Who’s to blame for the housing crisis? Changes & solutions

The UK has a housing crisis, consistently failing to build enough new stock in line with government targets over the last 20+ years. Over that time, the failure to meet housing need has seen house prices and rental rates spiral upwards. In this final post, we look at the plan for change and the data behind it.

The new Labour Government has made solving this crisis a central pillar of its next 5 years in power. It’s even put a number on it – 1.5m new homes to be completed by the middle of 2029. However, just like a super tanker travelling in the wrong direction, housebuilding in the UK will take time to change of course and deliver tangible results. 

In early August 2024, the Deputy Prime Minister and Housing Secretary, Angela Rayner, laid out the Government’s plan to turn the super tanker around [2]. It breaks down into three main areas... 

Mandatory Targets for Local Planning Authorities. All councils in England will be set mandatory annual goals to reach an aggregate total of 370,000 new homes completed per year. Most areas will see an increase in their target, but London will see a 20% decline, from 100k to 80k.

• By 2025, councils must identify all the sites necessary to hit their annual targets.

• There will be a new method for determining targets ensuring that housing is “built in the right places and development is proportionate to the size of existing communities” (this has been a growing problem for the past 20+ years - read our post on planning).

• The ability for regional-level planning between adjacent councils will be introduced to reach a ‘best-fit’ solution to hit targets. 

Prioritisation of Sites. A new draft National Planning Policy Framework (NPPF) hopes to clarify decision-making and relax restrictions around building on Brownfield sites, the Greenbelt, and a newly-identified ‘Greybelt’. 

• ‘Brownfield’. Previously developed land should be prioritised. Planning consultant Lichfields estimates that fully optimising every identified brownfield site in England could create 1.4 million homes [3]. However, this alone won't meet housing demands in areas with the greatest need.

• ‘Greybelt’. This is a new designation, not yet fully defined, but the government has spoken of “ugly” greenbelt, covering areas with “little intrinsic beauty or character”. Industry estimates vary as to how many new dwellings this could produce, but research by the land agent Knight Frank [4] identified 11,000 sites, making up 1% of the existing Greenbelt, that it estimates could provide 100,000-200,000 new homes.

• ‘Greenbelt’. It represents close to 13% England's total land area and is situated around 15 cities, with the majority circling London, Liverpool, Manchester, Leeds, and Sheffield. It currently requires "very special circumstances" for building projects. Change here will be the most controversial but the Government is using a wider definition of "Low quality" which is land making "limited contribution to the green belt's purposes" of containing urban sprawl. It is land that “contributes little to preserving the setting and special character of historic towns." The government estimate is that 15% needs to be made available. There are also plans for compulsory purchase of potential sites and a cap on profits to be made from those purchases. 

• “Golden Rules” for building big developments on the Greenbelt. 

  • 50%+ affordable homes, with an "appropriate proportion" available for social rent. The quid pro quo for this new quota is the removal of the current requirement for all large developments to build a minimum of 10% affordable homes.   

  • Necessary improvement of infrastructure (specifically schools, GP surgeries, transport, care homes, nursery places.)

  • New or improved accessible green spaces for the public "within a short walk" of home.

Creation of New Towns. There will be a taskforce to identify locations and report back within the next 12 months.

• These New Towns will be a minimum of 10,000 homes in size, but “most will be larger”.

• At least 40% of homes built will be affordable.

• Establish a New Towns Code to ensure, according to the Government statement, “well-connected, well-designed, sustainable and attractive places where people want to live and have all the infrastructure, amenities and services necessary to sustain thriving communities”.

What we’ve reviewed over the previous posts is the data that monitors the state of housing in the UK - let’s call them the key performance indicators (KPIs) of the ‘business’ of new homes delivery. We shall be tracking those KPIs to see what progress is being made.

For now, though, the question remains whether the government’s plans go far enough? Changes in other areas could also have a material, positive effect on the KPIs. 

• Accelerate planning decisions. Research suggests the average planning approval period currently ranges from 1.5 years for small-sized projects (<100 dwellings), to over 5 years for the largest (2000+) [5].  

• Recruit more Planning Officers. No doubt linked to the previous point, the number of Planning Officers working in Local Authorities has been in steady decline. The Government is looking for 300 new Planning Officers to join the profession to help reduce the backlog. But it represents just 10% of those Planning Officers who left the public sector between 2010-20 and no timeframe for recruitment has yet been given [6].

• Reform of the Rental Market. The Renters’ Rights Bill, which promises to abolish no-fault evictions and allow rent rises to be challenged, is back on the legislative agenda as of Sept. 2024. Additional measures are being proposed to discourage converting properties into holiday or short-term lets (as it stands, councils can begin charging double the council tax rate on second homes from April 2025).

• Reform of Stamp Duty Land Tax (SDLT). The 30th October budget lowered tax-free Stamp Duty thresholds, increasing costs for buyers from April 2025. It also added a 2% surcharge on second homes and investment properties (meaning an extra 5% would be due in Stamp Duty for those purchases). This may further encourage the sale of rental properties, benefiting potential buyers but disadvantaging renters. The key issue remains whether the Stamp Duty system supports a healthy housing market or needs a rethink.

• Tax Relief for Downsizing. The average age of homeowners has steadily increased with the majority of those who are mortgage-free living in an under-occupied house. Incentivising more of these empty-nesters to downsize with a tax-break on stamp duty could help generate greater mobility in the housing market.  

• Don’t rely on the Private Sector to solve the issue of Affordable Homes. The government has set affordable housing targets for Greenbelt and Greybelt developments, including social and council housing. The October Budget allocated additional funding to the Affordable Homes Programme (AHP), with a £3 billion guarantee to support smaller housebuilders. However, given the private sector's inability to meet demand historically, questions remain whether this will spark an affordable housing ‘boom’.

• Fix the skills shortage in the construction sector. The Construction Industry Training Board (CITB) reported the need to recruit an additional 251,500 workers by 2028 to meet projected growth. In 2023, the industry advertised an average of 38,000 vacancies per month [7].

All that said, the Government announcement in August 2024 represented some radical change in its pursuit of reaching 1.5m new homes built in the next 5 years. We shall track the KPIs to see whether the super tanker begins to turn.  

notes & sources

1. 8.7% of land in England is of developed use (including residential, commercial, industrial, roads & transportation), with 91.1% of non-developed use and the remaining 0.2% being vacant. Non-developed includes the top 3 land use groups - ‘Agriculture’ (63.1%), ‘Forestry, open land and water’ (20.1%), and ‘Residential gardens’ (4.9%). Land Use statistics, gov.uk.

2. Reform of the National Planning Policy Framework (NPPF), consultation, 30/07/24

3. Banking on Brownfield, Lichfields Planning, June 2022

4. Knight Frank report, 2024.

5. A New Dawn has Broken, Lichfields Planning, July 2024.

6. Financial Times, Royal Town Planning Institute 2023.

7. ‘250,000 extra construction workers required by 2028 to meet demand’, CITB, May 2024