Home Truths Review – by Simon Bain



Home Truths is a must-read for all young people who are alienated from our housing system and baffled as to why they can’t afford a home of their own, Simon Bain writes 

When it comes to elections, it’s said that the economy rules.

But Liam Halligan reveals that when it comes to the UK’s housing crisis, it’s the land, stoopid!

Home Truths takes the lid off the gross power imbalance which has seen land owners and brokers make fabulous fortunes while councils, housing associations, and humble buyers scrabble to find the cash for a stake in the property bubble. This is his devastating summary:

“It would be hard to conceive of a system skewed in favour of landowners and the housebuilding industry to a greater extent than the one we have, and to the detriment of ordinary homebuyers.”

Imagine a field which might one day be ideal for housing. As bare earth, it is worth only £10,000 an acre. With planning permission, it’s suddenly worth an average £3 million an acre. Yes, literally. So who gets the profit?

From 1947 to 1961, it was shared between landowner and the community, to allow for investment in all the infrastructure that makes a site valuable and enables public housing to be built. That kept land prices in check, allowing local councils and small builders to acquire land and create a housebuilding boom. But for the past 60 years, the windfall profit has gone 100% to the landowner and/or developer.

In 2004, a review commissioned by the Blair government from economist Kate Barker recommended:

“The Government should actively pursue measures to share in these windfall gains, so that increases in land value can benefit the community more widely.”

But nothing was done.

More recently, land value reform has been urged on the government by a rainbow spectrum of think tanks, economists, experts, enlightened housebuilders, and MPs, as the crisis has intensified. No sign of any action. Home Truths sets out to expose a litany of failings on the part of successive governments to tackle the housing crisis – and succeeds.

Scary Statistics

Home Truths

  • The average real house price across Britain has increased by 250% since 1980, compared with 50% on average in the US and Eurozone.
  • Between 1985 and 2015, UK house prices shot up by 219% in real terms, almost twice the rate in France and dwarfing the 28% in Italy and 10% in Germany.
  • Prices are up another 20% since then. And land costs are responsible for 70% of the price explosion.
  • These days four out of 10 thirty-year-olds pays rent to a private landlord – four times the level in 1996. And it costs them up to 30% of their income (50% in London).
  • In 1991 two-thirds of 25-34-year-olds owned their own place, by 2016 that was down to 38%. In London it crashed from 46% to 20%.
  • First-time buyers now need to borrow 5.2 times their income on average (9.8 times in London). Almost 40% of women have their first child when renting – it was less than 15% in 1991.

In the North-East and Cumbria it has ‘only’ fallen from 54% to 44%. But we are not exactly talking employment and opportunity hotspots.

Millennials have also suffered from a slump in labour mobility, because they can’t afford to follow the work.

Renting suits some? Surveys in 2016 found 71% of current renters and 89% of all under-34s saying they would like to buy their own home one day. Yet renting is such a drain that 60% of renters are failing to save for a deposit.

Halligan observes:

“Generation Rent is coming of age, they are voting more and – as their chance of ever buying their own home seems to slip away – getting increasingly angry.”

Disastrous policies

After Theresa May’s 2017 election disaster, this looming radicalisation of younger voters may have dawned on the Tories. The hobbled PM vowed that she would “dedicate my premiership to… fixing the UK’s broken housing market”.

Instead of which, she flung another can of petrol onto the flames, in the blank cheque for Help to Buy – the new home leg-up dubbed Help to Sell, a scheme which has bloated the profits of a handful of giant housebuilders and the bonuses of their bosses, inflated prices, and encouraged the building of shoddy under-sized homes.

From a £3.5bn bung from George Osborne in 2013 HTB will have mushroomed to almost £30bn by 2023 – and made the housing crisis a whole lot worse. The National Audit Office confirmed in June 2019 that two-thirds of HTB buyers could have managed without the scheme, which had helped inflate prices and boosted housebuilder profits. UK Finance says HTB has helped just 9% of all first-time buyers whilst raising prices for the other 91% and pricing loads more off the ladder.

The affordability crisis is crippling essential services: Halifax, the bank, estimates that nurses can afford to buy in just 3% of towns across the UK, down from 12% in 2014, and teachers in just 9%.

The chronic housing shortage is also driving an epidemic in ‘beds in sheds’ and outright homelessness, with Shelter estimating a 13,000 rise in rough sleepers to 306,000 between 2016 and 2017.

The public sector built half of all new homes 50 years ago, now it’s down to a fifth. It’s the land – they can’t afford it.  But contrary to myth, there’s plenty of room. The 25 million homes in the UK cover just 1% of England, and only 11% of land is built on, while 13% is green belt.  Inner London has less than half the density of population of Paris and a third that of Madrid.

Halligan says this is all…

“…fuelling not only inter-generational tensions but also compounding regional income disparities – both of which are contributing to political resentment and a shift away from moderate, centrist politics.”

Failure after failure

The one radical measure that is truly needed, land value reform, did finally find its way, under then communities secretary Sajid Javid, into the draft 2017 Housing Act. But it was taken out by – guess who? The former PM on a personal mission to talk through her backside.

Most recently, Mrs May’s housing minister James Brokenshire faced down a powerful barrage of submissions urging this single critical measure, saying he would tinker with the current feeble mechanism which sees developers promising ‘planning gain’ goodies for the community. Amazingly, they have been able to drop them at will by claiming they are ‘not viable’ (i.e. will take a nibble out of huge profits).

The government is also fiddling the figures. It now includes in ‘new housing’ completions the offices converted into flats/cupboards, which have no restrictions on size and can be a third of the size of approved living spaces. This is down to the Coalition Government, though it did chalk up a rare success in upping the tax on empty property.

Even the statisticians have been roped in to aid the cover-up. The ONS has taken over responsibility for forecasting housing need, and incredibly has swallowed the line peddled by the housebuilders which is that there is no housing shortage at all!

The spin?  We’re not forming new households as quickly as expected, therefore we don’t need as many new houses. Anyone not in the pay of the developer lobby can surely see that the reason young people are not moving into their own houses like they used to (a third of men and a fifth of women aged 20 to 34 now camp at home) is…er, because the new houses aren’t there. Apparently today’s millennial couples live in cramped shared houses, family homes, attics and cupboards as a lifestyle choice.

And what we do build is mean. New homes are a third smaller than in the 1970s and the smallest in Europe.  Not so the rewards of the housebuilding moguls – remember Jeff Fairburn of Persimmon and his £100m bonus?

Home Truths
Hobbit homes – the only option left for millennials today

Britain’s powerful land lobby

As a nation, we hark fondly back to the birth of the NHS in 1948, it’s part of our founding myth.  But the Town and Country Planning Act of 1947 was no less groundbreaking. It brought in the need for planning permission, but also required that land be sold at its ‘existing use’ value, which sparked the much-needed housebuilding boom. That safeguard was whittled away by the Tory governments of the 1950s until the Land Compensation Act of 1961 scrapped it altogether, giving the community no benefit whatever of land appreciation.

Prior to that, demand for housing had been very strong but prices had risen only gently, and housing was broadly affordable. Countries such as Holland, Switzerland and Germany all ensure that residential building land comes to the market in an orderly manner and at reasonable prices.

The fall-out has taken time. In the 1960s one new home was delivered for every 14 people.   Building peaked in the 1970s since when it has halved, and since 2010, with population rising, one home has been built for every 43 of us.   The bubble really began in the mid-1990s. In the two decades from 1997, average house prices rocketed 258%  while average earnings were up 68%.

“When it comes to the UK’s housing market, the normal laws of economics don’t apply,” goes the argument in Home Truths. He adds:

“As prices rise, instead of supply increasing to match demand, developers build slowly to ensure prices rise further. This is possible because the industry is controlled by just a few large highly influential operators.”

Reform has been perpetually shelved, because the land lobby is a mighty one. Tony Gallagher, for instance, billionaire founder of Gallagher Estates which styles itself ‘one of the largest strategic land companies in the UK’, gave over £500,000 to the Conservative Party in 2015 and hosted a fiftieth birthday dinner for ex-PM Cameron in October 2016. The property industry is second only to financial services as a Tory backer.

Home Truths
George Osborne – fingers in many pies

The Iron Triangle

George Osborne’s biggest new job after leaving office was a £650,000 a year ‘role’ at BlackRock, which “controls significant investments in many of the UK’s largest residential housebuilders”, Halligan notes. He calls the lobby an ‘iron triangle’ of vested interests, but most intriguingly fingers the Treasury as its biggest supporter.

In one of his many insider reports, the author says a ‘recent former Housing Minister’ told him that the Treasury “are fixated on the idea that building more homes will cause a banking collapse”. He argues:

“The HM Treasury view strikes me as nonsense, and probably has more to do with the fact that senior Treasury officials, often with substantial homes in attractive parts of Surrey, Buckinghamshire and other Home Counties, have conveniently elided their ‘judgment’ of what is good for the economic stability of the country with their inner NIMBY.”

Immigration is a red herring, says Halligan (an economist who is pro-Brexit), citing authoritative studies. We have plenty of room to build, we’re just not doing it.

One brilliant chapter chronicles how the big housebuilders can rush people into unfinished, sub-standard homes, completely unseen, at an hour’s notice, in order to meet internal sales targets, then leave them stranded with major faults untouched.

A surveyor is quoted as saying ‘consumers enjoy more protection buying a toaster than when they buy a new-build home, probably the biggest purchase of their life’.

On top of that, one new HTB house in five in 2017 was sold with hidden leasehold clauses that amounted to legalised fraud. The builders have recanted on the worst examples, but legislation to ban leasehold sales promised by (former) minister Brokenshire won’t apply to flats, it won’t come in until 2021 – and it isn’t even on the statute book yet.  So, carry on unscrupulous developers, nothing to stop you exploiting young unsuspecting buyers attracted by the baubles of Help to Buy – the government’s flagship policy.

Home Truths
Illustration by Joy Ann Laforme

What to do next

And so to the solutions. In Home Truths, Halligan suggests that local authorities should be empowered to form Local Development Corporations (LDCs) which would earmark land, use the threat of  compulsory purchase orders, and crucially be able to buy it at close to its ‘existing use’ value.  They would then parcel it up into building plots and sell at profit to a range of developers – including SME builders who usually deliver more quickly than the giants and at higher standard.  (We would get more townscape variety too, rather than the cloned estates thrown up by a single company.)

The profits could be ring-fenced within the LDC (not used to fund pet council projects) and dedicated to creating infrastructure for the new housing but also for the locality in general.

This is the concept of Land Value Capture (LVC), and it could be used more widely to fund a new era of social and affordable housing. Rather than removing landowners’ right to 100% of windfall profits, a new LVC regime could propose a 50-50 split – for realpolitik.

It is the keynote of the Home Truths manifesto, and “while no silver bullet it could go a long way towards fixing the UK’s broken housing market’, says the author, whilst admitting it “would be fiercely resisted by powerful vested interests”.

The question is: can we elect a government of any stripe that will stand up to them?


Simon Bain is a multi-award-winning business and financial journalist who worked in newspapers for 39 years until semi-retiring in 2016 to work for Young Money Agency. Liam Halligan’s book, Home Truths, is available now to buy from all good online and physical retailers for £20 (though Young Money Blog encourages you to buy from British booksellers that pay their taxes like Waterstones)

This Post Has One Comment

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    Giles Austin

    The price of land for housing development is determined by housebuilders appraising how much to pay, based on a development appraisal which includes sales values/house prices, various construction costs and an allowance for profit. The price of new houses reflects the market value of existing houses, although there will often be a new build premium. The price of new houses does not work on the basis of developers paying any increasing price for land on the basis that they can simply add the costs to house sale prices, illustrated by the nonsensical outcomes that would result, such as homeowners being prepared to pay and lenders being prepared to offer mortgages for a £200,000 new build house immediately worth £150,000 in the existing homes market. Housebuilders look for maximum sales prices and profits, and will also not be selling houses cheaply because, among many examples, they buy land cheaply without planning permission and then obtain planning permission.

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