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Artillery Row

Dumb, glum and zero-sum

British thinking has to value supply more than distribution

When there’s a shortage — actual or perceived — of an essential good or service, we start to obsess about its distribution. We enter a mental mode of wartime rationing, jealously glancing across the fence to check whether any of our neighbours are getting more than their “fair share”, or using more than they truly “need”. We saw this clearly during the early stages of the pandemic, when shoppers were being shamed on social media for “panic-buying” and “hoarding”. 

In this particular case, production quickly adjusted, shelves were restocked, and that was that. But unfortunately, there is one good — housing — which is permanently in short supply in Britain, and as a consequence, we have turned this wartime rationing sentiment into a permanent state of mind. We endlessly obsess about issues that nobody would care about if we had an adequate housing stock: are there too many second homeowners? Too many overseas buyers? Too many homeowners who leave their houses empty? Social housing tenants with a spare bedroom? Social housing tenants who could afford to move out? Too many foreigners competing with British-born people for scarce housing?  

The government’s recently announced plans to tighten planning laws in order to curb the short-term letting sector are just another expression of the same zero-sum thinking.  

The government’s own rhetoric makes this abundantly clear: 

Local residents will be protected from being pushed out of their communities by excessive short-term lets thanks to changes in planning rules […]

[C]ouncils will be given greater power to control short-term lets by making them subject to the planning process. This will support local people in areas where high numbers of short-term lets are preventing them from finding housing they can afford.

In fairness, as far as planning restrictions go, these plans are not particularly egregious. People will still be able to sublet their homes occasionally, and the changes will not be applied retroactively. So to describe this as a “crackdown” on the short-term let sector would be an exaggeration.  

But even so: these plans represent yet another infringement on private property rights, and yet another increase in the regulatory burden. More to the point, they also reinforce the miserabilist wartime rationing mindset, treating housing supply as fixed when the emphasis should be on expanding it. England has just 434 housing units per 1,000 inhabitants. The EU average is 495, Germany has 509, Switzerland 529, Austria 547, Spain 551, Finland 557, and France 590. But these numbers vastly understate the true scale of Britain’s housing shortfall, because Britain does not just have fewer homes than comparable countries, but also unusually small ones. The average British home is only about two thirds of the size of the average Dutch, German, Belgian or French home, and less than half of the size of a typical North American or Australian one. 

This shortage of residential housing is mirrored by a shortage of business premises, such as offices and retail space, and, of course, a shortage of hotels and other providers of accommodation — which, ironically, then fuels demand for short-term lets, as a (thus far) more lightly regulated substitute.   

We do not have to make that choice

It is by no means guaranteed that the government’s plans will work even on their own terms: they may just fuel conversions into, for example, bed-and-breakfast accommodation rather than residential housing. But to the extent that they will work, they will do so by suppressing tourism, thus depriving areas of a source of income. So to the extent that there will be any improvements in housing affordability, communities will pay a price in other ways. 

We do not have to make that choice. It would be perfectly possible for every city, town and village in this country to provide enough housing for residents, visitors and newcomers alike. We should not even be having this conversation. And if this government had not spent the past 14 years catering to the whims of NIMBY obstructionists, who find the sight of houses (other than their own) distasteful — we would not be having it. 

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