Unpacking The Housing Crisis

Image – Daria Agafonova

As of 2026, over half of all UK property is owned by the over-60s, while over a third of its private renters are aged 25-34.

To address the housing crisis, Kier Starmer’s government committed to delivering 1.5 million new homes by 2029 as part of its Change manifesto. More recently, Secretary of State for Housing, Communities, and Local Government (MHCLG), Steve Reed, urged UK housebuilders to “build, baby, build”, as he announced legislative and planning reforms to unlock development opportunities across England.

Rhetoric aside, almost two years on from Labour’s historic 2024 win, buyers remain squeezed on average size, quality, and cost, with UK housing offering some of the worst value stock in the developed world. Rising costs, in particular, risk exacerbating the UK’s already sluggish growth, as young people are geographically restricted from accessing careers in economic centres or from starting families, illustrating the extent of generational inequality in access to housing.

For its part, the government has enjoyed some limited success in facilitating new developments with the aim of lowering average costs. While the overall number of delivered homes remains lower than pre-election figures, the amount of newly started developments is rising modestly. Considering Labour’s short tenure and the magnitude of the current crisis, it is unfair to park responsibility entirely on their doorstep.

The real-term defunding of local government following austerity has revealed the shortcomings of the UK's discretionary planning system: councils lack the resources and expertise to deliver housing at scale, while private sector SME developers are restricted by complex legislative procedures. This imbalance has progressively hollowed out the middle section of UK housebuilders, creating an increasingly dominant oligopoly of larger-scale firms.

Large-scale housebuilders were responsible for developing [40% of the UK's new housing](https://www.gov.uk/government/publications/housebuilding-market-study-final-report/final-report#:~:text=The largest 11 housebuilders provide,to focus on larger developments.) in 2021-2022, with SME firms delivering almost exclusively smaller developments. This system has heavily commercialised UK development, as the largest housebuilders leverage land supply to manage delivery, ensuring “supernormal” average profitability, typically over 30%. To rebalance the market, MHCLG’s regeneration agency, Homes England, is acquiring and preparing previously non-viable, formerly developed brownfield sites before tendering development contracts, which require housebuilders to deliver affordable units in a timely manner. Despite reaffirming its commitment to delivering 1.5 million new homes by 2029, however, Reed and Homes England’s maximalist approach to development brings with it longer-term challenges.

Current construction rates mean that today’s housing stock will have to last for an estimated 2,000 years before replacement if supply-side issues continue unaddressed. Although large-scale landmark projects, including Homes England’s Forth Yards expansion in Newcastle, could ease the lifespan burden, the delivery timeframes of such projects are likely to continue [into the 2030s](https://www.bbc.co.uk/news/articles/c8j33r8pz2lo#:~:text=New design images for the,Road and Newcastle Business Park.).

Comparatively, smaller, more nationally dispersed schemes, including the Shared Ownership and Affordable Housing Programme, have delivered new homes with a quicker turnaround, at an average yield rate of 27,000 units per year. Although the scheme is expected to exceed its new homes target, its overall delivery of just over 136,000 units falls well short of the UK’s estimated 4 million deficit.

Equally, the quality and longevity of new build units remain debatable. Over one-third of new home buyers have encountered at least ten ‘snags’ following their move-in date, while a majority of properties are estimated to require retrofitting in the next 20-30 years to meet net-zero obligations.

The incentive for the government to build as many units as possible to meet its election pledge further threatens to undermine the planning system’s stated importance of environmental protection. To mitigate this, through deregulation the government is aiming to allow developers freer access in acquiring and building on brownfield land. Research from the Campaign to Protect Rural England suggests that such sites could provide sufficient land to support an estimated 1.4 million new homes, with over 50% of identified sites already possessing planning permission. With the government recently recognising degrading biodiversity as a threat to national security, alongside Homes England’s preference for regenerative development considered, the case for brownfield over greenfield development appears compelling.

Although they are potentially suitable, brownfield sites typically carry with them considerable decontamination fees and may lack adjacent infrastructure, affecting the overall profitability and viability for even large-scale housebuilders. While government-issued Homes England funding bridges some of this gap, the centralisation of resources into large-scale firms affects the extent to which these sites are brought forward for development in practice. Despite typically fulfilling these projects more quickly, the Homes England tendering process unintentionally excludes many SME firms based on its [consumption of their often limited administrative resource](https://www.building.co.uk/focus/why-is-the-home-building-fund-failing-to-reach-small-builders/5103840.article#:~:text=In its response accompanying the,borrower ceased communication with us”.). The inability of SMEs to access government grants is likely contributing to the almost 45% of new build homes still being developed on greenfield land, as these sites carry with them lower risks and cheaper preparation costs.

Just as the causes of the housing crisis are far-reaching and complex, so too are its consequences. Regardless, one only has to look at the estimated 2.2 million young people struggling to step foot on the property ladder to recognise the gravity of the problem.

Rather than lying entirely in legislative simplification, deregulation, or government investment, a comprehensive solution likely consists of all three, with an added consideration for serving local interests. A shift towards a zonal rather than discretionary system could provide developers with increased certainty when acquiring sites, while streamlined tendering requirements could better allow SME housebuilders to compete with their larger counterparts. Moreover, planning reforms must also prioritise investment into local infrastructure and sustainable integration features to provide future-proofed homes to tackle the climate crisis.

If the government is serious about kickstarting growth, reliable access to affordable, high-quality, environmentally conscious housing for all is a necessary, albeit challenging, first step.

‍