More homes and better places

The housing supply crisis in the UK is beginning to receive the attention it deserves. The mainstream media has picked up on the controversy surrounding the proposed new National Planning Policy Framework and research commissioned by the National Housing Federation which highlights the drop in owner occupation. The publication of ‘More Homes and Better Places’ by the Building and Social Housing Foundation (BSHF) adds to that discussion.

It is worth considering why there is increased interest in housing supply at present. A series of major policy reviews over the last decade have highlighted the shortage of new homes in the UK and several organisations, including BSHF, have been highlighting the drop in owner occupation for some time.

The most obvious answer is the sheer scale of the housing supply problem that we face. Last year saw the lowest number of new homes built since the second world war. This undersupply of housing is a longstanding problem, which has been exacerbated by the financial crisis of 2007/08. The structural problems – such as those related to land and planning, opposition to development, and the operation of the construction industry – have been compounded by increased restrictions on finance and mortgage availability.

But why does this matter? The economic impact of undersupply is significant and wide ranging. It is a drag on economic growth. It blocks labour mobility and job creation. It is a cause of unemployment and leaves the UK exposed to changes in the global economy. Too much wealth and debt is tied up in the housing market restricting investment in other – more productive – areas of the economy.

The economic impact of undersupply deserves attention, but there are also important impacts on individuals and wider society. Undersupply is limiting choice for a variety of different types of households and having a negative impact on the affordability and delivery of public services such as healthcare, education and social care.

Highlighting the problems caused by the undersupply of homes is relatively easy. The hard part is finding workable proposals to increase the number of homes being built. At BSHF we have been working with leading practitioners and academics on this issue.

The coalition government has clearly stated its intention to increase housing supply and has outlined a number of initiatives to do this. However, our analysis suggests that a greater and more co-ordinated response is required to tackle the scale of the housing supply problem. The following strategic objectives would work together to overcome many of the substantial barriers to delivering sufficient housing. Under each strategic objective further recommendations have been made for changes that could increase supply.

1. BUILD NEW PLACES. Local authorities should take a leading role in assembling land and parcelling it out to a range of suppliers, to increase competition amongst firms and between different models of development.
2. ENHANCE DELIVERY OF LAND. Those who own or control land that is suitable for housing need to be encouraged to bring it forward for prompt development at values that will secure appropriate quality.
3. ENSURE THAT AN APPROPRIATE RANGE OF FINANCE IS AVAILABLE to support development. Following the global financial crisis, there has been a fundamental change to the financing of housing supply and purchase, in addition to short-term credit constraints. Government and the housing sector need to ensure that these changes are adapted to, so that housing supply is not inhibited.
4. MAXIMISE THE USE OF EXISTING BUILDING STOCK. The existing stock of buildings, including empty homes and some commercial properties, represents a potential source of additional housing. Where possible this should be brought into use to help to meet housing needs.