11th July 2018
Focus – The UK housing shortage

Tackling the UK housing shortage – where are we now?

Hardly a week goes by without the media seizing on a new story about the nation’s chronic housing shortage. Much of the coverage deals with the effects of the housing crisis, rather than delving into its causes and the measures being taken to tackle it.

For the government, there’s an awful lot riding on the delivery of enough new homes to satisfy the burgeoning demand; it has pledged to increase the housing stock by a million new units by 2020.

A supply system under strain

The increased emphasis on residential development has put a lot of pressure on everyone involved in the process of delivering on this ambitious target. Last November, Chancellor Philip Hammond pledged at least £44bn in capital funding, loans and guarantees to support the housing market and create the financial incentives needed to build 300,000 homes a year. To put this number in perspective, it’s roughly equivalent to building a city the size of Nottingham annually.

Although the finger has often been pointed at council planning departments for causing delays, this seems to be wide of the mark. Research shows that councils are approving nine in every 10 planning applications. In 2016-17, permission was granted for 321,202 new homes – up from 204,989 in 2015-16.

A study carried out at the beginning of the year shows that more than 423,000 homes with planning permission were waiting to be built, with the backlog having grown by almost 16% in the last year.

The data also shows that development is taking longer; it now takes an average of 40 months from the receipt of planning permission for building work to be completed, an increase of eight months over the figure for 2013-14. This could in part be caused by the much talked about shortage of skilled labour in the construction industry, a situation which could worsen as a result of Brexit.

Permission in Principle

From the beginning of June, the new system of ‘Permission in Principle’ came into operation. A key reform of the Housing and Planning Act 2016, it is designed to streamline the development process by allowing in-principle permission to be granted on sites already identified and allocated for housing development by local authorities within their local and neighbourhood plans.

Whilst the new legislation doesn’t replace the need to look at proposed developments against the National Planning Policy Framework and local planning policy, it is hoped that it will deliver more homes by providing developers with greater certainty that the land they are proposing for development is suitable for housing.

Brownfield Land Registers

Legislation introduced in April 2017 requires local authorities to prepare and maintain registers of brownfield land that is suitable for residential development. Analysis of Brownfield Land Registers carried out by the Campaign to Protect Rural England earlier this year confirmed that there is enough space on brownfield land to build at least a million new homes within the next five years.

More than a third of these sites are on publicly-owned land, easing the pressure on councils to release more greenfield sites, and preventing a further loss of countryside. Using brownfield sites is also likely to give rise to fewer planning objections, speeding up the development process.

New measures needed

The Local Government Association, which represents 370 councils in England and Wales, has called upon councils to be given greater powers to act on unbuilt sites that have planning permission, and the use of compulsory purchase for land with planning permission where homes have yet to be built, in the hope of hastening the end of the practice of ‘land banking’ operated by some property companies.

Could council borrowing be the answer?

Many experts believe that to be able to tackle the housing backlog, local authorities need to be given back the freedom they once had to borrow and invest in the building of new homes. Currently councils cannot launch major building programmes because they are unable to borrow large sums from banks or fund projects through council tax. Giving councils the power and the money to replace houses sold under the Right to Buy programme would, it’s been suggested, go a long way towards alleviating the housing shortage.

Looking to the future

For nearly 40 years, successive governments have seen house price inflation as a measure of economic prosperity. If we are going to solve the housing crisis any time soon, we may need to return to viewing housing primarily as a means of meeting fundamental human needs, like shelter and privacy, rather than seeing it as an investment vehicle.