National Planning Practice Guidance – bungalows, supply and demand and CPRE

The draft NPPG is now available on line after a couple of days of glitches – I have given the link below.  Trailed by DCLG over the Bank Holiday weekend, the newspapers picked up on the proposals that more bungalows should be built for the elderly, including clusters only available to older people.  And CPRE has picked up on the “affordability” test, claiming that a requirement to release more land for housing where prices are rising is likely to result in unnecessary loss of countryside and deliver very little affordable housing.  These issues are actually quite difficult to find in the draft NPPG (bungalows aren’t actually mentioned, and the search engine doesn’t give any results for “affordability” or “indicators”) but they are prominent in the press release which says the new “easy to use” advice sets out guidance on amongst other things “a new affordability test for determining how many homes should be built” and “housing for older people – councils should build more bungalows and plan positively for an ageing population”.

But there are economic fallacies here.  The affordability point is important and ought to be looked at alongside the issue of house sizes.

Earlier in August DCLG consulted on a housing standards review[1], part of which looks at space standards. Fifty years ago Parker Morris standards were introduced and ensured minimum sized rooms in what was then council housing. Whilst not generous, a visit to a home of that era quickly demonstrates the paucity of space in today’s market housing. As the consultation notes: “There is a view (supported by some evidence) that across all tenures, the average size of new homes in England has reduced over time giving rise to concern about their ability to support these routine activities, particularly when homes are fully occupied”[2]. In addition, there is evidence that England has some of the smallest housing in Europe[3].  But the consultation notes that large parts of the home building industry consider that market forces ensure that consumer interests are well served and that there is no evidence that space issues are causing failures in the new homes market.  It also suggests that improving space standards will lead to a rise in the price of homes, with the risk that people are priced out of the market[4].

Of course the new homes market is not failing for lack of space.  It is well documented that we are not building enough homes to keep up with the rate of household formation.  So prices hold up because demand exceeds supply.  Builders will secure the most they can.  Indeed, the consistently expressed criticism of George Osborne’s Help to Buy scheme is that it will simply inflate house prices by putting more money into the housing market[5].  The housing market is no different from any other market.  And in the same way, if there is not enough money in first time buyers’ pockets then they will not buy.  The builder of first time homes then has to cut his prices.  That in due course will lead to lower housing land values, and will also exert downward pressure on the price of building materials.  Eventually the market will pick up as prices match the money available.  At that point it becomes easier for buyers to exercise greater choice over what they are prepared to buy, and the small house becomes less desirable, if bigger ones are available.  But the problem here is that we traditionally sell houses by reference to the number of bedrooms rather than floor area.  This is changing as floorplans showing floor areas in metric and imperial now frequently appear on estate agents particulars, especially on websites such as Rightmove and Prime Location.  This should help get away from the allegedly three-bedroomed house where the third bedroom is about the size of a broom cupboard.  Giving floor areas should enable people to be more discerning when they buy.

The same law of supply and demand will of course apply to the general supply of housing.  So the affordability test should work.  If people can’t afford new homes, we need to get more homes onto the market, and that means releasing more land for housing.  It’s not rocket science.  CPRE dismiss this as a simplistic economic view.  Possibly, that led to The Times reporting that story under the headline “Anger at plan to cut price of rural housing”.

And so to bungalows.  Some parts of the world have fabulous bungalows, think of Sydney, or California.  Here in England I am sure we have some, but from the pictures in newspapers this week you wouldn’t think so.  Instead they tend to be in clusters and rather samey.  The idea from DCLG seems to be to group old people together in an estate of bungalows.  But doesn’t that go against good, integrated communities, where young and old can live together, where old can influence the outlook of the young?  We demand the integration of affordable housing with market housing.  And new developments usually have a range of house types, for different sizes and ages.  Shouldn’t we  keep it that way for the elderly as well.  And design really superb bungalows.