The UK’s chronic housing shortage is one of the biggest challenges the country faces. The Government is aiming to build 300,000 new homes every year to match demand and keep housing costs affordable, but less than 250,000 were built last year, the highest rate in a decade. But contrary to popular belief, there is not one single national housing crisis. In many parts of the country housing is relatively affordable, and supply keeps up with the demand for new homes.

Instead, Britain has many localised housing crises focussed on its most economically successful cities and towns where employment opportunities draw in large numbers of people. These housing crises are caused by how our planning system disconnects the local supply of housing from local demand.

Where has the worst housing shortages?

Cities with the biggest housing shortages are primarily concentrated in the Greater South East of England such as London and Brighton. But some places elsewhere like Edinburgh, Bristol, and York are also affected.

Many expensive cities, such as Oxford and Brighton, often build far less housing than cities with cheaper housing and lower demand, such as Wakefield and Telford. This is because the supply of houses has little connection to prices and therefore the cities with the most unaffordable housing.

There is huge variation around where in large cities and towns new homes are being built. The vast majority of development happens either in city centres or on the very edges of cities. Meanwhile, half of all these suburban neighbourhoods have built less than one home each year.

What are the effects of housing shortages?

The scarcity of new homes in Britain’s most economically successful cities has created huge inequalities in housing wealth.

Urban homeowners in the South East made on average £80,000 more in housing equity than those elsewhere in England and Wales from 2013 to 2018.

This wealth inequality exacerbates existing social problems, and may have been one underlying factor in many areas’ strong Leave vote in the 2016 EU referendum.

The housing crisis also creates huge cost for the rest of society. The money spent on housing benefit, the difficulties that the NHS, police, and schools has in staffing roles in expensive cities, and homelessness are all linked to the unaffordability of housing in certain places. Fixing their housing shortages will reduce pressure on the rest of the welfare state.

How can we build more homes?

The UK must concentrate homebuilding primarily in economically successful cities where demand is highest.

The current planning system will not deliver homes at this scale or in the right places. Only a wholescale reform of housing policy will deliver the development needed.

We propose:

• Increase housing supply where new homes are needed. More homes are built in Wakefield than Oxford. Building in places with fewer jobs won’t fix prosperous cities’ housing crises.
• Introduce a flexible Japanese or US-style zoning system that permits most new development automatically, provided it complies with an agreed local plan. This includes development in the greenbelt.
• Increase the use of permitted development rights to cut the red tape that makes it hard to build upward extensions or infill developments.
• Stop subsidising home ownership. Despite Right to Buy, home ownership as a share of private housing has fallen in every city since 1981. The Government should stop subsidising ownership, tax housing wealth increases by abolishing the Capital Gains Tax exemption for primary residences and treat owning and renting equally.