Tackling the under-supply of housing in England

Cassie Barton; Wendy Wilson

Tackling the under-supply of housing in England

Published Monday, March 12, 2018

This briefing paper considers key trends in housing supply in the UK and goes on to focus on some of the of the key barriers and potential solutions to increasing supply in England. It has been updated to include proposals in the Housing White Paper published in February 2017 and subsequent developments.

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Failing to meet housing need

According to current projections, an average of 210,000 new households will form in England in each year between 2014 and 2039. In 2016/17, the total housing stock in England increased by around 217,000 residential dwellings: 15% higher than the previous year’s increase but short of the estimated 240-250,000 new homes needed to keep pace with household formation.

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.

The Government's ambition: 1 million net additions by 2020 and half a million more by the end of 2022

The 2015 Government had a stated aim of achieving 1 million net additions to the housing stock by the end of the Parliament, which was expected to be in 2020. This translated into 200,000 additional homes per year. Net additions includes, for example, conversions and changes of use. Critics pointed out 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 for 1 million homes is ambitious enough, there is some doubt over whether even this number is achievable.

The current Conservative Government was elected in 2017 with 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.”

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.”

The 2017 UK Housing Review Briefing Paper (September 2017) argues that while supply is of critical importance, “so is the rather more neglected issue of affordability, in both the private and social housing sectors.”

The Housing White Paper 2017

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.

Consultation on proposals in chapters 1 and 2 of the White Paper closed on 2 May 2017. A separate consultation exercise on Planning and affordable housing for Build to Rent was launched alongside the White Paper, the outcome of which was published in August 2017. A summary of responses to the White Paper and the Government’s view on the way forward was published on 5 March 2018. This date also saw the launch of consultation on proposed changes to the National Planning Policy Framework (NPPF) and further consultation on reforming developer contributions to affordable housing and infrastructure.

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. There is some agreement on the need to incentivise authorities and communities to approve development, and for measures to encourage developers to build-out permissioned land without unnecessary delays.
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 currently 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? (November 2017)
Planning for Housing (June 2017)
Commons Library analysis of the Neighbourhood Planning Bill (September 2016)
Neighbourhood Planning Bill: Report on Committee Stage (November 2016)
Planning Reform Proposals (July 2017)

Trends in housing supply in England

The charts below summarise some of the trends in new housing supply in England.

Housing supply looks very different now compared to 40 years ago. House building was much higher from the post-war period up to the 1970s, largely due to a programme of slum clearance and local authority building. The private sector now builds the majority of homes and conversion of existing property plays a much bigger role in increasing supply.

An estimated 240-300 thousand new homes are needed per year in England, but new supply of housing isn't reaching this level.

House building has declined since the 1970s. The percentage of homes built by local authorities has fallen. Housing associations now build around 17% of homes.

New supply in 2016/17 was higher than the yearly average in the 1970s. New building was higher in the 1970s, but there was more demolition and less conversion of existing buildings.

Housing statistics for the UK

UK-wide statistics on housing are also available in this briefing and the associated tables. Use the downloads below for access to:

Housing expenditure in the UK
House building statistics for England, Wales, Scotland and Northern Ireland
Housing stock at census years for England, Wales, Scotland and Northern Ireland
Historic statistics on net change in housing supply for England
Social housing supply statistics for England (new additions, sales and demolitions)

Commons Briefing papers CBP-7671

Authors: Cassie Barton; Wendy Wilson

Topics: Housing, Housing supply, Planning