Tag Archives: housing

388. When House Building Ceases to Pay: What the Viability Crisis Means for Localism

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The conventional housing model depends upon continual economic growth. A developer buys land, obtains planning permission, installs infrastructure, builds houses and sells them at prices sufficiently high to cover every cost while leaving an acceptable profit.

The Home Builders Federation’s report, The Viability Crunch, suggests that this model is beginning to fail across substantial parts of England and Wales.

The Federation calculates that additional taxes, regulations and rising material and labour costs have added as much as £76,000 to the cost of building a typical house since 2020. It cites research suggesting that conventional house building is financially unviable across 48 per cent of the country and faces viability difficulties in a further 16 per cent. Typical housing schemes are therefore viable in little more than one-third of English local authority areas.

The Home Builders Federation represents the building industry, so its recommendations naturally reflect the interests of developers. Nevertheless, its figures point towards something more fundamental than a dispute over planning regulations.

The national housing machine is faltering

Government housing policy assumes that granting more planning permissions will produce more houses. But planning permission does not make an unprofitable development profitable.

Developers build only when completed houses can be sold for enough to cover land, materials, labour, finance, taxation, environmental obligations and infrastructure contributions. If household purchasing power is weakening while these costs continue to rise, the calculation no longer works.

This is particularly serious in parts of the Midlands and northern England, where house prices may be too low to support present construction costs. The strange result is that houses may be desperately needed but cannot be supplied through the commercial market.

A national housing shortage can therefore coexist with land that has planning permission, builders who need work and families who need homes. The missing element is not physical capacity. It is financial viability.

This is one more indication of the shrinking economy. The monetary value of a completed house can no longer be assumed to rise fast enough to absorb every additional cost imposed upon its construction.

Development will become increasingly uneven

Where building remains profitable, investment will be concentrated. This is likely to be in localities with high incomes, wealthy purchasers, strong employment markets or an influx of people able to bring money from elsewhere.

Other localities may receive very little new housing, even where their existing population needs it. Young people may be forced to leave because homes are unavailable or unaffordable. Older people may remain in houses larger than they require because suitable smaller homes have not been built.

This could divide the country into pockets where conventional development remains profitable and much larger areas where it does not.

Central government may respond by increasing subsidies, reducing requirements or pressuring planning authorities to approve more land. But none of these measures resolves the underlying problem if construction costs remain above what local people can afford.

A threat to local communities

The immediate consequences could be damaging.

Fewer homes will mean fewer opportunities for local families. Small builders may disappear because they are less able than national companies to absorb delays and rising costs. Building trades may lose employment. Contributions towards roads, schools, drainage and affordable housing may also decline.

Large developers may concentrate on standardised estates in the most profitable locations. Such development is designed primarily around the national housing market, mortgage finance and car travel. It does not necessarily meet the needs of the locality.

There is also a danger that government, desperate to meet national targets, will overrule neighbourhood plans and local objections without ensuring that the resulting schemes are financially deliverable. Localities could lose control over land while still receiving few of the homes they actually need.

The opportunity for localism

The failure of the national development model could eventually encourage a different approach.

A locality does not merely need a numerical allocation of houses. It needs particular kinds of homes for particular people: modest houses for young families, smaller homes for older residents, accommodation for carers, homes connected with farms and small businesses, and housing that can be maintained with locally available skills and materials.

Instead of asking how many houses a national developer can profitably sell, the starting question could become:

What homes does this locality need in order to remain a functioning community?

That change of question has far-reaching consequences.

Land might be released at a value related to local housing need rather than its speculative development value. Community land trusts, housing co-operatives, local authorities and small builders could play a larger part. Some homes might be self-built or completed gradually. Existing buildings could be subdivided, extended or converted. Groups of cottages might share heating, water, workshops, gardens and other facilities.

Local builders could use designs suited to the climate, landscape and available materials. Houses might be smaller, simpler and easier to repair. Construction could provide apprenticeships and maintain practical skills within the locality.

This would not remove the cost of building. Safety, accessibility, water conservation and protection of nature remain important. But decisions could be made together, at locality level, rather than arriving as an accumulation of separate national demands, each considered worthwhile but with little regard for their combined effect.

Housing as local infrastructure

In a shrinking economy, housing can no longer be treated principally as a financial asset. It must increasingly be regarded as part of the essential infrastructure of a locality.

A community cannot maintain farming, food processing, care, education or small manufacturing if the people doing those jobs cannot afford to live nearby. Housing policy must therefore be connected with the future economic purpose of the locality.

Some localities may need homes tied to essential work. Others may need to renovate empty properties rather than build large estates. Towns may convert redundant offices and shops. Rural areas may need small groups of cottages close to farms, workshops and local services.

The appropriate solution will differ from one locality to another. That is precisely why a rigid national model is becoming less useful.

From developer viability to community viability

The Home Builders Federation asks whether a development leaves an adequate return for the builder and an incentive for the landowner. Those are legitimate questions within the existing system.

Localism asks a broader one: will the locality itself remain viable if the homes it needs are not built?

The answer cannot be found simply by relaxing planning control or subsidising the established development industry. It requires new relationships between landowners, builders, residents and local government. It also requires society to accept that rising land and house prices cannot remain the foundation of housing provision indefinitely.

The house-building viability crisis is therefore both a warning and an early sign of change. The growth economy produced housing as a national investment product. A shrinking economy will increasingly require homes to be created as durable, affordable and useful parts of a locality.

The future may involve fewer large estates and more small, locally determined developments. They will not be judged merely by the profit they produce, but by whether they provide sufficient homes, sustain essential work and allow the locality to endure.

336. The Great Estate Opportunity and the Lesson of Planned Villages

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Many of Britain’s large country houses and estates are now proving difficult to sell. Properties valued above £2 million, especially those with extensive agricultural land, often remain on the market for long periods. The traditional pattern of ownership has weakened, while the cost of maintaining such estates continues to rise.

Yet this situation is not new. It has happened before, and we already know some of the answers.

After the Second World War, many estates were broken up or sold because they could no longer be sustained in their historic form. Some were lost entirely. Others survived by adapting. At the same time, a parallel tradition of planned settlement had already demonstrated a different path, through the work of industrial families such as the Cadburys at Bournville and the Rowntrees at New Earswick in York.

Bournville and New Earswick were not housing estates in the modern sense. They were carefully designed localities. Housing was integrated with gardens, green space, schools, village halls, shops and community facilities. In the case of the Rowntree model at New Earswick, there was a strong emphasis on social wellbeing, walkability and everyday self-sufficiency within the settlement. These were not places designed simply to accommodate population. They were designed to support life.

After the war, however, this tradition was largely displaced by standardised large-scale development. Estates were broken up, land was absorbed into mass housing programmes, and the idea of integrated local economies was gradually lost. Housing became separated from work, food growing, shops and community structures.

Now, as country estates struggle to find buyers, the same question returns in a new form.

What if these estates were not sold as single assets, but reimagined as long-term planned localities?

One model would be for the estate owner to obtain outline planning permission for a limited number of dwellings. The land could then be divided into generous self-build plots, each held on a very long lease, while the freehold remains with the estate owner as long-term steward of the land.

The people likely to be drawn to such a model would not be conventional housing buyers. Many would be individuals leaving senior professional or corporate roles, often through redundancy or early retirement. They may have capital, but they are seeking stability, autonomy and a closer relationship with place rather than a return to large organisations.

Each household would have space to build a durable home, with substantial gardens capable of supporting food production, workshops, studios and small enterprises. In this way, the settlement would not simply house people. It would enable them to become productive within the locality.

The importance of Bournville and New Earswick lies in showing that this is not a new idea. It is a recovered one. Both demonstrated that when land is treated as a framework for life rather than a commodity for maximum short-term extraction, it naturally produces mixed, resilient and human-scale communities. Shops, services and shared facilities are not add-ons. They are part of the structure of the place itself.

A modern estate-based model could extend this principle. Alongside housing plots, there could be space for village shops, workshops, small service providers and shared facilities. The aim would not be density for its own sake, but the re-establishment of a complete local economy within walking distance.

For the estate owner, the advantage is continuity. Instead of a one-off sale to a large developer, the freehold remains intact, and the estate continues under long-term stewardship. Income is generated through the sale of long leases and structured estate management, while the identity of the land is preserved across generations.

From a localist perspective, this approach has wider significance. It keeps wealth, skill and decision-making anchored in the locality rather than dispersing them into distant corporate systems. It also builds resilience, because people are less dependent on a single employer or institution and more connected to one another within a shared place.

The post-war experience of estate fragmentation, combined with the planned village tradition of Bournville and New Earswick, points towards the same conclusion. When land is organised as a living structure rather than a commodity, it can support stable and productive communities.

The unsold country estate may therefore not represent decline. It may represent an opportunity to recover a British tradition of settlement design that integrates housing, work, shops and land into coherent localities once again.

302. The End of Housing Wealth? What Happens if the Economy Continues to Shrink

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For more than forty years Britain has relied upon rising house prices as a substitute for genuine economic growth. As manufacturing declined and debt expanded, housing became not merely somewhere to live but the principal store of household wealth. Millions of people came to believe that their future security depended upon the continual rise in the value of their homes.

The recent concern that Britain’s housing wealth may be in danger of collapsing raises a much deeper question. What happens if the economy itself continues to shrink?

In a shrinking economy, the fundamental assumption behind ever-rising house prices begins to weaken. Housing values ultimately depend upon what future buyers can afford to pay. If incomes stagnate, secure employment becomes scarcer, borrowing becomes more difficult and younger generations possess less disposable income, the pool of buyers capable of sustaining high prices gradually contracts.

This does not necessarily mean a sudden crash. More likely is a long period of stagnation in which house prices fail to keep pace with inflation. In nominal terms prices may appear stable, but in real terms housing wealth steadily declines year after year. Britain may already be moving in this direction.

A shrinking economy would also change the role of housing itself. During the growth era, property functioned as an investment asset. People expected capital gains. Buy-to-let investors expected rising values. Governments quietly welcomed rising house prices because they created a feeling of prosperity.

However, if economic growth disappears, housing increasingly reverts to its original purpose – shelter.

That change could have profound consequences.

The first consequence would be psychological. Much of Britain’s middle-class security is tied to property values. Pension planning, inheritance expectations and retirement assumptions all depend upon housing wealth remaining high. If prices stagnate or fall, many households may discover that what appeared to be wealth was largely a paper valuation dependent upon continuous market optimism.

The second consequence would be political. Governments have repeatedly intervened to support house prices through low interest rates, mortgage schemes and planning restrictions. Yet in a shrinking economy governments themselves become poorer and more indebted. Their ability to support asset prices weakens. Eventually economic reality may become stronger than political intervention.

The third consequence concerns localism.

If housing ceases to be viewed primarily as an investment, local communities may begin to think differently about land and property. The emphasis shifts from maximising exchange value to maximising usefulness. Empty buildings become potential workshops, local enterprises, food production facilities or housing for younger families. Land ceases to be merely a financial asset and becomes part of the productive life of the locality.

This would represent a major cultural shift. For decades Britain has measured success through rising property values. Yet from the perspective of a shrinking economy, permanently rising house prices are actually a sign of increasing unaffordability and growing dependence upon debt.

The irony is that falling or stagnant house prices may be painful for those who expected continual gains, but beneficial for future generations seeking somewhere to live. Many younger people already regard high housing costs as one of the greatest barriers to family formation, financial security and independence.

If the shrinking economy continues, Britain may eventually be forced to choose between preserving housing as a speculative investment or restoring it as an affordable necessity.

The housing market was built during an age of growth, expanding credit and rising consumption. If that age is ending, then housing wealth may no longer behave as it did before.

In that case, the future may not be a dramatic collapse, but something perhaps more significant – the slow transformation of housing from a financial asset back into a home.