North-South divide worsened by planning system, says think tank

Housing in Brighton, Sussex. Credit: Public domain

A ‘restrictive’ planning system is worsening the North-South divide in England and Wales, it has been discovered.

Urban homeowners in the South East of England have become £80,000 richer since 2013 than those living elsewhere in England and Wales, due to the scarcity of new homes in the region driving up house prices, Centre for Cities has said.

The think tank said that urgent reform of the planning system is needed to stop it from ‘gifting wealth’ to homeowners in desirable southern cities.

Centre for Cities’ chief executive Andrew Carter said: ‘Our planning system is fuelling a North-South wealth divide among homeowners. Restrictive planning policies in many prosperous southern cities are gifting wealth to homeowners in the Greater South East.

“This creates two wealth divides: one between homeowners in the Greater South East and elsewhere in the country, and another between homeowners, who tend to be older, and renters, who tend to be younger, within the Greater South East.’

Centre for Cities’ research found that homeowners in the Greater South East – where incomes are typically higher and new housing is scarce – saw their wealth grow by over £80,000 between 2013 and 2018, £46,000 more than the national urban average.

Homeowners in London saw the biggest increase in housing wealth of £122,000 over the same period, while the capital saw an overall increase of housing equity of £550bn – more than every other city in England and Wales combined.

Overall, the Greater South East has seen over two thirds of overall growth in housing wealth, while delivering just under half of all new homes.

As home ownership rates in the region are lower, wealth is being redirected to homeowners and landlords, while young renters are being penalised in the form of ever-higher rents, the think tank found.

‘The best way to address this inequality is to build more homes in the areas that have seen the biggest increases in housing wealth,’ Carter added.

‘This means radical reform of our broken planning system and challenging the Nimbys whose voices dominate local politics.’

Introducing a flexible zoning system, as is used in Japan and some parts of the USA, would help to ensure that housing supply in sought-after areas meets demand, Centre for Cities concluded.

The think tank has also recommended that the government end subsidies for home ownership and tax increases in housing wealth.