Tackling the under-supply of housing in England

The House of Commons Library has published a paper on Tackling the under-supply of housing in England.

The paper can be seen here, and a summary here, which says:

Government ambitions for new housing supply

In their 2019 election manifestos, all the main political parties included commitments to increase housing supply in England.

The Conservative manifesto pledged to “continue to increase the number of homes being built” and referred to a need to rebalance the housing market towards more home ownership. It said progress towards a target of 300,000 homes per year by the mid-2020s would continue, which would “see us build at least a million more homes, of all tenures, over the next Parliament.”

Both the Public Accounts (PDF) and Housing, Communities and Local Government Committees have sought greater clarity on how the target of 300,000 housing units a year will be met and why this number was chosen.

How much new housing is needed?

It’s difficult to put a precise number on the amount of new housing needed in England.

Need for new housing arises when population growth leads to new households forming, but other factors also have an effect. There’s a backlog of need among people currently living in unsuitable accommodation, and affordability pressures can prevent people accessing the housing they need.

According to one estimate commissioned by the National Housing Federation (NHF) and Crisis from Heriot-Watt University, around 340,000 new homes need to be supplied in England each year, of which 145,000 should be affordable.

When people are unable to access suitable housing it can result in overcrowding, more young people living with their parents for longer, impaired labour mobility, which makes it harder for businesses to recruit staff, and increased levels of homelessness.

Trends in housing supply

New housing supply is currently lower than the Government’s ambition of 300,000 new homes per year. 216,000 new homes were supplied in 2020/21. This is lower than the 243,000 new homes supplied in the previous year, in part because of disruption to housebuilding caused by Covid-19 in early 2020.

Prior to 2020/21, new housing supply had been increasing year-on-year since 2013. Relaxed planning rules around converting non-residential premises to residential use contributed to some of this increase.

The charts on page 8 of this briefing summarise trends in housing supply.

Barriers and solutions

There’s some consensus around increasing housing supply to address the backlog of housing need, but there’s less agreement about how best to achieve it.

Commentators agree there’s no ‘silver bullet’ and call for a range of solutions across policy areas. There are calls for a housing-led recovery from the pandemic, emphasising housebuilding as a proven form of counter-cyclical investment, and to recognise the importance of housing in the levelling-up agenda.

There’s increased focus on addressing affordability as distinct from supply. In the foreword to a 2017 Institute for Public Policy Research report, 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.”

As noted above, research commissioned by the NHF and Crisis from Heriot-Watt University identified a need for 145,000 new affordable homes each year to 2031. Although based on 2015/16 data, it’s still widely cited as establishing the case for a large programme of social rented housing development.

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. There’s a continued focus on supporting private sector delivery.

The Planning White Paper (August 2020) proposed “Radical reform unlike anything we have seen since the Second World War.” Following Michael Gove’s appointment as Secretary of State at the Department for Levelling Up, Housing and Communities (DLUHC) in autumn 2021, there were reports of a ‘pause’ on planning reform. At the time of writing, the Planning Bill promised in the 2021 Queen’s Speech hadn’t been introduced. In January 2022, the Lords Built Environment Committee described the uncertainty generated by the ‘pause’ as having “a chilling effect” on housebuilding (PDF).

This paper focuses on the main barriers and possible solutions to increasing supply in England, including:

  • The potential contribution of the local authority and housing association sectors. The widespread view that meeting delivery targets will require major public sector investment in a housebuilding programme.
  • How to ensure 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 address a planning system that’s widely seen as slow, costly and complex.
  • How essential infrastructure to support housing development can be funded.
  • How to encourage and support more small and medium sized (SME) building firms into a market dominated by a small number of large companies.
  • How to ensure the construction industry is in a fit state to deliver housebuilding capacity, eg through improved training. The Government commissioned Farmer Review of the UK Construction Labour Model (2016) concluded “many features of the industry are synonymous with a sick, or even a dying patient.”

Is supply meeting need? The Government wants housing supply to reach 300,000 homes a year by the mid-2020s. Others have called for as many as 340,000 a year. New supply reached 243,000 in 2019/20, but fell to 216,000 in 2020/21.

Covid-19 disrupted housebuilding in 2020. Housing starts fell in April-June, reaching similar levels to 2008. They rebounded in later quarters.

Housebuilding is lower now than it was at its peak in the 1960s. Building reached a low point in 2020, after the financial crisis, and has increased since then.

The net supply of new housing was higher in 2020/21 than the estimated average from the 1970s. While there were fewer new builds in 2020/21, there was also less demolition and more change-of-use of existing buildings.

Statistics on housing supply

Historical house building statistics for all UK countries are available for download from the landing page for this briefing.

The Library has also produced an interactive dashboard, Local authority data: housing supply, which provides statistics on housing stock, new supply, and supply of affordable housing for local authorities in England.



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