Britain’s Self-Inflicted Housing Crisis

The Antiplanner has spent the last week in Britain, and everywhere I went people were talking about Brexit: the vote in June on whether Britain should leave the European Union. Britain originally joined the union when it was a free-trade area, but since then it has grown increasingly intrusive on the economies of its member states.

While those intrusions are costly to Britain, the country’s biggest economic problem is self-inflicted: the housing crisis that makes Britain one of the least-affordable housing markets in the world. That crisis directly results from land-use laws passed to contain urban growth within specified boundaries. Since passing the first of these laws, the Town & Country Planning Act of 1947, British housing has not only grown more expensive, the nation has experienced four housing bubbles and collapses.

Until 1860 or so, all of the land in Britain was owned by an aristocracy that made up less than 4.5 percent of the population. Today, more than 60 percent of families nominally own the land they live on, though I use the word “nominally” because the official position of the government remains that “The Crown is the ultimate owner of all land in England and Wales.” This probably refers to alloidal title, while individuals may own a fee-simple title or freehold.

Even if fee-simple ownership really is ownership, most fee-simple owners in Britain own tiny plots: 16.8 million landowners occupy just 4 percent of the land. Meanwhile, just 432 people own half the land in Scotland, while two-thirds of the land in Britain as a whole is owned by 189,000 families. Greenbelts and other urban containment measures confine 90 percent of the population to less than 6 percent of the land, and those urban areas have an average population density of around 10,000 people per square mile.

The Antiplanner’s home state of Oregon has slightly more land than all of the United Kingdom, including Scotland and Northern Ireland. While Britain has sixteen times Oregon’s population, if Britain’s urban population were allowed to expand to the same population density as Oregon’s, or about 2,800 people per square mile, they would still cover less than 18.5 percent of the country, leaving more than 80 percent for farming and other uses.

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Part of the Town & Country Planning Act called for the government to build high-density housing for people to live in within the greenbelts. Like Pruitt-Igoe in the United States, many of the high-rising housing complexes turned out to be poorly built and had to be destroyed (see above video). Today, only about 14 percent of Brits live in true multifamily housing, while most of the rest live in row houses. On the other hand, only 26.5 percent live in single-family detached homes, compared with 45 percent in France, 55 percent in Canada, 63 percent in the U.S., and 76 percent in Australia.

As of 1980, a high percentage of the nation still lived in government-owned or council housing. To increase homeownership, in the 1980s the Thatcher government gave people the right to buy their home or apartment, usually for a third to half off the estimated market value. This pushed homeownership up to 70 percent, but it has since fallen to around 63 percent as people have sold their privatized homes at a profit.

Some people blame the housing crisis on the right-to-buy program as the revenues from sales of council homes were given to the treasury rather than used to build more homes. But private developers could have met the need for housing if the government weren’t standing in the way.

The only way to alleviate the housing crisis is to fix the problem that caused it: the greenbelts and other land-use restrictions that keep builders from meeting housing demand. Unless that happens, whether or not Britain stays in the European Union will have a relatively small effect on the nation’s economy.