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- Industry context
Last edited 03 Aug 2020
In general, a housing shortage follows the economic principles of supply and demand. When the production of housing outpaces the demand there is a housing surplus. When housing production falls behind demand there is a housing shortage.
According to Shelter, successive UK governments have failed to build houses in adequate numbers, and so there is an ongoing housing crisis. In 2015, Lord Kerslake, the chair of the Commission on Affordable Housing in London said “our inability to build enough homes to meet the country’s needs is one of the biggest public policy failures over 50 years.”
Shelter have suggested that by 2008, the number of new homes starting construction had fallen to its lowest peace-time level since 1924, and is has barely recovered since then. They estimate the number of new homes needed each year is around 250,000. In fact, only 141,000 new homes were built in Britain in 2014.
A lack of housebuilding is the driving reason for the housing shortage, however, other contributory issues include:
- Increasing population.
- Changing lifestyles meaning more people live alone or in small households.
- Difficulties and delays obtaining planning permissions.
- The cost of land.
- Protection of the green belt.
- Difficulties developing brownfield land,
- Land-banking by developers.
- Inefficient buildings methods.
- Skills shortages
- A decline of the small- and medium-sized housebuilding sector.
- Space standards and other minimum building requirements.
The housing shortage has meant that the cost of buying a house has now risen to around seven times the average income (2017), making it increasingly difficult for first-time buyers to save enough for a deposit. Those that do manage to afford a deposit have, in some cases, found themselves with risky mortgage loans and high monthly repayments that they can find hard to meet. In 2013 nearly 29,000 homes were repossessed.
In 2015, an investigation by The Guardian found that the UK’s biggest housebuilders are sitting on 600,000 plots of land with planning permission, leading to accusations of land-banking (i.e. deliberately holding land back from development until it has sufficiently increased in value). Housebuilders have disputed the charge, arguing that their business model relies on having a healthy pipeline of plots to develop, and that undeveloped sites are generally owned by owner-occupiers, historic land owners, the government and investment funds.
In 2015, the Redfern Review suggested that high property prices are a result of rising household incomes, high employment and falling interest rates rather than a lack of housing supply, which it argued has been broadly in balance with new household formation over the last 20 years.
Whether this is correct or no, the housing shortage has become a key issue for many people, with all political parties developing policies to address it, with various pledges and commitments to increase the rate of housebuilding, ease the planning process, and enable local authorities to build more themselves.
On 7 February 2017, the government published a housing white paper ‘Fixing our broken housing market’, setting out plans to reform the market and boost the supply of new homes in England. Admitting that the current market is ‘broken’, the Communities Secretary Sajid Javid, said: “there is a serious problem … and the cause is simple; we are not building enough new homes.”
However, crucially, the white paper abandoned the government’s manifesto pledge to build 200,000 Starter Homes by 2020 and dropped its plans to require developers to make 20% of all new sites Starter Homes in lieu of other affordable housing.
In response, Labour’s Shadow Housing Minister John Healey called the measures “feeble beyond belief”, saying; "We hoped for better and we needed better ...We were promised a White Paper; we are presented with a white flag."
As part of her speech to the Conservative Party Conference on 3 October 2018, Prime Minister Theresa May announced that the government will scrap the borrowing cap on local councils to enable them to build more houses.
Also announced earlier at the Conference was the policy of increasing stamp duty on foreign homebuyers by 1%, possibly rising to 3%, with the money raised being used to tackle homelessness.
Julia Evans, Chief Executive at BSRIA, said; “BSRIA supports the Prime Minister’s announcement of the ‘opening-up of the £9 billion Affordable Housing Programme to councils, to get them building again’. The scrapping of the government cap on how much councils can borrow against their Housing Revenue Account assets to fund new developments is especially welcome. Indeed: It doesn't make sense to stop councils from playing their part in solving it.... This announcement will revitalise industry confidence, but BSRIA’s oft-repeated mantra is that, although we must see a spade in the ground soon, housebuilding quantity cannot be at the expense of a reduction in quality. The proof has to be in the pudding and words must turn into deeds and action. It shouldn’t be a case of paying lip service to this crucial societal and industry issue.”
 Related articles on Designing Buildings Wiki
- Affordable housing.
- Diversity and the housing crisis.
- Empty dwelling management orders.
- Empty housing in London - documentary.
- Home ownership.
- Housing and Planning Act 2016.
- Housing guarantees.
- Housing tenure.
- Housing white paper 2017.
- Interview with Labour’s Shadow Housing Minister.
- Local housing need.
- Peter Barber - interview.
- Private rented sector PRS.
- Redfern review into the decline of homeownership.
- Social housing.
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