Following on from our email last week about the true cost to property developers of planning objections, it was interesting to read David McWilliams‘ take on this in the weekend papers. He was, perhaps, less diplomatic, stating: “Want to find the cause of the housing crisis? Look in the mirror. Individuals opposing planning applications drive up house prices and make land scarce”.
He is not wrong.
In the real world, property developers and contractors are well aware of the negative impact that individual or community opposition to a proposed development has. Even on projects where the objections can be overcome, the true costs of the delay – including loss of opportunity – can eat away at margins, which are (at best) tight.
As noted last week, some objections are certainly legitimate. But in his article, the errant economist points out that even legitimate individual objections can have the effect of driving up property or development land prices locally and ought to be considered on a macro level, meaning – in the words of Dr. Spock – “Logic clearly dictates that the needs of the many outweigh the needs of the few”. In fact, David McWilliams takes this a step further by explaining a principle of macroeconomics, which provides that what is good for the individual is not always good for society as a whole. Of course, this makes sense, but it is not particularly palatable to the aggrieved individual.
It is fair to say that most people within the industry understand that there is no single factor that we can point to as the cause of our current housing crisis. Rather, we had decades of questionable industry practices and questionable State policies collide with the global economic meltdown at a time of heightened globalisation. If there had been one single cause, then perhaps there might be one single solution… Nothing could be further from the truth.
If we accept that there can be no single solution, then it ought to be easier to implement a range of measures across all facets of the industry – from banking to planning, taxation to regulation- and then to adopt a more curious rather than critical form of feedback. This might actually allow for learning rather than finger-pointing.
With this in mind, reforming the pre-planning public consultation process with a focus on the big picture, would likely reduce instances of organised community or ‘group think’ Nimby-ism (‘Not In My Back Yard’) and would almost-certainly negate the impact of individual objections based on personal protectionism.
Would such reform be enough to solve the housing crisis? Absolutely not. Would it speed up the delivery of new homes? Definitely.
So, it appears that the property lesson this week is for us not to be afraid to think about the big picture in small ways.
Director / Business Development
Lotus Investment Group