Cutting red tape alone will not solve the housing affordability crisis.
Some governments have recently launched regulatory programs to cut red tape as a primary strategic response to the global housing affordability crisis. This approach is predicated on the idea that legislative and administrative simplification is necessary to dismantle the huge administrative burdens that characterize the building sector. In Australia, Minister for Housing Clare O’Neil said that “we want builders on site, not filling in forms to get their approval.” In Canada, the province of Ontario is adopting the Building Faster Act to cut red tape, accelerate growth, and increase housing supply. Policymakers at national and international levels have put simplification of building regulation on their political agendas.
But is simplification the right, or even the only, response to the housing crisis?
Despite the prevailing opinion that simplification will cure all ills, the effectiveness of simplification depends on a number of demographic, economic, cultural, environmental, and other factors. Simplification is not a magic wand, and its success turns on its conceptualization and implementation.
If we want to address the serious problem of housing affordability by cutting red tape, we should first consider “what simplification actually means.” Historically, many governments have talked about cutting regulation, but few have succeeded in doing so, and we are no longer in the optimistic mood that characterized the 1980s and 1990s.
For this reason, instead of listing technicalities and specific measures, I propose five warnings that might be useful in drafting a regulatory strategy for effective simplification in the building sector.
First, the problem is not only building more and faster, but building to live better.
The environment of manmade buildings possesses an intrinsic human dimension: “Buildings are homes, workplaces, schools, hospitals, shops, sports halls, and transport terminals where we spend a significant part of our day.” From this perspective, it is clear that the crisis concerns not solely shelter, or so-called coffin homes, but access to decent housing as a basic human right. Prioritizing quality over quantity is the only effective method to address housing needs while mitigating adverse social and economic externalities. Furthermore, given the significant impact of construction on the environment, economy, and society, regulatory frameworks must be responsive to cultural shifts and historical exigencies, such as the architectural adaptations necessitated by the post-pandemic era.
Second, although the problem of housing affordability is global, effective policy responses must be calibrated to the local context.
The global crisis of housing varies greatly between different jurisdictions. In nations such as Australia and Canada, or in global megacities, the problem is a real shortage in housing supply, driven by positive demographic trends and massive immigration. Elsewhere, however, the issue is less a shortage than a mismatch between supply and demand. For example, Italy is characterized by huge pieces of real estate, a negative demographic trend, a prevalence of small-to-medium-sized urban centers, and a high rate of land consumption. The housing crisis in major Italian urban centers is related to a mix of different factors, including over-tourism, the closure of essential services such as rural hospitals, railway stations, and schools, regulation and taxation of rent contracts in urban areas, and deficiencies in digital infrastructure and access to the internet in some areas of the country. In such contexts, simplification of building regulation is insufficient. Instead, a coherent, integrated public policy approach involving transport, health, tourism, communication, and education is required.
Third, simplification is not a panacea; it also has a dark side.
Building regulations are designed to safeguard public interests and mitigate risks related to land use, structural integrity, workplace safety, and energy efficiency. This is done by establishing an administrative toolbox that includes land planning, permitting, controls and inspections, and tax benefits or subsidies. For this reason, improper simplification may harm relevant public and private interests. On the other hand, over-regulation and excessive administrative burdens produce huge and often disproportionate costs on citizens and businesses.
How to solve the impasse? Scholars and academics agree with international organizations in suggesting the adoption of a risk-based approach which pays attention to “probabilities and harmful effects associated with risky regulated activities” by enabling regulators “to make better decisions about how to prioritize the allocation of regulatory resources and ultimately how to manage the risks.” This approach is particularly relevant in navigating the perceived conflict between simplification and anti-corruption measures in the building sector: Simplification can itself function as an anticorruption tool by reducing the power of public agents, while anticorruption concerns can guide the prioritization of simplification efforts.
Fourth, policymakers should approach the problem of building better in a transdisciplinary way by promoting a culture of mutual confidence in the building sector.
Building better is a complex public policy problem that involves different disciplinary perspectives and a number of private and public actors, including governments at every level, businesses in the building sector, and building professionals. If we look at building practices through the lens of trust, it is clear that much of the red tape, difficulties in regulating discretionary powers, defensive administration, and administrative tolerance often stem from a lack of confidence among institutional actors. The detrimental effects of low trust are visible throughout the construction lifecycle. For this reason, policymakers must recognize trust as an intangible but relevant factor for cooperation and regulatory effectiveness in mitigating housing crises.
Finally, although building regulations play a crucial role in promoting environmental sustainability through green standards, they can inadvertently contribute to “legislative inflation” and increase administrative burdens, raising a different problem: the sustainability of complying with building regulation itself for businesses and citizens. Compliance depends both on the number and on the content of rules, including their necessity, residuality, and proportionality.
In some way, we must take into consideration that people’s lives consist not only of water, food, land, air, housing, transport, education, health, and work, but are also made up of rules that increasingly intrude on and shape the times, spaces, and ways of our human existence. Ensuring that regulation remains sustainable and effective is probably one of the most relevant challenges for contemporary governments and international organizations, requiring strict control over the production, delivery, and management of rules. In such a context, it is undeniable that building regulations at every level of government will continue to exert a profound influence on the housing market.
This essay is part of a series, titled “Regulatory Simplification Around the Globe.”
