The role of the suburbs in solving the housing crisis

Although the housing crisis has spurred great efforts from central and local government to end the shortage and build more homes, housing remains unaffordable in many cities and large towns. The lack of housing can only be solved by reconnecting housing supply to demand for new homes, by building a greater amount in the most expensive cities and large towns. This will require reform to where and how we build new homes.

This paper shows that local authorities have often made tough political choices to build new housing. But systemic problems in the way we plan for new homes have made it much harder to build new homes across much of our cities.

  • Large parts of the existing suburbs of England and Wales are providing almost no new homes. Over a fifth (22 per cent) of city neighbourhoods outside city centres have built no new houses since 2011. Half of all these suburban neighbourhoods (51 per cent) have built less than one house each year since 2011. Sunderland has the most dormant suburbs, with 70 per cent of neighbourhoods adding less than one house every year, compared to 22 per cent of neighbourhoods in Cambridge.
  • A few suburban neighbourhoods are building the lion’s share of new homes. Some 4 per cent of suburban neighbourhoods have supplied 45 per cent of all new suburban homes since 2011. These new homes concentrated in certain parts of our suburbs have been essential for places to meet their housebuilding targets. Milton Keynes has the most neighbourhoods building at this intensive rate, with 11 per cent of neighbourhoods adding more than 25 homes every year since 2011. In contrast, no neighbourhoods built at this rate in the suburbs of Oxford or Luton, both of which are expensive places to live with below average housing growth.
  • With so few of our suburbs seeing minimal or no new homes being built, only a small increase in housing supply across our dormant suburbs is needed to deliver a large boost to the number of homes. If every suburban neighbourhood had at least built just under four houses per year since 2011, there would be 446,000 more homes in cities today, a 56 per cent increase over actual new supply. If cities did this and built the 56,000 extra homes a year it required, it would almost close the remaining gap between our national housebuilding rate of 241,000 and the national housing target of 300,000.

What lies behind these outcomes is the interaction between different elements of the planning system and housing policy. These include a combination of local plans that rarely encourage development in the suburbs due to local opposition, a lack of incentives for local authorities to build more than their Government housebuilding targets, and the use of unpredictable planning permissions to control development which make constructing new homes in the suburbs too risky for builders. Measures such as the Green Belt, which are justified partly on the basis they encourage suburban densification, do not achieve their stated objectives.

Solving Britain’s housing crisis will require more housing in existing suburbs, in addition to making more land available for development on the outskirts of cities. This can be done by:

  • National reforms to the planning system to reconnect supply with demand. A shift towards a greater role for prices in calculating cities’ housing targets, and an expansion of permitted development rights would increase housebuilding in the most expensive cities and suburban development.
  • Reforms to make suburban supply The National Planning Policy Framework (NPPF) should require cities to allocate some development sites in the existing suburbs; cities should create suburban design guides which reduce the risk of developing infill development for small builders; tax incentives like the New Homes Bonus should encourage councils to pursue housing in the existing suburbs; the existing method of developer contributions through “Section 106” and the Community Infrastructure Levy (CIL) should be simplified to reduce risk; metro mayors should use public transport mobility data to shape development patterns in their cities; and funding should increase to deal with the technically complex work of suburban development.
  • Experimental ideas. The Government should look at whether England and Wales could copy recent reforms in California, which have legalised “granny flats” and “millennial pads” in back gardens; and should run pilots with London YIMBY’s ideas of allowing very local neighbourhoods to redevelop themselves in return for keeping the profits of doing so.