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



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.