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Tony Travers: Reform property taxes to increase housing supply

Tony Travers
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Housing reform is surely the most muddled and problematic of all public policy.

Successive governments add new layers of intervention on top of the layers put in place by their predecessors. Subsidies are given to boost both the supply of new homes and, unhelpfully, the demand for them. Reforms are made to the planning system. New scapegoats are blamed. And still the ‘crisis’ continues.

Recent scapegoats for the failure to deliver include local authority planners, ‘volume’ housebuilders and developers who hoard land.

Back in 2013 the government, as part of its neighbourhood planning reforms, said: “Instead of hectoring people and forcing development on communities, the government believes that we need to persuade communities that development is in everyone’s interest.” Part of the yield of the community infrastructure levy would be paid to neighbourhoods that accepted new development.

There is some evidence that areas with neighbourhood plans achieve a marginal boost to the number of new homes completed, though the implication of this week’s housing white paper makes clear that the government itself is frustrated with the overall lack of housing delivery.

England has three levels of housing planning: national, local and in some places at the neighbourhood or parish level. The government has ended up with a combination of bottom-up and top-down policies which, on occasion, appear to conflict in their efforts to encourage (on the one hand) and coerce (on the other). The new white paper strengthens the top-down element of the process.

Politicians are careful not to blame the public overmuch. It is safer to accuse planners, developers and housing companies rather than point the finger at voters. But it is local opposition to so many housing developments that puts the brakes on rapid development. Existing, generally older owner-occupiers often oppose new homes which, if built, would make life easier for the young.

The one tool no government dares touch is property taxation. It is now a quarter of a century since council tax valuations were determined for England and Scotland. Stamp duty is a problematic tax on transactions. If a government were really serious about housing reform, it would reform property taxes to support the rational use of homes.

Tony Travers, director, LSE London

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