Where should we build new towns?

The location is critical to new town's prosperity

Britain Remade and Create Streets have just launched our brand new report, Creating New Towns Fast and Well, which can be read here, with coverage in the Guardian here. This post covers where new towns should be located and a post next week will cover our 12 suggested new towns.

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For the first time in 50 years, there is a national commitment to building a new generation of new towns. With the severity of Britain’s housing shortage, this is exciting news. But as history shows us, the location of new towns is critical to them growing into prosperous and liveable communities. Trying to create self-sufficient new towns far from existing successful cities has failed before (see the case of Skelmersdale) and would fail again.

The most important criteria for choosing where to locate new towns is that they should be either urban extensions of or quickly connected to places where building an additional house unlocks significant surplus value. When house prices are much higher in an area than the cost of building a new home, every additional house you build there unlocks a large amount of value.

This is value that can be spent in all sorts of ways. It could be spent on infrastructure, such as a new railway station in the town, a new tramway, or a new motorway junction. It could be spent on greenery and making the new town’s public parks lovely places. It could be spent on building more non-market rate housing, such as social housing or improved temporary accommodation. It could be spent making the local public services the best in the country so that the new town is a fantastic place to live.

The higher house prices are compared to build costs, the more surplus value there is, which means the more good things that can be provided in the new town. Conversely, if the new town is built in an area where house prices are equal to or even less than build costs, not only will it not benefit from any of the goods listed above, the Treasury and taxpayers will be on the hook for building new infrastructure and subsidising each new home built. When Keir Starmer rightly says that we’ve already got the highest tax burden for 70 years and public services crumble, I doubt that there is a desire to hike taxes to fund poorly performing new towns that are far from prosperous cities.

So what are these areas where each new home produces lots of surplus value that we can spend on making the new towns brilliant places to live? To find out, I’ve collected median house price data on the ONS’s 50 largest urban areas in England. I’ve then estimated the build cost of a new home using regional building costs per square metre and the average size of homes in each region. London, for example, has the highest building costs, but it also has the smallest homes, so the building cost per house comes out somewhere in the middle of the regions.

The 10 areas with the largest surplus value of each additional house are in the table below:

These are the cities and towns where new homes should be built, either as urban extensions or as nearby new towns with fast and reliable connections. The median house price in London is £535,000, but it only costs roughly £250,000 to build a new home in London. Therefore, a single new home in London is expected to produce £285,000 of surplus value. Every thousand homes built unlock a quarter of a billion pounds for new tube lines, improved green spaces, social housing, or better public services. It is also of little surprise that high housing costs and a shortage of homes in London have led to over 300,000 families being on the social housing waiting list in the capital, further encouraging new towns to be built nearby.

On the other hand, some urban areas in England have houses that are significantly below the cost of building new homes. The median house price in Stoke-on-Trent, for example, is £140,000, well below the estimated £234,530 construction cost. If a new town was built as an urban extension here, the Treasury and taxpayers would have to spend upwards of £100,000 subsidising each new house. A 10,000 house urban extension would therefore cost the taxpayer nearly a billion pounds, and that’s not even factoring in building the new roads, GP surgeries, sewage, and electricity lines that would be needed.

So we’ve got the 10 cities or towns that any new town in England should be located close to. But that leaves thousands of potential sites. Narrowing this down further should take into account areas that have room for at least 10,000 homes today and future room to grow naturally by building more streets and squares later in the century.

The sites should make use of existing or planned infrastructure. As we know, it is incredibly expensive to build new roads, railways and tram lines in Britain, so any opportunity to build a new town alongside existing infrastructure should be taken. One particularly exciting opportunity is ‘mirror towns.’ When railways were constructed by the Victorians, they were often built along the periphery of existing towns, as building through the centre was too expensive. In many cases the town naturally expanded and grew around the new station. But in many others, it has not and the train station remains on the outskirts of town. This is often due to restrictions around development, like the green belt, which the new Labour Government has a mandate to push through.

West Horndon station in Essex, less than half an hour from the city of London, is an example of a mirror town. The masterplan below shows how new development can occur on the “other side of the tracks”

Finally, we shouldn’t let green belts, which were originally designed to prevent environmentally-damaging urban sprawl from stopping us building dense, well-connected new towns. However, new towns shouldn’t be built in National Landscapes (like National Parks or Areas of Outstanding Natural Beauty), flood plains, or Sites of Special Scientific Interest (SSSI).

With these criteria, Britain Remade and Create Streets have created a long list of 50 potential new town locations, and a short list of 12 that we discuss further in our new report, Creating New Towns Fast and Well. I’ll write about these 12 in a blog post next week.