UK Housing shortage and Reform imperatives

The UK is grappling with a serious housing dilemma marked by a persistent scarcity of residences. The government's aim is to erect 300,000 new homes annually to meet the escalating demand and maintain housing affordability. Yet, the practical outcome falls below this aim, demonstrated by the construction of fewer than 250,000 homes in the past year. This housing shortfall poses a substantial obstacle for which the authorities must find a practical solution.

Compared to the average European nation, the UK currently faces a substantial shortfall of 4.3 million homes that were never constructed. Addressing this housing gap would require a minimum of 50 years, even if the government attains its present objective of building 300,000 homes annually. There is only one way of solving the crisis creating new homes.

The government must build 442,000 homes annually for the next 25 years or 654,000 homes each year over the coming decade. Solving the UK housing shortage is a major challenge that requires substantial reform. The current discretionary planning system, unchanged since 1947, needs a major overhaul to initiate meaningful changes.

These reforms must include the following:

• The discretionary planning system must be replaced with a new flexible zoning system based on clear rules. This will make the planning process more definite and ensure a steady land supply for development.
• A shift from uncertain decision-making to a rule-based approach is needed to guide new planning reform ideas.
• Private-sector house-building efforts must be intensified. While more council and social housing are definitely desirable, it is also important to significantly boost private house construction and address the extensive housing backlog.

The narrative often points to Britain's recent housing supply challenges, attributing them mainly to the decline in council house-building post the introduction of the Right to Buy in 1980. However, this evaluation only partially captures the truth. A more comprehensive view reveals severe declines, notably during the 1970s, when private and council house-building plummeted by about half. Another substantial reduction followed immediately after World War II.

The vital lesson here is not that council housing was an error but that the UK could have built more private and council houses had the planning system has been less restrictive. The crux lies in establishing planning reforms that replace the current discretionary approach with a more adaptable zoning system. Instead of development being prohibited unless granted permission, the new system would allow development on urban and undeveloped land near cities unless explicitly prohibited. It's worth repeating here that to achieve a housing boom sincerely, the government must double its current annual output of 220,000 homes. Even the target of 300,000 new homes annually will eventually fall short.

The nation requires 442,000 new homes annually over 25 years to address the 4.3 million backlog.

Furthermore, for optimal economic and societal benefits, the majority of new homes should be strategically situated in and around the least affordable urban regions where the demand for housing is the highest. Focusing on high-supply areas with low demand will yield minimal gains for affordability and the economy.

Finally, swift planning reform is crucial for reaping maximum benefits. Constructing homes takes time, and filling the void of four million missing homes will require even more time. Effecting growth dictates well-timed planning and reforms and a robust housebuilding surge. When applied with a sense of deep commitment, these measures can help alleviate the housing crisis.