The Government aims to build one million more homes by 2020, the Prime Minister has announced. Michelle Custodio puts the need for more homes in perspective.
How many more homes does the UK need? Back in May last year, the then business secretary Vince Cable argued that the UK should build an extra 300,000 a year to catch-up with demand. According to the National Housing Federation, England alone is short of half a million homes at the present time. Yet in the year ending March, only 125,110 homes were built in England – just half the number needed. Consequently the problem is compounded each year.
Housing minister Brandon Lewis recently announced that the government wants one million new homes to be built in the next five years. He told the BBC: “By the end of this Parliament, success would mean that we have seen a build in total of something like a million homes.” The Prime Minister has since reiterated that ambition.
According to housing charity Shelter, by 2008 the number of new homes being built in the UK had fallen to the lowest level since 1924. It adds that housing shortages are “enormously damaging, socially as well as economically” and this problem is forcing individuals aged 35 and below to live with their parents. Another consequence of this crisis is that millions more people are renting, although they would prefer to be living in their own homes.
Meanwhile, there is a parallel problem of a massive shortage of social housing for rent. There are now more than 1.8 million households in England on the waiting list for social housing – an increase of 81% since 1997.
The housing crisis in the UK was made much worse for potential home owners by the financial crash of 2008/9. It was in this period that banks ceased to lend money, so buyers were unable to get mortgages. Consequently, builders could not sell as many houses and so constructed far fewer units. Government statistics report that housing starts fell by nearly two-thirds between 2007 and 2009, and the number of first time buyers fell by more than 50% between 2006 and 2008.
Patrick Law, the corporate affairs director at Barratt Developments, one of the UK’s biggest house builders, says that the slump also caused about 250,000 employees to leave the construction industry. So although there is now renewed demand for housing, the industry has a serious skills shortage, lacking the needed number of bricklayers, carpenters and joiners to build homes.
The recent years have seen a sharp rise in the number of homes being built by the private sector. Barratt alone is building more than 14,000 houses per year, with a completion rate 40% higher than in 2011. Barratt’s competitor Redrow finishes about 4,000 homes each year and, according to its chief executive John Tutte, the rate at which the company is selling houses is the same as in 2007, when the market was at its peak.
Overall, the number of houses built in England has started to go up since the worst of the bank crisis. In 2014/15, 124,520 housing units were built in England – 12,170 more than in 2013. These numbers, though, are low compared to total home ownership demand and historic construction levels. In 2007/8, some 170,610 units were built in England – whereas in several years in the 1970s, more than 300,000 homes were built across the UK.
In July this year, Chancellor George Osborne published a comprehensive report containing a series of housing and planning reform proposals. The past ten years witnessed a surge in house prices, leading to a decline in the number of UK citizens able to afford to own their own homes. Osborne plans to facilitate the completion of more homes to reverse this trend.
Included in Osborne’s ‘Fixing the Foundations’ report are radical measures to liberalize and speed-up the planning system and allow for a smooth delivery by 2020 of 200,000 new ‘Starter Homes’ for first time buyers at a 20% discount. Regulatory obligations on housing developers have been eased; guidance has been much reduced; and all local authorities must produce effective plans to increase housing provision.
But at the present rate of housing construction, the shortage of homes in London alone will reach more than 700,000 units in the next 16 years. The National Housing Federation asserts that bold solutions are crucial in solving the housing crisis in the UK. A joint report by Shelter and KPMG proposes more public investment in the social housing sector. “If neither local authorities or housing associations build homes in significant numbers, then we will never build the homes we need,” says the report.
While it is apparent that there has been progress with the housing situation in the UK, there should be a greater collaboration between the government and the private sector so that developers are able to move at a faster pace and meet the real estate demands of the public. Recent reform proposals suggest that the housing crisis is solvable. A solid partnership between the government and private housing construction companies working together can lead to dramatic results that will finally end the UK’s housing crisis.