local councils are suffering from the revealed preferences problem.

    Everybody *says* that property prices and rents are too high and the council should build more homes.

    However, any councillor that publicly supports significant building in their ward, council or otherwise, is highly likely to be voted out at the next opportunity.

  16. Funny how everybody is now panicking ,blaming others and going into meltdown ( the British way)over land values .Meanwhile the Conservative Party has gone out of business without informing the authorities and is now trading as super-UKIP but under the old misleading name. Is there any connexion between land values making house prices and rents too high and the Conservatives going into hiding (while in office but not in power)?

  17. Land costs per unit are lower with high density housing, but the individual units tend to be smaller and less desirable than if the development was less dense, so it can sometimes be a tossup as to whether you really do get more revenue from rents or sales per hectare. Additionally, if it is a mixed use development with some deed restricted affordable units and some market rate units, the “affordable” units are often sold at a loss and the market rates units may be worth less because of the 1) increased density, and 2) perceived undesirability of the affordable units in the development.

  18. @ Tommydog
    Mr Graham was claiming that high-rise blocks of flats – where you get more (and often bigger) flats per hectare than low-/ medium-rise blocks of flats pushes up the price of land so much that the land cost per unit is increased.
    Hence RichardT’s explanation (2.08pm)
    However the imposition of “affordable” units can frighten off some buyers of the more expensive units since they are unlikely to realise that the units are only affordable to the well-paid.

  19. John
    Land would typically be acquired or optioned before the approvals are obtained so the cost per unit is dependent upon what is eventually allowed, but I could see that if it became apparent that more upzoning might be permitted that nearby property values might increase for the next developer. I’ve played in this game a few times in California. It’s really hard to make a project pencil out with a 20-25% affordability requirement even with density bonuses. They can take a potentially good project and make it marginal if you’re lucky.

  20. @ Tommydog
    In the UK most land is “optioned” prior to planning permission being granted but some is acquired after the landowner obtains planning permission off his own bat. Mr. Graham’s thesis depends upon land being acquired after planning permission is granted or, as you surmise, after planning permission is granted on a nearby plot. But he’s still obviously wrong since the price of a plot that has a 30-storey tower on it is not going to be more than 15 times the neighbouring plot with a couple of semi-detached houses as Mt Graham claims. Since, if it was, it would be possible to buy the two semi-detached houses, demolish them and make a small fortune by doing so.

    As to the “affordability” hit on economics of development: several housebuilders have appealed for a reduction in the %age of “affordable” homes that they are to provide and some have won their appeals. I have little sympathy – someone who is struggling to find a deposit for a £500k house but can find one for a £200k house is not the same as an “undesirable” living in a “sink” council estate in Tottenham, so why claim that a few “affordable” homes will decimate propery values in the rest of the development? The numbers almost certainly look a lot different in California where “affordable” means something a normal person can afford.

  21. In a former Polytechnic of my acquaintance, the 7 year Architecture course could well be compressed into a couple of weeks with no real loss. As there was no prerequisite for anything, any lecture (and they were few and far between) could be attended by 1st and 7th year students for credits.

    The 7 years is to keep away the poor.

  22. The only weighty objection I’ve ever heard to “The first thing we do, let’s kill all the lawyers” was that it should be “The second thing we do, let’s kill all the lawyers” because architects should come first.

  23. We can, at least in principle, change politicians with a snap of our fingers. No need to hang ’em (except Mr Blair of course).

  24. “Local councils get central government funding for schools, on a per pupil basis. They also get central government capital funding to build new schools, based on the expected increase in pupils in their area. So objecting to new housing on the basis of the cost to the local government of providing schools is nonsense.”

    I’m in the U.S. Your premises are wrong.

    The main complaint of the local governments is capital expenditures. Operating costs will indeed be covered by new taxes.

    My county has a $2,500 per unit impact fee on new construction. They are considering bumping the fee up to $10,000.

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