South Berkhamsted: Market Failure?
'Can we really rely on profit-hungry property firms?'
Georgiana Irwin | 13 June 2016

The proposed new 800 houses in Berkhamsted, namely ‘South Berkhamsted’, may not come as a shock to many, considering the vast amount of new housing developments springing up all over Berkhamsted, including Bearroc Park, the recently built Taylor Wimpey Development at Durrants Lane.

But what does this mean for social housing? With increasing demand from a population expanding by 6% per year, how does the council intend to provide for this stipulated quota? Moreover, does it even have the power or resources to provide this essential housing?

Thatcher’s Housing Act of the 1980s extended right-to-buy social housing to tenants with substantial discounts as part of a wider move towards market privatisation. Hence, in the following decade more than a million council homes were sold (at around £60bn, in today’s money). The majority of sold-off homes were not replaced, leading to a chronic shortage of social housing and converting what was traditionally a public good into a private one. This led to large numbers of people who could not afford houses, and had nowhere to rent, resulting in the higher homelessness we see today, as well as the extortionate rents and house prices in London and the wider South-East.

The Government tried to address this by subsidising ‘Help to Buy’ schemes hoping it may have some impact in making housing affordable, but only for the ‘lucky few’ according to Homelessness Charity Shelter’s Toby Lloyd, and this doesn’t address the fundamental problem of a desperate shortage of affordable housing: not enough houses are being built or provided to meet the demand.

It is worth remembering that it was an unsustainably rapid increase in homeownership resulting from many ‘ninja’ (for people who had ‘No Income, No Job or Assets’) loans that led to a worldwide financial crisis when the property bubble popped. Although there is nothing wrong with people owning their own homes, this push for more homeowners has involved a huge number of buy-to-let landlords buying up property as an investment which has driven up prices, up to six times median income in London (Guardian 2015), and putting pressure on surrounding green belt areas like Berkhamsted, which have easy access to London.

Although promising to provide low cost ‘affordable housing’ to appease planning departments, private developers do not always fulfil these unrealistic quotas. The Durrant’s Lane development is promising a seemingly optimistic but suspiciously vague ‘up to 40%’ affordable housing. So to what extent can we rely on these private developers, beyond their desires to line their own wallets?

The Berkhamsted Action Residents Group have opposed the plan for the town’s expansion, saying that Grand Union Investments sustainability claims are ‘misleading’. GUI have said the plans for new sustainable housing will help to ease the strain on infrastructure and it will also be improved. The utility companies will not be forced to improve infrastructure or fulfil affordable housing quotas on the basis of GUI plans, either.

So, is the provision of social housing, or lack thereof, an example of market failure? Should it be provided by the government or can we really rely on to profit-hungry property firms, housing associations and buy-to-let landlords to supply housing, with the council having less and less input into ensuring the provision of sustainable, affordable, subsidised housing? In Berkhamsted, perhaps not. But nationwide, with a Conservative government, the property market will be free from regulation until at least 2020.


Original Image by Oliver Hansen

James Routledge 2016