Mass sell off of public land fails to deliver social housing

NEF has been scrutinising the government’s public land sale policy for some time now. The current policy is set to end in March 2020. With a shelf life of six months we decided to take another look at what it’s achieved.

With over one million households on the waiting list for social housing, public land could play a major role in meeting this urgent need for affordable homes. But new NEF research has found that just 6% of the houses built on former public land, will be available for social rent. This represents a massive missed opportunity.

Since 2011, the government has been disposing of public land with the stated objective of stimulating housing supply. Generally, the government sells the land to the highest bidder with little regard for what social good the public gets from the sale. The objective of the current 2015 – 2020 programme has been to identify and release surplus central government land in England for 160,000 new homes, and the collection of £5 billion in capital receipts.

The policy has been highly criticised, most recently by the Public Accounts Committee, who found that by the end of the programme, the government will only have sold enough land to meet 43% of the target for 160,000 new homes. The second target — £5 billion cash receipts — is only due to be achieved because of one big unplanned sale (Network Rail’s sell-off of its railway arches) which generated almost £1.5 billion but will not be used for house building. Almost all government departments are on course to miss their individual targets.

Solving the housing crisis requires building millions of new homes, but as the crux of the crisis is in the affordability of the homes, what sort of housing is built and for whom is as important as how many homes are built. In most places that means building social housing should be the top priority.

The National Housing Federation have estimated that in order to address the current housing crisis, 42% of all new homes built in England should be affordable, but that in 2017 only 23% of new housing stock was deemed any category of affordable. Shelter have recently reported the need for 3.1 million new social rented homes. The UK is in the grip of a housing crisis, with a severe shortage of affordable homes in some areas, specifically social homes for rent. But the government has failed to use its position as a major landowner to develop and execute an effective strategy.

The government has argued that their public land sale policy is a major part of their solution to the housing crisis. Yet, despite calls from the National Audit Office, the Public Accounts Committee, NEF, and many others, they have continuously failed to provide information on the number of affordable and social homes built on sold-off surplus public land. And until recently, it had failed to provide information on homes built at all.

Given the important role that public land could play in meeting our need for social housing, we decided we would do the sums for them, and so we have analysed the government’s public land sale in terms of affordable housing output.

Our latest analysis of the land sale, from 2011 – 18, finds:

• Only 6% of homes built on public land will be for genuinely affordable social rent.
• Less than one-quarter (23%) of homes built on public land will be any category of affordable.
• Over half (56%) of the sold-off sites have plans that include no socially rented housing at all — widely understood as the only housing that is genuinely affordable to people on low incomes.
• Since 2015, the beginning of the current programme, land has been released for 38,000 homes, a rate of 792 homes per month. At the same rate it would take a further 154 months, or almost 13 years, to reach the government’s target of public land released for 160,000 homes. That would take us to 2032.

Even against its own targets, the policy of selling public land to build homes has failed. At the current rate, the government’s target of building 160,000 homes by selling off public land will take until 2032 to achieve, 12 years later than promised. Almost all departments have failed to meet their cash targets. But perhaps most importantly, the government has failed to account for or influence what is built on the land.

NEF’s latest analysis of recently published government statistics estimates that less than one in four homes built on public land will be​‘affordable’. This figure uses the government’s own widely criticised definition of affordability, which, at up to 80% of market value, is still unaffordable for many. As little as 6% of new homes are likely to be social housing, and in some cases developments comprise solely luxury properties.

Public land could be used for public benefit to alleviate the housing crisis, but selling to the highest bidder is ruling this out from the beginning. This is because the highest bidders have committed to pay the most for the land, and therefore are incentivised to squeeze the most profit from the land. Expensive land leads to expensive houses. And with every site sold, the availability of land suitable for housing diminishes as more land is lost to luxury housing developments.

Surplus public land could play a central role in expanding social housing delivery if the programme was radically redesigned. With only six months of the policy left, it’s time to start seriously considering what comes next. Next month we will be releasing a major report which will show how public land could be used to solve the housing crisis, and ensure that public land delivers public benefit in perpetuity, not just vast profits for developers building unaffordable, luxury housing.

Technical notes

The Ministry for Housing, Communities and Local Government released their second report on the public land for housing programme in May 2019. It includes an annexed spreadsheet including data on the progress of 90% of sites sold in both policy iterations (2011 – 15, and 15 – 20) to end of March 2018. Available here: https://​www​.gov​.uk/​g​o​v​e​r​n​m​e​n​t​/​p​u​b​l​i​c​a​t​i​o​n​s​/​p​u​b​l​i​c​-​l​a​n​d​-​f​o​r​-​h​o​u​s​i​n​g​-​p​r​o​g​r​a​m​m​e​-​2​0​1​5​-​t​o​-​2​0​2​0​-​p​r​o​g​r​e​s​s​-​r​eport

NEF collected data on affordable and social housing plans for all sites disposed of since 2011 with the capacity for more than 400 homes, for which affordable housing information was available in planning documents online. This yielded a sample of 39. It includes sites sold in every year of the programme, as well as by nine different departments. Available here: https://​newe​co​nom​ics​.org/​u​p​l​o​a​d​s​/​f​i​l​e​s​/​A​f​f​o​r​d​a​b​l​e​-​h​o​u​s​i​n​g​-​o​n​-​p​u​b​l​i​c​-​l​a​n​d​-​S​e​p​t​-​1​9​.xlsx