It’s time for a radical solution to the housing crisis

In this election year, housing will be a much-debated subject and rightly so. It is now widely accepted that we need to build a total of 442,000 homes a year for the next 25 years to meet this country’s demand. Yet today we build well below 200,000, a figure lower than in 1948. How is it that our capacity to build has fallen so far?

Every month the housing sector sees a conference or fresh policy paper purporting to offer an answer to why the UK has failed to meet its housing needs. The issues identified range from complex problems with the planning system through to the (inadequate) ways in which we tax land and property. Many of these challenges are intelligent and sensible, but the remedies offered generally fail to address the fundamental problems we need to tackle if we want to sort out housing – and much else besides.

AV, anyone?

In fact, the ills of the sector have little to do with housing. The real problems lie in the nature of the UK’s political governance. It turns out Nimbyism and a first past the post electoral system are tragically comfortable bed partners. Many of our political representatives – at parliamentary and council level – have small electoral bases and slim majorities which leave them in a poor position to withstand the pressures of Nimbyism and put national and regional interest above local resistance.  

By loosening the direct link between the representative and the constituency, most systems of proportional representation would fix this once and for all. Until politicians can overcome the confines of Nimbyism, we will continue to have an overly-politicised housing system that gets in the way of any kind of more predictable rules-based delivery framework. 

Indeed, on the crucial measure of dwellings per thousand inhabitants, the UK is the second worst performer in Europe (after Greece). We have only 371 compared to Germany at 515 and France at 552. 

Devolution, baby

The second big constitutional issue is over-centralisation. Without a consistent system of devolution, we lack the intermediating power of a regional government, with proper budgets and serious planning powers, capable of negotiating sensible deals between the long-term macro needs of the country and the concerns of the local. 

If, for instance, the mayor of London had the convening power and held the budgets and planning powers with which to shape the political debate around housing delivery, London’s housing starts would be far greater than they are today. Despite being a world city, housing decisions in London essentially sit with individual boroughs and many of these are under-delivering significantly on their targets for all types of housing.

Government of disunity

Our third major challenge is the abject lack of joined-up thinking between the various relevant ministries in Whitehall (i.e. the Treasury; the Department for Business and Trade and the Department for Levelling Up, Housing and Communities). In over 20 years of my career building affordable housing, I have never experienced any kind of joined-up action between these vital departments to try and tackle our housing challenges. 

In our despair about whether we can ever dig our way out of this mess, the debate around housing in the UK has become impossibly polarised: it seems to have reached the point where those who profess to have an interest  put themselves either into the camp of the protection for rural England (the ‘greenbelt at any price’ lobby) or into the social housing lobby (for whom no other form of housing matters). Both are wrong-headed and, together, such polarisation reduces this to a platitudinal debate which cannot address the delivery challenges that the country faces. 

A solution? Let’s loosen regulation for smaller sites

As things stand, the introduction of some form of proportional representation and meaningful regional devolution may seem impractically distant. But here is at least one measure that can be enacted fairly quickly by any sensible government: create a presumption in favour of development on small sites provided they deliver sufficient quantities of all types of affordable housing. 

Currently, small sites are expected to meet the same policy requirements as large regeneration sites, requiring red tape that is just too much for any of these businesses to cope with. This is why large numbers of SME developers and contractors have gone bust over the last 10 years and even more in the last three. In 1988, 39 per cent of our housing was developed locally by SME developers. 

Today, it stands at barely 10 per cent. So, the support of Homes England (the government agency responsible for delivering housing throughout the country) for the creation of a viable SME housing sector is mission critical; it will also encourage genuine local accountability. The success of this initiative is rapidly becoming an existential test against which Homes England’s future success should be judged. 

Let’s be honest, we need more funding

The second policy change we will need to accept is that more social housing will require more grants in the system and, consequently, a higher tax base. Consider London, for example, where even after receiving £4bn in government funding for its Affordable Homes Programme 2021-2026, the city still faces a yearly funding gap of some £3.3bn to meet its annual affordable housing target of 26,000 homes. 

So whilst it’s tempting for politicians to beat up the developers, the truth is that the lack of delivery of affordable housing is only going to be solved by creating meaningful public/private partnerships and putting more public funding into the mix. 

The public deserves better from all of us. When we say let’s get building we should be saying to each other: let’s stop the blame game. Instead, let’s start working out all the small steps needed to get the country to a better place and then maybe we can tackle some of the biggest challenges raised here and create a truly viable modern Britain.

Marc Vlessing is chief executive of the UK’s leading affordable housing developer Pocket Living