Will “garden villages” and “Starter Homes” help first-time buyers?

David Kingman takes a look at the government’s latest housing policy initiatives house-building-300x200

The government has recently announced some progress towards achieving two of its most high-profile commitments on housing policy: creating a new generation of so-called “garden villages” (new planned communities that will contain between 1,500 and 10,000 homes) and “Starter Homes” (a new category of Affordable Housing that will be sold at a discount to people aged between 23 and 40). Both policies have been pitched squarely towards the thousands of frustrated young adults who want to become first-time buyers but have been unable to do so – but will they really help first-time buyers get on the housing ladder?

Garden villages

The nomenclature of the garden village policy is an historical reference which harks back to the Victorian Ebenezer Howard, one of the founding fathers of English town planning, who led the garden city movement during the early 20th century; this was a campaign which argued that the health and social problems of Victorian industrial cities could be remedied by building a number of “garden cities” – planned communities where all the land would be owned on a cooperative basis, and which would be designed to provide their residents with clean and spacious homes located in bucolic surroundings.

Only two of Howard’s proposed communities were ever actually built in England (Welwyn Garden City and Letchworth Garden City, both in Hertfordshire), but the concept had a lasting influence on subsequent generations of planners, including the architects of Britain’s post-war New Towns (such as Milton Keynes and Stevenage). It became the subject of the 2014 Wolfson Economics Prize, which asked contestants to explain how they would deliver “a new Garden City which is visionary, economically viable, and popular?” in order to win the £250,000 first prize.

Almost 90 years after his death, the current Conservative government – facing rising public anger over the price of housing in Britain – appears to have taken Ebenezer Howard’s ideas to something of an extreme. The government now says it is planning to build three new types of planned community in order to increase Britain’s supply of housing: firstly, the 14 new “garden villages” which were described above; secondly, 10 new “garden towns”, which will be built along similar principles to garden villages but contain more than 10,000 homes; and thirdly, two new “garden cities”, at Ebbsfleet in Kent and Bicester in Oxfordshire, which are supposed to provide over 15,000 new homes. Their strategy for these new planned settlements was outlined in a policy paper last year.

The government says that it expects 25,000 housing starts to have occurred by 2020 across all the sites that are allocated for growth under these policies. Although they are being instigated by Westminster, the central government is keen to present these developments as being locally-led, so it is calling for expressions of interest from local authorities who want to develop new garden settlements in their areas. It seems that most of the housing will still actually have to be built by the private sector, as the only funding that the government has committed to the scheme appears to be relatively small amounts to assist with site assembly, land remediation, extending infrastructure links and so on.

Starter homes

Unlike garden settlements, which are a general attempt at increasing housing supply, the Starter Homes scheme is the government’s way of trying to ensure that the supply of housing which is specifically available to first-time buyers increases. Following the recent Autumn Statement, a dedicated Starter Homes Land Fund worth £1.2 billion has been created to help get these projects off the ground.

How much will either garden settlements or Starter Homes help first-time buyers? The evidence is decidedly mixed. Serious concerns have been raised about the government’s policy of allowing private developers to build Starter Homes as their affordable housing contribution instead of building sub-market rental accommodation, especially as the discounts which will be available on Starter Homes (they will have a maximum cost of £250,000 outside London, or £450,000 in the capital) mean they are likely to benefit fairly well-off young buyers who might have got on the housing ladder anyway, rather than those who are genuinely locked out of it.

The new garden settlements face a sizeable array of hurdles, not least gaining planning permission. Planned communities in England have had an uneven record, with several of the post-war New Towns being regarded as failures; the concept goes against the grain of fashionable ideas in urban economics which stress the importance of endogenous growth and agglomeration advantages, and the related social trend which has witnessed a revival in city-centre living. No-one can plausibly argue that new settlements on their own can solve the housing crisis.

However, at least the government is taking the housing crisis seriously; indeed, if they are serious about helping the so-called JAMs (Just-about Managing families) then housing will need to be a key part of their agenda. For all the flaws of these two schemes, they signal a concerted effort to find innovative ways to increase the housing supply, and that this has become a key issue right at the heart of government.