Michael Gove’s housing reforms are the only ray of light in this doomed government | Simon Jenkins

TOAs the current Tory administration lurches along, at least one minister is showing some terminal creativity. The secretary for leveling, housing and communities, Michael Gove, is galvanizing housing policy, more or less. This year, he has finally abandoned the absurdity that there is a national housing need for a fixed number of homes per year.

Councils across England have been told they no longer need to deliver a precise target of new buildings set up in Whitehall, regardless of good planning or local opinion. It has also banned ugly suburban development in Kent, has laid out plans that would allow councils to limit Airbnbs and holiday homes, and is trying to make manufacturing companies pay to clad tower blocks after Grenfell.

Gove has begun to draw attention to the stupidity of the housing debate, typified by the BBC never seeming to use the word housing without adding “crisis”. There appears to be a crisis whether house prices are going up or down. The thesis that Britain “needs” 300,000 new houses a year is a hangover from 20th century demography, kept frantically alive by building industry lobbyists. Need is simply a synonym for demand. The Southeast “needs” an infinite number of homes because demand will always outstrip supply as long as governments tilt wealth toward the capital, as Germany and France have wisely failed to do.

The exorbitant cost of much housing in the UK has nothing to do with house building. New houses make up a small part of the real estate market in any country. Prices rise when cities prosper and when, as in recent years, interest rates are low and money is cheap. British politicians who bribe voters with mortgage subsidies simply inflate prices and therefore benefit sellers. Similarly, the prediction of an imminent fall in UK prices is not the result of a rise in new construction – there has been none – but a quadrupling of mortgage interest rates.

This entire debate is dominated by the construction lobby, which is a large donor to the Tory party, a relationship exemplified by Lord Udny-Lister’s brief tenure in Boris Johnson’s office. The developers are mainly interested in luxury towers in London for foreign investors, mostly empty, and in parkland in the south-east. The reality is that the real estate market is overwhelmingly determined by the financial and fiscal conditions in which houses are bought and sold, mainly existing ones.

‘London’s most densely populated square kilometer is also tower-free: Maida Vale.’ Photograph: Peter Summers/Getty Images

As Oxford University geographer Danny Dorling has long pointed out, these conditions have produced one of the most wasteful land and house occupations in Europe. The urban density of Paris is leagues above central London, and that’s with virtually no tower blocks. In fact, London’s most densely populated square kilometer has no towers either: Maida Vale. The political hysteria surrounding home ownership in Britain means, as Dorling points out, that “a house ceases to be a place to live and becomes a treasured space.” It is a bank balance frozen in time and place, with little or no relationship to the number of people living in it.

British government policy is responsible for this gross inefficiency. The sale of a house is taxed through stamp duty. Property taxes remain low and regressive. The ecological rehabilitation of old homes is penalized with 20% VAT.

Gove is telling councils that coating fields on ugly properties from Somerset to the Isle of Thanet benefits no one but developers. He wants to re-empower people to decide if and how their communities should grow, change and appear, even if that sometimes means telling them to reject what is ugly. It is ludicrous that right-wing think tanks, in tune with their anonymous donors, call them fools for resisting Whitehall’s centralist orientation.

More controversially, Gove is allowing councils in suddenly popular resorts to limit the number of properties handed over to Airbnbs and vacation rentals. Why Cornwall, East Anglia or the Lake District should stop their local businessmen from exploiting their main asset, their beauty, may seem debatable. But Gove is not, as his Tory critics complain, interfering with the free market. He wants to give local people a choice. Belgravia, Chelsea and Kensington may be happy to see their permanent populations drop into free fall. But St Ives, Chipping Norton and Windermere should have the right to refuse.

Every incoming government swears that it wants to reduce centralization and boost localism. Keir Starmer has said that he wants to “return control”, though without specifying. Few politicians ever keep that promise. British regional and tax policies have inflated housing costs and inequalities. They have punished younger buyers and rewarded older sellers. They have disempowered the local population and cost the taxpayer a fortune. Gove is at least moving in the right direction.

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