(updated - 6 April 2014)
This
article - why Britain should adopt Singapore's approach to affordable housing appeared recently in the UK's Telegraph.
Nobody seems to be able to solve the public housing problem in the UK, especially in London.
I quote from the Telegraph article,
"
For both good and bad reasons, the Government has ducked the obvious solution of meaningful planning reform, but there are other approaches to expanded supply that could work. One would be for the Government to embark on a major programme of house-building. This could be done in a fiscally neutral, self-financing way by adopting the Singapore model, where all public house-building is for private sale – the apparent contradiction of state activism for free market purposes."
Planning Reform?
The article did not elaborate what type of planning reform it was advocating for. However, from a Singaporean viewpoint, the planning process in UK is nothing short of astounding, in terms of the steps, the hoops, the hurdles and the time it takes to get things approved, if they get approved.
According to the
UK Government planning portal,
"Planning control is the process of managing the development of land and buildings. The purposes of this process are to save what is best of our heritage and improve the infrastructure upon which we depend for a civilised existence.
Your
local planning authority is responsible for deciding whether a development - anything from an extension on a house to a new shopping centre - should go ahead."
Local Planning Authority Makes the Decisions
The local planning authority, or the local council, calls the shots. There are
32 London Borough Councils.
The critical point is that the councillors are elected, i.e. they are first and foremost politicians because without the votes from the local people, they lost their jobs.
What happens? From what I have observed, planning decisions, after going through all the necessary consultation, refinements etc, are put to the vote. Local councillors have to be very careful with regard to how they manage the sentiment of the local population. Mess this up, and you'll be voted out at the next elections.
How to mess this up? Very simple. If the local residents (i.e. your electorate) strongly object to a certain development for whatever reasons, who do you think they will vote for if you let Planning Permission go through? Also, every elected councillor has one vote when the Planning Permission is put up for a vote. And the votes are published so the local electorate knows exactly who voted for and against a particular planning project.
Political Incentives of the Local Council
Say you are leading the local council, considering a decision whether to allow a glitzy new development of high rise residential units in an area that was previously just low-rise residential. Would you be able to get the support from the local people to go ahead? May not be so easy.
Nobody likes construction in their backyard! And Londoners seem to have an aversion to tall buildings. This is a simplistic analysis, but I think fundamentally this is a major issue London is facing.
The irony is this. London is very short of housing. All the Londoners who would potentially have benefitted from the brand new residential skyscraper would want to the local councillors to vote yes. But the key is the building has not been built and the people have not moved in. So these potentially new residents have no vote! Rather, the entire voting process would be 'captured' by the locals already living in that local constituency.
London Projects in Short Supply, Each Project is Small, even Tiny
In a separate post on
international developers moving into London, I commented that from a Singaporean perspective, the projected pipeline of projects in Canary Wharf looked to be very small.
Indeed, the JLL research article observed correctly that international developers are finding that they can't find the scale when they invest in London. In one London project that we have been buying into, the entire project consists of less than 500 residential units to be built over 4 to 5 phases, with the entire project taking more than 5-7 years to complete.
Perhaps this pace of development is considered fast for Londoners, however. Singaporean readers would appreciate that tall skyscrapers (think of the new generation 40 to 50 storey HDB flats and condominiums) pop up in Singapore, almost overnight.
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| Tall HDB (Public Housing) Flats in Singapore |
Would UK Government Be Able To Start A Public Housing Programme?
Perhaps, but my own assessment is this is not likely to happen for a few reasons.
First, for a successful public housing programme to work, the Government must directly control the Planning Process and, in short, brush aside all the local concerns. Any large scale housing programme would immediately be crippled by the existing planning regulations.
Second, a successful housing programme takes decades, not years. Furthermore, it requires substantial funds. The UK government, having to fight for its survival every 5 years at a the polls, would likely not take such a long-term view.
Third, a successful housing program would likely require tall, or even very tall flats. Londoners seem to have quite an aversion to skyscrapers, which brings me back to point two. How are the politicians going to get support?
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| The Pinnacle @ Duxton - Pride and joy of Singapore's public housing |
Happy investing!
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