Britain needs more homes. We should use policy to get empty homes back into use and to encourage people with extra space to downsize – but that won’t change the fact that the UK has been under-delivering homes for decades compared to other Western countries.
Yet our housing crisis is not just a crisis of low supply. It is a crisis of overdependence on a single model of supply. For decades, we have relied overwhelmingly on speculative private development. Developers buy land assuming they will build market sale homes for the highest prices possible in a given local market. They then wait as long as necessary to sell at the prices they assumed when buying land. When prices fall or build costs increase, as they have done recently, supply slows. That is not a moral failing: it is how the speculative development model is designed to work.
The planning system bakes in this housing model, taking for granted that this is how the majority of homes will be delivered, and seeking to cream off some of its profits to build social housing and infrastructure (via Section 106 agreements in England and Wales, and Section 75 agreements in Scotland). No resilient country should rely so heavily on one delivery model for something as fundamental as housing.
There are two basic theories at play in the debate about how to increase housing supply in the UK:
- Make this speculative development model as easy, smooth and profitable as possible
- Diversify the UK’s housing supply away from this one over-dominant model of housing supply
I would argue it is self-evident that the gains from the first strategy are bound to be too limited to make a difference to most people’s lives. Reforms to planning and regulation matter. Britain does need a faster, more predictable planning system. But planning reform alone cannot solve a housing crisis rooted in overdependence on a single speculative delivery model that relies on maintaining prices where they are. Since current prices are far too high for most people to afford, this supply model will only ever be able to cater to a minority. Increasingly, it sells homes to first time buyers with support from the so-called ‘Bank of mum and dad’. For the rest of us, our only possible hope of buying an average priced home in England is to be in the top 10% of earners in the country.
Now let’s explore the second strategy: free the UK from over-dependence on the speculative model. Healthy housing systems use many delivery models at once: private sale, social housing, community-led housing, Build to Rent, co-operatives and specialist housing for older people.
The most direct way to diversify how we build homes is to use the tried and tested model of mass social housebuilding – as discussed in Labour Housing Group’s 2020 report, The Missing Solution. Policy and funding support must enable councils and housing associations to ramp up supply. To scale up social housebuilding anywhere close to the levels needed, we need two things.
- Sources of land protected from speculative housebuilding. If social landlords are competing with speculative housebuilders for the same land, they will either lose or buy land at an extortionate and unsustainable price.
- Public grant and affordable finance to cover the costs of building homes, so that rents can be kept low and affordable for social renters and homes can be managed and maintained to decent, safe standards.
It is a moral and economic imperative for governments across the UK to scale up this model as much as humanly possible, as fast as humanly possible. We can and must do more – for example on affordable land supply, front-loading grant, extending low-cost loans, building capacity in councils and community-led housing groups, and supporting acquisitions from the market.
But after 14 years of Conservative misrule of our economy, aggravated by war and international turmoil, it is difficult to see how the UK can scale up social housebuilding as quickly as we need to confront our housing crisis in the way that people deserve. It is going to take time to rebuild social housebuilding after decades of hostile policies.
I don’t want to ask people to wait. I want us to use every tool in the box to get every person in this country in a safe, affordable, decent place to call home. That means using policy to support as much diversification of housing supply as possible:
- Build to Rent helps keep supply going when speculative development stagnates, because it does not rely on households being able to get a mortgage. While new-build private rented homes tend to be let to renters with higher incomes, this can free up existing – often more affordable – homes for other renters in the same community.
- Tackling the chronic shortage of specialist housing for older people will mean more people have a safe, accessible homes as they age – and will also free up homes for people who don’t have those same needs.
- Purpose-built student accommodation – at the right levels and in the right places – can make more existing homes available for local people in university towns and cities.
None of these alternative private development models alone will solve the housing crisis – but done right, they can all help. All have untapped potential to provide more ‘Affordable Housing’ through planning agreements.
I understand why many on the Left are sceptical of new profit-driven development models. But there is no doubt they are playing an important role in diversifying housing supply in other countries with similar housing problems to our own. Britain’s housing crisis is too deep, and too urgent, for ideological purity or single-solution thinking.
We must build far more social housing. We should reform planning. We should support community-led housing. We should use Build to Rent, specialist housing and student housing where they help free up supply elsewhere.
The goal is not to defend one development model against another. The goal is to create space in our housebuilding system for every model that can contribute to ending the housing crisis.
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