British Planning Policy and Access to Housing: Some Empirical Estimates

TLDR

The planning system limits land supply, generating scarcity rents that affect land values. This study estimates, for 1984, how such restrictions influence house prices, residential density, and owner‑occupation access, and projects potential urban expansion in the South East absent these constraints. Using data from two similarly situated English cities at opposite ends of planning restrictiveness, the authors applied household survey–based standardisation to quantify the supply‑restriction effects on land and property markets.

Abstract

There is evidence that the implementation of the planning system creates 'scarcity rents' for land in different uses by acting as a constraint on land supply. This paper provides, for 1984, estimates of the effects this has on house prices, on residential densities and on access to owner occupation. In turn these generate estimates of the extent to which urban development would spread in the South East if the planning system were operated in a way which had no restrictive effect on the built-up area. We draw on the results of a wider study of the economic consequences of the planning system. Our estimates are derived from a detailed analysis of the land and property markets in two English cities, selected to be at the polar extremes of planning restrictiveness but as similar as possible in other respects. Household surveys were used to generate the data necessary to standardise for factors conventional urban economic theory suggests would lead to demand differences between them, to provide quantitative estimates of the effects of the supply restrictions produced by the operation of the planning system.