Tackling the under-supply of housing in England
Failing to meet housing need
Estimates have put the number of new homes needed in England at up to 345,000 per year, accounting for new household formation and a backlog of existing need for suitable housing. In 2019/20, the total housing stock in England increased by around 244,000 homes. This around 1% higher than the year before – and the amount of new homes supplied annually has been growing for several years – but is still lower than estimated need.
Housing need manifests itself in a variety of ways, such as increased levels of overcrowding, acute affordability issues, more young people living with their parents for longer periods, impaired labour mobility resulting in businesses finding it difficult to recruit and retain staff, and increased levels of homelessness.
An ambition to achieve 300,000 homes a year
The 2015 Government set out an ambition to deliver 1 million net additions to the housing stock by the end of the Parliament, which was expected to be in 2020. Net additions include, for example, conversions and changes of use. Critics said that the figure did not take account of the backlog of housing need. The House of Lords Select Committee on Economic Affairs concluded in Building More Homes (2016), that the target “was not based on a robust analysis” and went on to recommend that the housing crisis required the development of at least 300,000 new homes annually “for the foreseeable future.” In addition to questioning whether a target of 1 million homes is ambitious enough, there was some doubt over whether the number was achievable.
The Conservative Government elected in 2017 had a manifesto pledge to meet the 2015 commitment to deliver
1 million homes by the end of 2020 and to “deliver half a million more by the end of 2022.” The Autumn Budget 2017 set out an ambition “to put England on track to deliver 300,000 new homes a year.” In January 2018, the Department for Communities and Local Government (DCLG) was renamed the Ministry of Housing, Communities and Local Government (MHCLG) to reflect a “renewed focus to deliver more homes.” The Homes and Communities Agency (HCA) was relaunched as Homes England on 11 January 2018:
By bringing together their existing planning expertise and new land buying powers, the new agency will play a major role in securing land in areas where people want to live, support smaller and more innovative house builders into the market and resource brownfield sites from across the country to deliver homes for families.
The Conservative Government elected in December 2019 included a manifesto pledge to “continue to increase the number of homes being built” and referred to a need to rebalance the housing market towards more home ownership:
…we will continue our progress towards our target of 300,000 homes a year by the mid-2020s. This will see us build at least a million more homes, of all tenures, over the next Parliament – in the areas
No ‘silver bullet’ to increase housing supply
There is general consensus around the long-term under-supply housing and the need to address this, but there is less agreement within the industry about how best to achieve the necessary step-change in supply. Commentators agree that there is no ‘silver bullet’ and call for a range of solutions across a number of policy areas.
The 2015 Government took action to stimulate housing supply through a variety of schemes. These schemes are referred to in the Government’s response to Building More Homes which acknowledged that “we have much more to do as a country to build more homes and that the Government has a role to play in making sure our housing market works for everyone.”
An increased focus on affordability
The 2017 UK Housing Review Briefing Paper (September 2017) argued that while supply is of critical importance, “so is the rather more neglected issue of affordability, in both the private and social housing sectors.”
In the foreword to the June 2017 IPPR report, What more can be done to build the homes we need? Sir Michael Lyons said: “We would stress that it is not just the number built but also the balance of tenures and affordability which need to be thought through for an effective housing strategy.”
This is echoed in research commissioned by the National Housing Federation (NHF) and Crisis from Heriot-Watt University, which identified a need for 340,000 homes each year to 2031 of which 145,000 “must be affordable homes”.
The Housing White Paper 2017 and subsequent developments
The 2015 Government’s Housing White Paper, Fixing our broken housing market was published in February 2017. It set out “a comprehensive package of reform to increase housing supply and halt the decline in housing affordability.”
The White Paper identified a threefold problem of “not enough local authorities planning for the homes they need; housebuilding that is simply too slow; and a construction industry that is too reliant on a small number of big players.” The White Paper focused on four main areas:
- Building the right homes in the right places.
- Building them faster.
- Widening the range of builders and construction methods.
- ‘Helping people now’ including investing in new affordable housing and preventing homelessness.
The intervening years have seen numerous consultation exercises and policy developments across a range of areas. The current Government has diagnosed the planning system as central to the failure to build enough homes, particularly where housing need is at its most severe. The Planning White Paper published in August 2020 will, the Prime Minister writes, signal “Radical reform unlike anything we have seen since the Second World War.” Responses to the White Paper are currently being analysed. Some of the proposals are highly controversial.
This paper covers some of the of the key barriers and potential solutions to increasing supply in England. The paper takes account of the key measures announced in Fixing our broken housing market and subsequent developments. The barriers and solutions cover issues including:
- The potential contribution of the local authority and housing association sectors. The delivery of more than 200,000 homes per year in England has, since 1939, only happened largely as a result of major public sector (local authority) housebuilding programmes.
- How to ensure that more land suitable for development is brought forward at a reasonable price, including how more public land can brought forward more quickly.
- How to properly resource local authority planning departments and tackle a planning system that is widely seen as slow, costly and complex.
- Consideration of how essential infrastructure to support housing development can be funded.
- How to encourage and support more small and medium sized building firms into a market that is dominated by a small number of large companies.
- How to ensure that the construction industry is in a fit state to deliver the housebuilding capacity that England requires. The Government commissioned Farmer Review of the UK Construction Labour Model (2016) concluded that “many features of the industry are synonymous with a sick, or even a dying patient.”
Information on Government action to stimulate housing supply can be found in Library briefing paper 06416: Stimulating housing supply – Government initiatives (England). Other relevant Library papers include:
- What is affordable housing?
- A new era of social rented housing in England?
- What next for planning in England? The National Planning Policy Framework
- Planning for the Future: planning policy changes in England in 2020 and future reforms
- Planning Obligations (Section 106 agreements) in England
In charts: trends in housing supply in England
See sections 1 and 2 of the full briefing for sources.