If you want to see who influences the government, you can do worse than look at Whitehall’s neighbours. In a grand Victorian building opposite the House of Commons in Parliament Square stands the headquarters of the Royal Institution of Chartered Surveyors. With a history dating back to 1792, the RICS is an illustrious professional body, promoting the highest international standards in the valuation and development of land and property. But it has another side.
Its royal charter states that it exists to serve the public interest, yet most of its members’ fees come from landowners and developers, not the public sector. Through its Red Book, the RICS sets the standards by which land and property are valued, but it is one of the most powerful lobbying groups in the development industry, representing the interests of landowners and developers at the highest levels of government. It directly advised on the National Planning Policy Framework (NPPF) in 2012, which led to 1,300 pages of policy being reduced to 65 in a triumphant bonfire of red tape, and it has numerous committees influencing policy on all aspects of land planning and valuation. It describes part of its mission as “unlocking the inherent value held within the world’s physical assets”, but the question is, for whom is the value being unlocked? And who, consequently, is missing out?
In the eyes of Bob Colenutt, the answer is clear. In his urgent new book, The Property Lobby, he identifies the RICS as one of numerous actors in a complex network of landowners, housebuilders, financial backers, professional bodies and politicians who are engaged in propping up the status quo to ensure that their interests prosper – at the expense of everyone else. The housing crisis is no accident, he argues, but the calculated product of an elite group who have no reason to fix it.
Many books have attempted to explain the roots of Britain’s housing crisis, but Colenutt is better placed than most to unpick the mess. His career in community planning and local government regeneration has taken him from campaigning in Southwark, south London (helping to lay the foundations for the community-led Coin Street housing project on the South Bank) to battling the development of Docklands and working for various London councils, before moving into academia. In 1975, he co-authored The Property Machine, a book whose message was nicely summed up by its cover illustration of a fat-cat developer gobbling up people’s homes. Then, the big developers were office builders, backed by insurance companies and pension funds. Now, they are housebuilders, armed with an unimaginable arsenal of global capital. Many of the themes remain the same, but, in the intervening years, through successive takeovers, intensive political lobbying and close integration with the finance sector, the leading developers have swollen into an unstoppable force.
Combining the methodical precision of an academic with the persuasive passion of a radical campaigner, Colenutt identifies how we got into this situation, and provides several suggestions for a possible way out. In succinct chapters, he lays out the structure of what he calls the “finance-housebuilding complex”, explaining how the housebuilding business works, how housing finance underpins the entire UK economy, how the powerful network of lobbying groups operates, how it has shaped planning policy, and how the grim cycle of low supply, high prices and poor quality homes is relentlessly perpetuated by vested interests.
Over the decades, governments of all colours have announced bold new methods to solve the housing crisis, but little has changed. Headlines have continually told us that we are short of 4m homes, that thousands are homeless, that 1.2 million people are on council house waiting lists and that a million private tenants are in deep poverty – not counting the impending impact of the coronavirus pandemic – but no effective action is taken. Instead, funding for social housing has been slashed while subsidies are lavished on the private sector housebuilders, in the hope that affordable housing will be delivered through “planning gain”. Meanwhile, local authorities have been forced into public-private partnerships for major developments on their own land, including the “regeneration” of estates that leads to the loss of thousands of council houses and the break-up of communities. It’s a Faustian pact from which the public is doomed never to benefit. As Colenutt puts it, the situation has led to “the ultimate absurdity of public authorities actively pursuing higher values from market-led development in order to find crumbs for social housing development.”
Meanwhile, the housebuilders get ever richer. Berkeley Group, one of the Top 10 UK builders, built 3,536 homes in 2017, which sounds like a decent contribution to meeting the housing shortage. That is, until you realise that the average price of these homes – proudly described as “popular with overseas investors” – was £715,000. Tony Pidgley, the company’s founder and chairman, received a personal payout of £48m in 2018, after a previous payout of £23m in 2015, when profits rose 42%. At the same time, Berkeley has consistently reduced the amount of affordable housing on its developments across London, on the grounds that the local authority targets were “unviable”. Over the past eight years, Berkeley made a profit of more than £3bn.
As Colenutt argues, it is not only the distribution of profits to a tiny number of executives that is so shocking, it is the political influence that goes with it. Pidgley was a member of Michael Heseltine’s Estate Regeneration Advisory Panel in 2016 and advised the government on the disposal of public sector land. He received a CBE from David Cameron in 2012, and the Berkeley Group won the Queen’s Award for Sustainable Development in 2014. The next year, Pidgley gave a donation to the Conservative party and wrote to the Daily Telegraph before the 2015 general election expressing his support for the Conservatives, citing their housing and development policies.
Good business deserves handsome rewards, the housebuilders retort. But these vast profits are not the product of great expertise, nor of success in a free market. Colenutt outlines how they are fuelled by government subsidy through Help to Buy, along with grants from Homes England and deregulation of the planning system that enables housebuilders to dodge their affordable housing obligations. The Chartered Institute for Housing estimated that of the total £53bn in government housing investment in 2017, almost 80% went in direct subsidies to the private sector. Persimmon, which infamously awarded its CEO Jeff Fairburn a £75m bonus, revealed that nearly half of its house sales in 2018 were partly funded by Help to Buy. The disastrous policy has simply maintained house prices at their high level and maximised housebuilder profits in the process.
All of this is great news for the Home Builders Federation, the powerful volume housebuilders’ lobby, whose members construct most of the new homes in England and Wales. Through constant political lobbying and direct ministerial contact, the HBF has been instrumental in shaping government policies, from the nature of the NPPF, to the “viability assessment” of planning obligations, to the Help to Buy mortgage scheme. Countless reports have highlighted the damaging practices of land-banking and drip-feeding the supply of homes to keep prices high, yet the HBF insists that the housing shortage is caused by local authorities not allocating enough land for housing and asking for too much from planning obligations. As Colenutt notes, the central contradiction in the HBF platform is that at the same time as wanting the state to reduce its control over development, they lobby for more state subsidies and government intervention to support their business model and bolster their profits.
The list of powerful interests goes on. There is the CLA (formerly the Country Landowners’ Association, a more accurate description of its purpose), whose 33,000 members make up the largest private landowning group in England and Wales. When planning consent for housing is granted on farmland, its value can rocket a hundredfold. The National Housing Federation estimates that landowners in England made a £13bn profit from land sales in 2016-17, far more than Amazon’s net annual global profit in the same period, or since. Yet the CLA is incensed by accusations that its members are pocketing unearned windfalls. The organisation has proved wildly successful in protecting the interests of landowners, arguing that any attempt to capture the uplift in value for the public good through the planning process would stifle growth and remove any incentive to develop. The result is endless inflation in land values, which in turn reduces the amount of affordable housing that will ever be delivered. Meanwhile, the landowner lobby ensures that any attempt at reforming this byzantine system is decried in newspaper headlines as a “Stalinist land grab” or a “garden tax”.
Colenutt packs many more targets into his 160 pages, from the revolving doors between councils and developers, to the culture of hospitality and political donations, to the innumerable loopholes and get-out clauses that riddle the planning system – which has itself been fundamentally altered, he argues, from dealing with the best use of land to safeguarding developers’ profits.
There is no easy means of untangling all this, but Colenutt offers some ideas. First, he calls for a national housing drive, “part of a newly reinvigorated welfare state, where housing, like health, is available to those in need as a human right”. It would be just as repugnant to the property lobby as the idea of a UK-style NHS is to the US health insurance industry – a comparison that vividly illustrates how much it is needed.
Second, there must be fundamental land reform to bring development land forward for housing at sensible prices so that new housing can be truly affordable and existing prices can stabilise. Colenutt points to the examples of Germany and the Netherlands, where local authorities buy up development land at its existing use value, draw up real masterplans, then offer sites to housebuilders, who build to the plans of the local authority. In this way, housebuilders are simply builders of houses, not land speculators.
He says it is finally time to tax developers’ land banks and implement “use or lose it” measures, to discourage housebuilders from hoarding plots with planning permission. And, most importantly, the Treasury and the Bank of England must be weaned off their dependence on land and house prices, and rebalance the economy away from property. All of this is eminently possible, if the powerful property lobby can be resisted, and some local authorities are already beginning to take the lead, in spite of central government policy. As the Coin Street Community Builders’ slogan puts it: “There is another way.” Seeing the stark reality spelled out in such clear terms in this book, there is no longer any excuse not to act.
The Property Lobby: The Hidden Reality Behind the Housing Crisis by Bob Colenutt, is published by Policy Press.
