The Help to Buy Debate: Is this why home price averages are climbing?

Many like to criticise the Help to Buy scheme, alleging price increases result. But others disagree:  most buyers are outside of London, new to ownership.

There is a popular argument circulating in the United Kingdom that George Osborne's Help to Buy scheme is causing home prices to rise - and rise rather quickly. From several sides, claims that the programme designed to allow new buyers their first step on the property ladder is in fact fuelling high demand that is greater than the supply and consequently pushing up prices.

That is a flawed argument, posit others. An easily provable point is that the housing supply has been limited for quite some time due to underbuilding during the recession (and before it as well). Also, that the price rises are skewed by the situation in London, where foreign buyers pay cash for £4 million homes just for their children attending university there.

Investors in homes, working through alternative investments in land, know that homes are selling everywhere including outside London. And that if nothing is built, demand will only increase.

Financial Times opinion writer Huw van Steenis made several points in a May 2014 article that suggest that Help to Buy in fact has been a success with little downside. His observations include:

• From mid-2013 through mid-2014, housing starts are up 31 per cent. That does a good job at increasing inventory, as homebuilders are now confident that what they build will be bought by middle class workers, throughout the country and away from London.

• New homes being bought are about one-third by Help to Buy and two-thirds by traditional financing. But research conducted by investment firm Morgan Stanley says this portion attributable to Help to Buy will rise to 40 to 55 per cent by 2015.

• Workers of modest income make up 95 per cent of Help to Buy users, as 80 per cent of homes purchased under the plan are for properties that sell at about one-third less than the national average home price.

Van Steenis concludes that there remains a shortage of homes, that the banks still need to apply stringency in making loans (for example, limit it to home values of less than four times the borrower's income), and that banks should be stress tested to ensure they can weather price drops of up to 35 per cent. He adds that freeing up more land for building should also be part of the national strategy for alleviating the housing crisis.

Of course, the National Planning Policy Framework, which is being implemented at the local level, plays a very important role in increasing housing stock. The web publisher Housing.co.uk noted in 2013 a critical provision of the NPPF plan, which pertains to how local planning authorities (LPAs) should react to market demands. The language of the Framework basically instructs LPAs to heed "market signals," looking at housing affordability, land prices and the relative degree to which land is allocated to residential development.

In other words, says Housing.co.uk, local authorities are responsible for ensuring that prices do not become unaffordable. If allocating more land to development can bring home costs down to the affordable level, then so be it.

Strategic land investment funds work with this equation. They look at market needs, identify land where home construction would be optimal, purchase the land (where sellers are willing), then develop the site. Increasingly, "development" is about creating infrastructure such as streets and utilities; then they sell the ready-to-build lots to actual homebuilders.

Individuals who invest by way of property fund managers take advantage of these sets of circumstances, often achieving appreciable asset growth. But such individuals should do so under the advisement of an independent financial advisor, recognising how the specific components of land investments need to fit the investor's wealth management strategies and objectives.

LPAs Running Behind in Plans, But Approvals Are Up

Two years into the streamlined NPPF, more development proposals are winning planning appeals. It means more homes for Britain, but not everyone is happy.

Two years into the new rules for development in the UK - as defined in the National Planning Policy Framework, or NPPF - it appears that more residential developments are being approved by local planning authorities (LPAs). Relative to the housing shortage crisis this is welcome news.

But why exactly are more plans being approved? PlanningResource.co.uk, the independent information hub for planning professionals, reported in 2013 and 2014 that too few local planning authorities are compliant with the NPPF. This then has the effect of allowing proposals by developers (very often real asset fund managers) to win appeals after initial rejection. Said the publication: "The framework opens up new opportunities for appeal against LPA decisions. If an application is turned down because of conflict with the local plan, there now may be an opportunity for the applicant to argue that the plan has not been brought into line with the NPPF, and hence is "out-of-date", and the presumption in favour of sustainable development should apply."

PlanningResource.co.uk further describes the NPPF as a "game changer," providing an advantage to developers who previously would not attempt an appeal. If the local authorities have a weak plan at all, rulings more often than before go to the homebuilders.

This is much more than a niche matter. The Planning Inspectorate (PINS, in the Department for Communities and Local Government) provided data in early 2014 that shows how only 49 of 336 local planning authorities (14.6 per cent) have plans in place deemed sound upon examination; the total number of planning authorities with plans of any sort is just over half (56.8 per cent) of local authorities. The reason for such failures may be due to staffing cuts in planning policy teams, according to Alister Scott, professor of environmental and spatial planning at Birmingham City University.

Is this a problem? Does the housing crisis not call for a streamlined process? The Director-General of the National Trust, Dame Helen Ghosh, says that pressure from the Government is forcing councils to approve too many plans too quickly. In her words, "I think events proved that you just need to take longer to do these things properly to get the land use right and genuinely to engage local communities." Former Planning Minister Nick Boles tends to differ, reports The Telegraph. He counters that councils have been asked for a decade to "shape where developments should or should not go."

The National Trust says their research finds that half of all councils with greenbelt land allocate some of it for development. Whether or not that is what the local citizenry wants is left to question. But the Centre for Housing and Planning Research at Cambridge University offers its own observations and advice based on multiple studies that might serve as a guide to local planning authorities:

• The NPPF has been well received by large house builders. They say that alteration to the policy is inadvisable; rather, LPAs need to focus on smart practice of the policy.

• Effective planning means adopting an effective five-year housing supply plan. Without it, the councils will more likely lose on appeal (as evidence shows often happens).

• Planning is effective once development is acknowledged as essential. When chief executives, planning officers and elected members become pro-development, a positive, get-it-done programme results.

In other words, planning works - if and when done in advance, and when the powers that be are in alignment with the national push to build more homes.

What is clear is that homebuilders, developers and their investors have a lot to be optimistic about. With more planning changes likely to be approved (or approved on appeal), this is a time to build. Surely, the opportunity can drive considerable asset growth for those participants? But with more than a million homes needed in the UK to meet a young, growing population, it serves the needs of the country as well.

Investors need to choose their investments in housing wisely. Whether it is to buy individuals homes for rental, or to invest through land fund managers, the investment should be reviewed by an independent financial advisor.  The IFA can determine if it meets the risk profile of a wealth portfolio.

LPAs in Slow at Writing Development Plans in the UK

British planning system changes should speed up housing delivery in an orderly fashion. But developers may be better at designing growth plans.

Two very important changes in how residential properties are developed in the UK have been implemented in the past few years. First, the Localism Act of 2011 enabled local communities to have a greater say in what is and is not built in their neighbourhoods. Secondly, the National Planning Policy Framework, published by the UK Department of Communities and Local Government in 2012, is widely regarded as a much-needed simplification of the process by which towns determine and implement their development objectives.

The backdrop to all this of course is the tension between a critical housing shortage in the UK and a long-standing culture of greenfield preservation. In other words, we need houses - more than one million residences to meet pent up demand of a growing population - and yet the country has long determined it wanted to avoid American-style suburban sprawl. Princess Anne herself has weighed in on this in support of the efforts of the Council for the Protection of Rural England, which advocates for incremental development on a small scale over large blocks of new homes, numbering in the thousands, in a single development.

The NPPF essentially tells local planning authorities that they need to think through and structure how development should unfold in their jurisdictions. It also expresses the need to enable development, as the housing shortage in the UK over the past decade and for some time to come, requires that new homes be built. Of course with all forms of development (including that driven by strategic land developers), there are opposing sides and differing opinions on how that should take place.

Which can mean that how development unfolds is a matter of influence. Ideally, good ideas lead the way - identifying where development will be smartest, where the municipality can benefit the most from new homes and new neighbourhoods. Under ideal conditions, new development will support the local economy and local infrastructure. Done right, everyone benefits.

So how are local planning authorities doing at this? The Department for Communities and Local Government provides the Strategic Housing Land Availability Assessment, a guide to determine where housing might make the most sense from a variety of perspectives (sustainability, economics, town centre vitality, transport, protection of Greenbelt lands, conservation of natural and historic environments, etc.). Presumably, the 48 per cent of local councils that had a plan written up by the end of 2013 used this and other guides to form their plans.

But this means that about 52 per cent of councils lack such a plan, even in 2014 (reportedly, about half of them are at work on something). Some say this leaves those un-planned areas subject to developers' whims.

Further, it should be noted that many councils have out-of-date plans, based on pre-NPPF dictates. Those plans often do not take into account the critical housing shortage and the NPPF-driven requirement that the need to build be taken into account. That often is the reason why developers win on appeal, that the plans put forth were unrealistic and out-of-date.

Why are local councils failing to develop true, NPPF-compliant plans? According to a 2014 review of 109 local plans by TRIP (Targeted Research & Intelligence Programme) and Nathaniel Lichfield & Partners (an economic planning firm), "the key reason Plans have stalled is the policy requirement to meet objectively assessed needs with the housing target remaining the key battleground at examinations. Just over half of Plans propose less housing than had been proposed by former Regional Strategies, but a third of sound plans end up having to increase their target to pass examination."

In other words, local councils are having trouble planning enough to alleviate the housing shortage. And in many of the districts studied by TRIP, a lack of information or out-of-date evidence plagued the plans that already exist.

Developers - such as joint venture partnerships of investors who buy and build on raw land - answer to market needs. Which means they do the work at assessing if new homes will sell. In all UK towns they still must get planning approval, then cover costs of new infrastructure demand (often through the Community Infrastructure Levy). What should be noted is that, as of April 2014, house building activity in the UK rose for 15 straight months while demand for property remained strong, according to data firm Market and the Chartered Institute of Purchasing & Supply.

House building continues to draw investors, such as those interested in strategic land (land that requires LPA approval for a use change). This is where the value of the land can increase considerably as it is prepared for development. Individuals who find the investment opportunity worthy of investigation should consult with an independent financial advisor to determine the weight and place of land investing in an overall wealth portfolio.

Why Land Banking is a "Myth," According to the Home Builders Federation

Indeed there are a few hundred thousand plots awaiting building in the UK. But what’s holding back homes is bureaucracy and construction time.

A popular idea in the United Kingdom holds that the housing shortage is due at least in part to developer and homebuilder "land banking." In the strictest sense, this is when people or a company hold un-built land like a financial security, anticipating the price will go up.

There certainly are problems with building enough homes in the UK. Cumulatively over the past ten years the country has fallen behind by more than 1 million homes. The shortage of supply has indeed driven up the cost of homes and the land on which they are built in London and many other parts of the country. Along with rising home costs go rental rates, also skyrocketing.

But there are several reasons why the land banking accusation is easily challenged. To start with, those prices are now at an all-time high, so if it were a simple matter of waiting for prices to rise that would then suggest a huge unleashing of land and built property would be taking place now. There is a sizable segment of strategic land developers who already are effectively turning empty land into residential properties - however, most of those were acquired months, not years, ago. 

Another inconvenient bit of information is basic microeconomics: it makes no sense for any business to tie up capital for long periods of time without extracting utility or value from that capital. Our "just in time" business supply culture keeps a laser focus on carrying costs, purchasing input products only when those inputs are ready to turn into something that will generate revenues. Why invest large sums in something you do not intend to use for several years?

In fact developers and homebuilders - a function very often split between two parties - will need time to get land acquired, approved and built. And by time, that can be several years in the most ideal circumstances. To tie up assets in land on the speculation that prices will increase is not a game that most businesses want or need to do. For homebuilders and their investors, getting a return on investment in a short period of time is the primary objective; this is even truer for smaller home builders who have less capital with which to work.

According to Stewart Baseley, executive chairman of the Home Builders Federation, the term "land banking" is a term that rarely applies to the home building process. "When you look beyond the rhetoric and the lazy accusations, the facts are quite clear: house builders do not hoard land or land bank unnecessarily. The debate really needs to be about how we get the land in the planning system through more quickly to build the homes we need."

The Home Builders Federation takes exception to criticisms that land banking is some conspiracy or that it even takes place. In a report issued in May 2014, "Permissions to land - debunking the land banking myth," the organisation states the following contrary points:

• 220,000 plots (representing as many homes) are said to be land banked by Britain’s larger homebuilders. But only 4 per cent of those plots have implementable planning permission where work has yet to begin.

• Of that same 220,000 plots, construction is already underway in a majority of them. Because these are larger homebuilders, these are the larger developments where construction is on a grander scale and therefore can take longer to be completed.

• 31 per cent of sites have only an outline permission (where construction is not yet allowed) or are still awaiting local planning authority discharge of planning conditions.

• 4,400 sites (2 per cent) are deemed non-economically viable for development.

The difficulties of achieving planning permission have driven the industry in part to a two-step process. Increasingly, joint venture partnerships will identify and acquire land that property fund managers believe to be appropriate for use changes. Once that planning approval is achieved, the fund will develop infrastructure such as roads and utilities, but sell plots to homebuilders who handle the development from that point. To be clear, those investors are looking for a turnaround in their investment of between 18 and 60 months, the shorter the better.

When investors consider this type of asset and its growth potential, they typically engage a third party to assess the opportunity for its risks and return potential. An independent financial advisor should always be engaged to determine if the land deal is appropriate for the investor's overall wealth management strategies.

The Hidden Homeless of the House-Short UK Impacts the Broader Economy

People are making do with what shelter is available. But so many renters, flat-sharers and home-with-mum-ers all indicate the need to build more homes.

Some call it "generation rent," but the situation goes deeper than that. The shortage of housing in the UK by more than one million homes means that people are finding all kinds of ways to cope with the dearth of affordable housing. At best they cannot buy but can find a place to-let; at worse, they have no address to call their own.

Homelessness has steadily risen in the UK over the past decade. A 2013 report, "The Homelessness Monitor: England 2013" from the Institute for Housing, Urban and Real Estate Research and several universities, revealed that rough sleeping rose 6 per cent in 2012 and by 23 per cent in 2011. The growth in statutory homelessness rose more markedly in London and the South. The report also notes that temporary accommodation places were up 10 per cent in 2013 with B&B placements rising at a 14 per cent rate. Additionally, the study found that there are hidden forms of homelessness - shared households and overcrowded homes.

All of which suggests that building more homes is the simple yet daunting challenge. Surprisingly, it's not just about council housing, as many of these under-housed individuals are working people with good prospects for eventually buying a home of their own. But that requires easier financing as well as a robust engagement of real asset fund managers who marshal private investment in market-rate housing.

This phenomenon of home sharing was reported in The Guardian in early 2014, where the trials and tribulations of flat sharing by way of various websites (Spareroom, for example) have led to households of convenience. Quite often, these are people who have experienced relationship dissolution, or the situation when one parent must take employment far away from a family home. Notably, many flat-sharers are middle-aged and at a place they never expected to be at this stage in their lives.

At the base of all this is simple supply-demand economics. The country's population rose by 7 per cent in the census decade (2001-2011) and yet the rate of house building plummeted in this time for various reasons, the financial crisis of 2008 being a major cause. The consequences go beyond how much space and privacy a person or family has - the ripple effects are in fact quite enormous:

• Family/social delays - Young, never-married professionals are living with parents or, at best, with friends. But with stagnant incomes they are less likely to get married, and the young marrieds less likely to have children.

• Failure to begin accumulating housing value - The UK's property ladder culture of asset accumulation falls short when people can't get on that first rung. Working people are paying tens of thousands of pounds to landlords for a decade or longer before being able to put that into a mortgage instead.

• Failure to make household purchases - When young people aren't buying houses, they aren’t buying furniture, appliances and other components of homes. This therefore has a downward effect on other parts of the British economy.

There are several programmes established in just the past few years that are designed to increase the numbers of houses being built and make them more affordable. One of course is the Help to Buy scheme, enabling first-time buyers to make smaller deposits while the Government guarantees the larger loan size. Another is Help to Build, directed specifically at homebuilders. In June 2014, Communities Secretary Eric Pickles announced major investments in several additional efforts, include £1 billion for projects such as large developments (7,000+ homes) currently underway in Manchester, Medway, Kettering and Swindon.

The planning system has been streamlined by the National Planning Policy Framework (NPPF), which has enabled local authorities to open more land to development. Pickles further has freed up £3 million to empower local planning authorities (LPAs) with additional capacity to finalise section 106 agreements, which has the effect of accelerating starts on work sites (up to 25,000 homes on 85 sites could be immediately affected).

But the real funding for development comes from the private sector. Individuals are keen on identifying investment opportunities in housing, many of whom work through capital growth funds that buy raw land, achieve planning approval, develop infrastructure then sell shovel-ready plots to homebuilders.

But before investing in property funds or any form of real estate, investors should discuss overall wealth building strategies with an independent investment advisor. With such pent-up demand for housing it seems that investments there can only do well, however an IFA can determine whether the specific fund meets an investor’s risk profile.

The Agricultural Building-Conversion Rules - Effective at Increasing Housing?

Converting agricultural structures to homes will provide additional housing in rural and suburban areas. But a true dent in the housing shortage will come by other means.

Then Planning Minister Nick Boles announced in March 2014 that owners of redundant agricultural buildings will have an easier go at permitted development of those buildings into residences. The ruling was made effective almost immediately. So an immediate follow-up question might be: what effect on the housing crisis in the UK might this have? Will farm families replace strategic land investment firms as the developers who solve the housing shortage problem?

The answer is "not likely." Within Boles’ ministerial statement are the limitations on these expanded development rights for owners of agricultural properties: up to three dwellings may be created up to a maximum of 150 square metres per house (i.e., a building up to 450 square meters may be converted). The prior agricultural use of the buildings had to be agricultural on and before 20 March 2013 (i.e., nothing built since or in use for another purpose other than farming).

Additionally, note this is not a free-for-all, as it is still subject to local planning authorities. Builders can place doors and windows where they chose, and even replace a portion of the building if a wall or roof or other element is deteriorated. But LPAs can still examine several factors to determine if the introduction of new residences has a material impact on local transportation and highways, if it will increase noise, or if flooding risks or ground contamination might make residential use impractical. Planning authorities can also rule if the design or external appearance of the building is acceptable or not, or if siting/location factors simply make the conversion impractical for residential use.

Given the shortage of housing in the UK, and the requirements of the National Planning Policy Framework (NPPF) for local councils to identify means to expand housing stock where possible and needed, one imagines those authorities would be somewhat predisposed to approvals.

As to the degree to which this addresses the UK's housing crisis, there are some points worthy of consideration:

• Need is important for aging farmers and rural workers - While they are not a large segment of the overall UK population, in agricultural areas an expansion of housing options can be beneficial to retired farmers who wish to stay near children now running the operation. Agricultural workers also need housing that is affordable and nearest to their places of employment.

• Knowledge workers might prefer country living - The Country Land and Business Association (CLA) published a report in 2013 that included enthusiastic support for these extended permitted development rights. Their reasons include how "to work effectively as a member of the knowledge economy, you no longer have to live in an urban location." But to make that truly possible, the CLA argues that transport policy and rural broadband delivery be increased.

• Peripheral locations may benefit - Some farming areas are in close enough proximity to developing industries. This is where residential development is most needed, and those locations therefore can help meet that need.

• Good supplementary income to farmers - According to FamersGuardian.com, the revised rules on agricultural building conversions can provide new streams of income to farms where redundant buildings have otherwise become a maintenance liability and cost.

But the overall UK housing shortage is of a scale where three residences per project in rural settings is not likely to make a huge difference to the national problem of too-few houses. The Home Builders Federation says that based on the seminal 2004 Monetary Policy Committee report by Kate Barker, the country is now short of one million homes. Where 220,000 houses should be built each year to achieve an adequate supply by the year 2021, only 115,000 have been built annually since 2004.

Another approach that achieves a larger volume is by way of strategic land developers. This is where investors join in real asset funds to buy raw land, get use permission changes from local planning authorities, then develop infrastructure that allows homebuilders to buy sites and build what the market calls for. Instead of three new dwellings, these ventures can provide 30 or 300 or 3,000 more homes.

Individuals who invest in housing-related joint venture partnerships are strongly encouraged to work with independent financial advisors. Factors relating to other components of a wealth portfolio need to be taken into consideration along with the risks and rewards of the investment itself.

How Much More Housing is Needed Outside of London?

Districts outside of the capital city - including the North and West - are seeing private industry growth. But without housing for employees, that can't continue.
Where it comes to both the rising price of housing and the shortage of it, London gets all the attention. Indeed, a 2013 survey and report by the Royal Town Planning Institute found that a higher proportion of Londoners - 63 per cent- felt that there was a housing crisis in their area. This compares to 51 per cent in the South and 38 per cent in the North.

But in fact there is a growing need for more workers in metro areas outside of London. The energy sector and its employment needs provide a good example, where 86 per cent of growth in this burgeoning industry between 2008 and 2012 was outside of London. In other industries, the growth rate is more modest but still a robust 53 per cent of growth also is happening outside of London. Strategic land advisors follow these trends closely, as they represent opportunities for development and homebuilding.

Economic growth outside of London can be identified in other ways. A 2014 study conducted by Trampoline Systems on behalf of Summit: The Future of Growth, a type of business think tank, revealed that entrepreneurial hubs in the UK are remarkably outside the capital. The organisation’s report states that of 41 areas with 50 or more fast-growing firms, 23 were found outside of London. The North East and North West had 22 per cent of that growth.

Surprisingly, some of these ex-London areas grew during the financial crisis and its aftermath. Between 2009 and 2011, of the electoral wards where growth was greatest, 72 per cent were outside of London.

Growth is a good thing, wherever it happens. But if these firms are to continue building and hiring more people, while spawning supplier companies that also need to add to their employment rolls, housing must be available for those firms' workers as well.

An exhaustive report from The City Growth Commission, an independent organisation that focuses on the economics of major cities in the UK, states clearly that smart planning and adequate housing are at the core of the country's growth, in London and other major metros. In "Metro Growth: The UK's Economic Opportunity" (February 2014), the Commission makes several clear statements about the role of housing in areas where growth is to be successful:

• "Planning and housing will need to be at the heart of many metros and regions' strategies. Over the last 30 to 40 years, national planning policies have often sought to constrain successful places from growing and focused instead on regenerating areas in decline. The effect of this is most acutely seen in the housing markets of London and the South East, where undersupply and strained affordability has started to impact on business decisions. London firms consistently list operating costs, transport and housing as key concerns."

• There is a clear need for countries such as the UK to enhance their productivity potential and enable cities outside of national capitals to benefit from growing opportunities. For the UK, policy and strategy must shift. Rather than considering 'rebalancing' the economy between cities and regions, a successful UK economy is likely to involve a network of mutually reinforcing, complementary and connected metro regions. A national system of cities will both be supported by and provide support to London as our leading global city.

• Along with a 'town centre first' policy, for example, there is a case for metros to encourage brownfield development and, where possible, increase the density of existing built up areas. But metros need to have greater flexibility to plan where they develop and how they link to other cities and regions to maximise their growth potential, while protecting their exceptional countryside and heritage.

This may be at odds with those who argue for constrained expansion of cities and who worry about blending between one town and its neighbours. But for organisations that wish to encourage sustainable economic growth - and to employ the growing British population - its clear that housing is an essential part of the equation.

Strategic land developers understand this principle well. They identify where economic growth and employment require new homes to be built, then scout for land that would effectively fill that need. From that point forward they oversee planning approvals and infrastructure development, after which the land is sold to homebuilders who complete the development process. This entrepreneurial approach to development neatly mirrors the development of local economies driven by business developers.

Investors in raw land -typically working in joint venture partnerships - are the drivers of much development. But before embarking on a real estate development scheme, residential or commercial, an investor should seek an independent financial advisor who can determine if development and raw land investing fits his or her investment strategies.

Can UK Agricultural Land Give Way to Housing?

The hard argument between land for farms vs. homes is too binary. The shifting nature of agriculture and farmland suggest a spectrum of solutions.

In the quest for space in which to build homes, the UK faces some difficult choices. Government planning agencies encourage cities to remediate brownfield land. And the streamlined planning programmes - by way of the Localism Act of 2011 and the National Planning Policy Framework implemented in 2012 - empower local councils to identify where residential growth can and should occur in greenfield and greenbelt lands.

Of course, this runs counter to some long-held beliefs about how land should be used and what defines England itself. But with a 7 per cent per decade level of population growth, and with an additional one million homes needed to meet the needs of the present population, new ideas should to be entertained. All of this is studied in detail by strategic land developers, those investors who look for ways to bring new housing onto the market.

One contentious area is the discussion around farmland. What is its role in the UK economy? What might conversions of farmland to housing provide? Does this betray a critical English asset, its pastoral countryside?

It would be easy to find pro- and con- answers to all of these questions, depending on whom you speak with. But any discussion of the sanctity of farmland relative to the pressing, critical need to build houses, should incorporate the following notes:

• Agriculture in the UK uses 70 per cent of total land area (including Scotland, Wales and England); agriculture’s contribution to the country's gross value added is 0.7% (£5.69 billion as of 2011).

• Shelter England, the British housing charity, reported in June 2013 ("Getting Serious About the Housing Shortage") that 33,000 extra homes could be built per year with "greenbelt flexibility," which would be to swap greenbelt land on which homes could be built for the greening of (plant trees, etc.) other land in urban areas. The publication specifically identifies "low grade agricultural land with little landscape or environmental value," as much of greenbelt-designated land is used for agriculture. Note also that greenbelts comprise 13 per cent of the England landmass while all urban areas combined only constitute 7 per cent of that same area, including urban parks and gardens.

• "Precision farming," a method by which technology enables identification of soil characteristics, that then enables smarter seeding and application of agrichemicals, increases per-hectare yields and reduces labour related to the growing season.

• Organic and locavore trends may alter the mix of products and where they are grown. For example, if niche farms narrow in on this specialty market (e.g., in tonier sections of London), it shifts the use of land from larger-scale (e.g., wheat) to something smaller scale (arugula, specialty grains, etc.). Some crops require more land, others less.

• Grass-fed sheep and cattle are becoming preferred over feedlot ("factory farmed") versions. This has a significant impact on the prices of mutton and beef (it makes them more expensive) but reduces the amount of land required to grow corn feed.

• An argument against genetically modified crops (GM) has effectively kept them out of England and the EU. But The Scientific Alliance argued in its report on the Oxford Farming Conference that GM and other innovations in farming can increase yields without increasing land devoted to agriculture, and that natural, organic methods can be used with GM seeds. No one is saying if and when GM will come into acceptance, but it does present an intriguing idea where land use is discussed.

So while the debate rages, the point should be made that weighing housing development against agriculture is not an either-or choice. Instead, there are many ways of approaching land use changes.

One class of investors - real asset fund managers - look for the creative solution. Fund specialists work with local councils to identify land that is more suitable for development than other purposes, achieving zoning changes as needed. Once approved by a local planning authority (LPA), the investors build the infrastructure necessary to then turn over the land to homebuilders who construct market-appropriate homes.

Individual investors who consider investing in such funds should do so under the advice of independent financial advisors. There, the role of land investing can be put into context of the investor’s overall goals and risk profile.

Can the UK’s Homebuilding Planning Process Be Accelerated?

Changes have benefited the land use planning approval processes in recent years. But it still is slow, and many ideas are afloat on how to make it move faster.

As is well understood, the United Kingdom is in desperate need of more homes. By some estimates, the country is currently short of one million residences that should exist to properly house the country's growing population.

There are many reasons believed to cause this shortage and the shortfall in construction over the past decade. Some say it goes back to Thatcherism and the sell-off of council housing beginning in the 1980s. For others, the financial crisis and stringent lending has cast a chill over development. But a near-universally held belief is that the country's planning system, established in the 1940s and one that favors the retention of Green fields, is at least partially at fault.

Reforms to the planning system have been rather robust in the past few years. While managers of land investment funds have endeavored to marshal private investors to work with local planning authorities to build homes, the Government has implemented important reforms to enable faster delivery of new build homes.

Most recently, the Help to Buy scheme has made financing for buyers more possible, producing a noticeable uptick in qualified buyers in 2014. Shadow chancellor Ed Balls has proposed a parallel "help to build" programme that would assist smaller and medium-sized builders to gain access to financing, an area of advantage currently held by bigger homebuilders.

Parliament passed the Localism Act 2011 to enable local authorities to implement planning policies free of regional and national controls, which was further reinforced with the publication of the National Planning Policy Framework (NPPF) in 2012. This is the means by which planning can occur according to distinctive local and neighborhood needs.   NPPF places a mandate on local planning authorities (LPAs) to develop five-year growth plans, which presumably would streamline the process; however, only about half of local councils have developed such plans as of mid-2014.

And yet, the criticism remains that the planning process is a bottleneck that slows the home building process. This is by design, of course, intended to ensure that development respects historical and environmental needs. The planning process may be cumbersome, but with the private sector (property fund partners, for example) endeavoring to satisfy the pent-up demand for housing, most avenues are being pursued.

Individuals who wish to invest in housing development need to understand the risks, including what happens when a planning change is necessary to build. Single investors should work with others who understand the market and the predispositions of LPAs toward land use changes. And prior to choosing a fund, speak with an independent financial advisor to discuss the expectations of real estate in relation to your overall investment portfolio.

Ways the Economically Disadvantaged in the UK are Affected by the Housing Shortage

The shortage of homes in England and Wales means that everyone faces higher prices and rental rates. But the pain doesn’t end there - as lower-income people know well.

One not need to have a PhD in economics from Oxford to know that the housing shortage in the UK affects all sectors of society: the very rich compete for homes in the priciest parts of London, the middle class struggles to buy a home when credit is tight (even average homes carry expensive price tags), and the poor must either find social housing or rent from private owners at low-supply, high-demand rates.

Increased housing supplies happen when the Government or private investors (e.g., land investment fund managers) determine how and where to build. But there are other effects of the housing crisis in England that tend to affect the economically disadvantaged to a greater degree. They include the following:

• The "Haves" and "Have nots" gap is widening, with homeownership a deciding factor - The portion of UK households that owned their own home rose dramatically from the 1980s on through the early 2000s, but began stagnating in 2004 and then began dropping in 2008, according to a report ("Home-ownership and the distribution of personal wealth," by Lindsey Appleyard and Karen Rowlingson) published in 2010 by the Joseph Rowntree Foundation (JRF). The cost of all home ownership has risen relative to incomes, particularly in the working/middle classes.

• Prohibitive proportion of household income goes to housing - A 2013 study, “Office for National Statistics Living Cost and Food Survey," found that the proportion of household income going to housing, utilities and communication has gone up five percentage points in the last decade to about 43 per cent.

• Price volatility makes middle class people poor - JRF’s "Housing Market Taskforce” decries the cycles of boom and bust in housing values - four since the 1970s - that create financial havoc for homeowners in the UK. The report takes into account the private rented sector, low-cost home ownership and risk, increasing supply in the social rented sector and international systems of land supply and planning.

Shelter calls for getting homes built with an "all hands on deck" approach: in the private and public sectors, getting more homes built will be a combined effort on the part of private developers, local authorities, the central Government, institutional investors and local communities and their planning authorities.

From the private investment side, real asset portfolio investing very often involves individuals working with land acquisition specialists who understand what is required when working with local planning authorities. Anyone with a minimum of £10,000 can join development funds, often seeing returns in 18-60 months. But no one should consider working in speculative real estate development without first speaking with an independent financial advisor about options and relative risks of land development.