Economist on the Home Voter Hypothesis for Nimbyism

We have mentioned teh Home Voter hypothesis on here several times – interesting to see a study

Economist

Local opposition to new housing developments is common across Britain. It has long been argued that such opposition—NIMBYism to its critics—is linked to home ownership. Homeowners, unlike distant landlords, vote in local elections and receive planning consultations in their postboxes. They lose out from development in multiple ways. Loss of green space reduces their quality of life and increased supply of housing suppresses prices. Landlords managing diversified portfolios are less exposed to the value of one property. The idea that planning decisions are driven by the desire of homeowners to maximise house prices is known as the “home-voter hypothesis”.

On October 24th the Institute for Government, a think-tank, released a study supporting this theory with data. It looked at English local planning authorities (LAs) between 2001 and 2011 and found that for every additional ten percentage points in the proportion of homes that are owner-occupied, 1.2 percentage points were knocked off growth in the housing stock. Average growth was 8.8%, so the effect was marked. The authors are cautious about making a causal claim, but the correlation was observed after controlling for the number of planning applications and the amount of available land. A rough calculation suggests that, without the NIMBY effect, one million more homes would have been built during the period.

That would have helped alleviate an acute shortage of British housing. In 2004, a government report by Kate Barker, an economist, found that 240,000 new homes were needed every year. Only 138,000 homes were built in 2013. Due to the shortfall, houses are eye-wateringly expensive and, since 1952, home ownership has become a more distant prospect for almost every new generation (see chart).

In a book released in September, Ms Barker argues that England’s planning system is fragmented and slow. LAs are required to have a medium-term plan which meets targets for development agreed with central government. But both the overall plan and individual developments can be held up. LAs find it difficult to work together on proposals which cross boundaries, and vacillate on whether to build on brownfield land, which has old buildings on it, or greenfield sites, which developers prefer. The green belt around many towns constrains development. And locals see few of the fiscal benefits from new homes, so there is little incentive for them to build.

Thankfully, public attitudes are shifting. Rising house prices used to be celebrated as a sign of economic strength; now, most see expensive homes as bad for Britain. Politicians are responding: both big parties have promised more building.

Looking specifically at the study it finds

Evidence reviewed in the paper suggests that three features of the English planning system (and the institutional environment where it operates) increase the risk of planning decisions being biased in favour of current homeowners, adding to supply constraints.

1.       Weak or absent city-wide/regional planning coordination – planning policy is operating exclusively at the local level and is responding to the interests of local residents;

2.       High fiscal centralisation / limited local fiscal autonomy – often new development implies additional costs for Local Authorities (ie investment in local infrastructure, in additional capacity for public services), while the increase in revenues is rather limited. So Local Authorities themselves have few fiscal incentives to allow more development;

3.       “Development control” – the English planning system requires any change of land use to be subject to planning permission. This not only makes planning decisions slower and more uncertain, but in the process, gives multiple opportunities for other people who might want to oppose new development to do so. Those more likely to be against planning for new homes are those who currently own them.

So if you are to overcome this an ‘evidence based’ approach to new housing requires

1. Strong city-wide/regional planning

2. Strong fiscal autonomy relating to uplift in land values

3.  A more zoning and subdivision approach

We are slowly shifting on 3, progress on 2 is recogbised by glacial, whilst on one at least in Manchester the government is finally moving.   From  international experience we know what works in delibering houses at all levels of affordability, what we now know does nt work, this year with the lowest levels of completions of social housing since the war, is gathering evicdence solely from slaoon bar interviews with housebuilders.  We tried that it failed.

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