Planning Reform and Housing Costs: Why The Coalition Failed and What it Means

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Abstract

Housing costs in the UK have exploded in recent decades. Contrary to what is often claimed, this has nothing to do with population density, demographics or a lack of public housing. A review of the empirical literature shows that the key determinant of housing costs is the severity of planning restrictions. Faced with a well-organised NIMBY opposition, the coalition failed in its attempt to make the planning system more development-friendly. This is not surprising, because the current system provides incentives which make NIMBYism a rational option. The coalition ought to address these incentives rather than trying to sidestep them.

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