Why Locals-Only Housing is Bad Economics, Impractical and Immoral

Article by John Meadowcroft on "Locals-Only Housing" in the Yorkshire Post

We must keep free choice over housing in Yorkshire Dales

Yorkshire Post
, April 2005 John Meadowcroft

The high price of houses in the Yorkshire Dales is caused by the fact there are too many people wanting to buy too few houses. It is basic economics that where demand outstrips supply prices will rise accordingly.

Of course, there are good reasons why the supply of houses in the Dales should be limited; nobody wants to see an area of outstanding natural beauty built over with new housing. Nevertheless, it may be the case that the present planning controls are too strict and it would be possible to allow more new building without seriously harming the local environment.

This is a question that the National Park Authority should revisit and tough choices may have to be made where such strict conservation so dramatically limits the supply of new houses and thereby imposes high costs on people. If the supply of houses is not to be expanded, however, it does not follow that artificially lowering demand by imposing a ‘locals-only’ rule is a reasonable policy.

On the contrary, the ‘locals-only’ rule may exacerbate the problem by further reducing the supply of new houses if developers are unwilling to build where artificially lowered prices diminishes the return on their investment. They may also use cheaper materials and cut back on design costs, leading to long-term aesthetic and sustainability problems. Few would want to see the Dales become renowned for cheap and ugly houses, but this may be a consequence of the rule.

By restricting the sale of houses within the national park, the rule may raise demand outside the park area and thereby push up prices in other picturesque parts of the county. A problem that is presently limited to a relatively small geographical area may soon become much more widespread if the rule is applied.

It should also be remembered that new houses quickly become what Americans like to call ‘previously enjoyed’ houses. For this policy to be effective wider restrictions will have to be placed on the sale of houses more generally, as has been the case in other parts of the country. This initial ruling may be the beginning of a long process by which people’s freedom to buy and sell houses where they choose is curtailed.

The rule is also based upon erroneous assumptions about the negative impact of commuter, retirement and holiday homes on rural areas like the Dales. It is not the case that a rural area where many homes are owned by commuters, retirees or are second-homes will become fossilised. On the contrary, recent research by Dr Aileen Stockdale of Aberdeen University shows that retirees and commuters who live in the countryside tend to spend more money and hence bring greater prosperity than many long-term residents. Rather than seeking to prevent such people from moving to places like the Dales, local authorities should seek ways to help people to utilise the economic benefits that follow to create vibrant, thriving communities.

Not only is the rule impractical, it is also unfair and inequitable. The rule assumes that some people have a greater right to live in a particular locality than others. This goes against the grain of a free society, and also raises the question of what constitutes a ‘local person’? I grew up and went to school in the village of Shelley outside Huddersfield, but having since moved away, might I now be prevented from returning? Am I really less of a local person than someone who happened to move to Shelley from the South coast three years ago?

Equally, is it fair that someone who has worked all their lives in order to buy a retirement home, or a second-home, in an idyllic part of the world should be prevented from so doing so that another person can purchase a house in the same location at a below-market price? Would it be fair if the French prohibited English people from buying houses in Provence, or if people in Leeds prevented those from outside the city purchasing new homes to keep the prices of houses low for local people?

The ‘locals-only’ rule applies the same logic that was used by racists to oppose black and Asian immigration to the UK in the 1960s and 1970s when it was claimed that such immigration would take jobs and homes away from the indigenous population. In reality a prosperous economy is founded upon the free movement of people and goods and measures that restrict such movement retard economic growth.

The Yorkshire Dales is a beautiful part of the world and it is no surprise that many people want to live there. Unfortunately, not all the people who want to live in the Dales can do so. In a free society, houses are allocated according to the processes of supply and demand in the marketplace. Builders and home owners are free to sell their properties to whoever is willing to pay the asking price. Where the government decides that only particular groups can live in particular places then we move from a free society to an unfree one.

For recent IEA publications on land use planning see
Liberating the Land by Mark Pennington and
The Land Use Planning System by John Corkindale. In September 2005 we will be publishing a book on the economics of the countryside and government policy. In December 2005, the IEA’s journal, Economic Affairs, will be comparing systems of urban planning used around the world.

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