Economists say build on green belt to ease prices

As the party conference season gets underway a major study by the IEA shows government intervention has made life much more expensive for families up and down the country.

Mark Littlewood, director general of the Institute of Economic Affairs, said: “Times are tough for millions of families up and down the country. But this will not be fixed by introducing new laws, taxes and regulations.”

The think tank says house prices have shot up due to restricted supply.

For more than three decades the UK has been building fewer new homes than any major country in Europe. Residential floorspace per household is now the lowest in Western Europe and the report says “planning liberalisation is the closest thing there is to an economic silver bullet”.

And busting the myth that “brownfield development can solve our housing crisis” the report adds: “There is a significant amount of brownfield space deemed suitable for development, but much of it is unsuitable for housing. Clean-up costs for many sites are prohibitively high, too. We must relax inflexible planning restrictions on green belt sites.”

The IEA says another myth centred on the “need for a public house building programme”. But the report adds: “The UK’s archaic planning laws date back to 1947, and planning restrictions have only become more stringent over time. Green belt status has been continually expanded, especially in high-demand areas. Housebuilding rates in the UK did not fall because the public sector stopped building. They fell because existing constraints became much more stringent. Building has been in an almost continuous state of decline since the 1960s.”

And the report blows away the myth that “greedy landlords are to blame for high rents”.

The IEA report says: “There is no evidence landlords are ‘greedy’ – rent levels have risen by less than inflation, whilst rents on new tenancies reflect housing market dynamics. The cause of high rent levels is restricted housing supply caused by planning laws. Tenancy rent controls cannot improve the affordability of renting, only an increased supply of housing can.”

Littlewood adds: “To really reduce the cost of living politicians must urgently tackle the root causes, rather than impose populist quick fixes.”