Britain is facing a housing disaster

The phrases ‘housing crisis’ and ‘housing shortage’ do not do justice to the scale of the disaster ahead in Britain.

To gain an idea of just how severe the problem is, take the right-leaning Centre for Policy Studies. It says that, in 2023, the UK housed 68.2million people in 30.4million homes – which is 446 homes for every thousand heads. That ratio might seem generous, but in Europe, only Ireland, at 411 homes per thousand, has worse housing provision than the UK. For the UK to reach the 542 homes per thousand averaged by comparable European countries would mean meeting a shortage of no fewer than 6.5million homes.

Our politicians are well aware of the crisis. In 2024, when she became secretary of state at the Ministry of Housing, Communities and Local Government, Angela Rayner announced that Labour planned to build 1.5million homes in England by 2030. Rayner decreed that local authorities must meet mandatory housebuilding targets, as if numbers on computer monitors had magical powers. Later, however, she conceded that her target would only make ‘a dent’ in the nation’s housing need, and that it was ‘stretching’.

New prime minister Andy Burnham is now set to make housing one of his key policy initiatives. He has already stated that Britain is in ‘the grip of a housing crisis’, has promised to end rough sleeping, and has talked of delivering ‘the biggest council-house building programme since the postwar period’. He has also, predictably, laid blame at the door of Margaret Thatcher and her government’s 1980s right-to-buy scheme, allowing council-house residents the opportunity to purchase their homes.

The housing statistics make for grim reading, no question. Fewer new-build housing schemes are ready to start selling homes than for almost a decade. The housing charity Shelter found that, in England, more than 1.3million households are on waiting lists for social housing, yet councils, housing associations and private developers built only 12,198 new such homes in 2025. The situation in London looks dire. And Greater Manchester? That case deserves special scrutiny, given its connection to our current PM.

Burnham was mayor of Greater Manchester between 2017 and 2026. His record in building council houses there inspires very little confidence. In his 2024 mayoral manifesto, Burnham promised 10,000 new council homes across Greater Manchester by 2028. But by June 2025, Greater Manchester Combined Authority reported that just 4,000 homes had been finished since the start of the decade – many of which were not council houses.

Why have Labour and Burnham, despite their partisan fidelity to council housing, found it so hard to build any houses at all? The green lobby has undoubtedly played a role. At the Greater Manchester Green Summit of 2018, hosted by Burnham, it was agreed that the Greater Manchester area should achieve carbon neutrality not by the national target year of 2050, but as early as 2038. Four years later, Burnham’s Greater Manchester Truly Affordable Net Zero Homes (TANZ) task force insisted that all new housing in the Manchester conurbation be Net Zero by 2028. These greener-than-thou requirements of housebuilders can only have slowed the construction of new homes.

Yet though Net Zero zealotry has played a significant role in impeding housebuilding in the UK, other roots of the housing crisis also run deep.

Why the house-price boom ended

Between 1856 and 1939, housebuilding in England and Wales grew by 1.9 per cent a year. That rate fell, however, to 1.2 per cent between 1947 and 2019. Private housebuilding also halved, with the UK registering the lowest housebuilding rate of any similar European country.

Much of the responsibility for this, one of us has long argued, lies with Clement Attlee’s Labour government and its 1947 Town and Country Planning Act (TCPA). That gave the state a monopoly on the development of land. Later legislation and regulation, securing the Green Belt and sites of special scientific interest and creating myriad other environmental devices, further restricted the space on which new homes could be built. The restrictive planning system, limiting the supply of new houses to a trickle, helped to ensure that, for decades, UK house price rises rose consistently and continuously. Nationwide’s widely used house-price index for 1953 onwards shows that, even after boom-and-busts around 1970, 1980 and 1990, annual house-price inflation in the UK recovered to an an annual average of 10 per cent.

Early this century, however, a house-price bust began, complete with a 14 per cent deflation during the Great Financial Crisis of 2007-2008. Since then, annual increases have been five per cent or less. Thus, adjusted for retail-price inflation, the average price of a UK house in real terms, costing above £330,000 from 2021 to 2022, has now fallen by £50,000 – to less than £279,000. In May and June, market prices also stalled.

Extortionate mortgages go some way to explain the fall in house prices. Stewarded by the hapless Andrew Bailey, the Bank of England became the first G7 central bank to raise interest rates to try to beat the inflation that attended Covid. As a consequence, mortgage rates have risen from 1.3 per cent in September and October 2021 to nearly five per cent today. No wonder homes now go unsold. People simply don’t have the means to buy them. Again, London is a prime example – 4,629 recently completed dwellings failed to find a buyer in June, and more than 2,700 were halted before completion.

Britain’s house-price crunch is even more remarkable in the light of net migration to the UK. We might expect migration-fueled population growth to increase demand for housing, and therefore for house prices to rise. From 251,000 in the year to June 2021, net migration soared to a peak of 944,000 in the year to March 2023, only returning to 2021 levels last year. Yet while mass immigration has boomed, in that same period house prices still fell.

What all this tells us is the danger of isolating symptoms of Britain’s housing predicament as causes. High interest rates, after all, reflect a deep-rooted inability to fight inflation by making things cheaper – housing included. Seizing upon mortgage rates or indeed immigrants as the chief culprit for our housing problems, therefore, is lazy. The problems go much deeper than that.

The distinguished economic geographer Paul Cheshire has it right about the house-price crunch. His focus is Britain’s deeper, broader productive malaise. He notes that the UK economy is stagnant, that real incomes haven’t risen since 2008, and that younger house purchasers are ‘unable to pay any more money’ to buy homes. His point about the stagnation of UK plc is key.

Following Cheshire, we should see both the long-term and the recent declines in housebuilding as part of the UK’s general economic struggles. Indeed, both the decline in housebuilding and that in the rate of GDP growth share the same sources – the spread of general bureaucratic regulation, especially around Net Zero, and the spread of what spiked has termed growth scepticism.

Since 1998, when Tony Blair declared economic stability ‘a sexy thing’, UK GDP growth has averaged just 1.5 per cent a year. Housing is caught in an ailing economy.

There are signs of this across the housing sector. Builders such as Vistry and Crest Nicholson have been targeted by short sellers, while Berkeley Group and Taylor Wimpey face thinner profits. Worse, the UK construction sector as a whole is complacent about productivity – fully 22 per cent of builders never bother even to measure it. As a major report by Mace Construct notes, between 1997 and 2022, the productivity of UK general construction improved by about one per cent, against 29 per cent for the UK private sector as a whole and a huge 182 per cent for manufacturing. ‘Almost no other major sector’, Mace Construct says, ‘has stood still for that long’.

The quantity and quality of housebuilding have suffered, too. New homes are not just in short supply – they are also often of dubious quality and wanting in workmanship. Britain’s existing housing stock, not least its council estates, is in a state of widespread dilapidation. Britain’s houses are some of the draughtiest in Europe, lacking both insulation and air conditioning, and they have some of the smallest rooms in Europe.

Sclerosis in Britain’s wider economy cannot fail to rule, too, in its housing sector.

How green tape restrains new housing

Britain’s officious, hyper-regulatory planning system has deepened the housing sector’s travails. As the Organisation for Economic Co-operation and Development puts it, Britain’s planning system for the use of land is ‘overly stringent and complex’.

The sheer size of Britain’s regulatory apparatus in housing speaks volumes. The Ministry of Housing, Communities and Local Government directly employs a good 3,500 people directly, and adds more through the enormous Land Registry (nearly 7,000), Homes England (nearly 1,700) and the Housing Ombudsman Service (600). Its Planning Inspectorate, which attends not just to infrastructure but also to local housing plans, numbers about 450 people, plus another 500 support staff. It makes more than 1,500 decisions a month, but cases typically take about six months. Though it hopes to eradicate case backlogs by next year, this seems unlikely.

Similarly, the Department for Environment, Food and Rural Affairs has 5,800 staff. Then there are its ‘arm’s length’ subsidiaries – the giant Environment Agency (more than 13,000), plus Natural England (2,800). Meanwhile, each of England’s 327 local authorities has a rough headcount of 40 planners, adding a further 13,000 people to look after housing-related matters. Here, too, the wheels of planning grind slow, as local authorities struggle to recruit experienced planners.

Altogether, there are a good 50,000 Brits whose jobs depend on ensuring that residential construction remains an unfathomably complicated business. And this is before we get to the Building Safety Regulator, established in 2023, after the 2017 fire at Grenfell Tower. Charged with the control of ‘higher risk’ buildings (those over seven storeys or 18 metres high), the BSA has 152 staff members and nearly 500 hangers-on. Its cause may be just, but it has refused two-thirds of the applications for building-assessment certificates made to it, and its processing times take ‘twice as long as expected’.

And still the green tape piles up. On New Year’s Day 2027, the UK’s Carbon Border Adjustment Mechanism (CBAM), drawn up in 2023 during Rishi Sunak’s Conservative government, comes into effect. Builders who import the basic raw materials of construction face a carbon cost for these goods’ production ‘comparable to what would have been payable had [the materials] been produced in the UK’. Given that a quarter of the cement, more than half the steel and 90 per cent of the aluminium used by the UK is imported, the costs of CBAM will hit the country hard. And apart from the direct costs to them, UK housebuilders will have to be on continuous lookout for the carbon and perfluorocarbons emitted in producing the steel and aluminium they put in ‘roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns’. Worse, note construction experts Turner and Townsend, as CBAM rules tighten, so builders will find that getting hold of ‘real’ emissions data from suppliers will become ‘essential and standard’ – a bureaucratic requirement that can only raise the cost of new housing.

Labour policy prevents new homes

Britain’s property-owning establishment has no interest in overcoming the morass of regulation we have described. Residential property is a historic bulwark of British capitalism, even if a weak one now. The value of UK housing as an asset is rated at £9.18 trillion. The establishment certainly doesn’t want new houses and new people spoiling the value of that. Its members have made their pile, and insist that any new houses are sustainable and built only on brownfield sites – that is, land that has been previously developed.

In fact Labour has favoured brownfield-only development ever since UK chancellor Gordon Brown first insisted upon it 20 years ago. The policy has also made a big contribution to housing shortages. Indeed, however rapacious Britain’s major housebuilders are, their chokehold on the market is nothing to that exerted by the state.

The state buttresses the sheer unaffordability of housing in the UK today. People now face the very real prospect of never paying off their mortgage. At £268,000, the average price of a UK house in 2026 is nearly seven times average annual total earnings – £39,000. These facts are well known; but we should know what they mean for the future of Britain.

Consider Tom, Dick and Harriet, three main or only earners in households located in England. Say that, respectively, they buy an average house at the average age for a first-time buyer in three different years – 1995, 2010 and 2025. Now, in those years, Tom, Dick and Harriet are likely to be 29, 31 and 34, respectively, with typical pre-tax earnings of £16,000, £26,000 and £38,000. And in those years the average house cost roughly £54,000, £167,000 and £268,000. In other words, Tom bought at about three-and-a-half times his salary; Dick at more than six times; and Harriet at the multiple of seven we have mentioned.

If we now ask what ages Tom, Dick and Harriet will be when their mortgages are finally paid off, the answers are 54, 61 and 69. Tom took the 25-year mortgage that was then standard, and was clear by his mid-fifties. Dick, on a 30-year term, will not finish until he is past 60. And Harriet, on one of the 35-year terms now taken by most first-time buyers, will not make her final payment, if she can, until she is 69 – past the state pension age. Stretch her loan to the 40-year maximum and she clears it at 74. This is not conjecture: Today, new mortgages cluster around borrowers who will be 69 or 74 years old when they finish paying their dues.

These rough figures point in an unmistakable direction. Without growth, Britain is working up a mixture likely to prove explosive – especially among young people, for whom ‘generation rent’ could all too easily morph into ‘generation tent’.

What to do

We need to abolish the Town and Country Planning Act. We need to hold competitions for house designs to first gain ‘type approval’, a standardised certification process used to pre-approve specific building designs and modular structures, and then build nearly anywhere. Some planning law will be important – for example, to ensure that householders have enough space to swing a cat. But the Green Belt, nutrient neutrality and all the rest of the green tape should go. As for new towns, a new act of parliament should annul all restrictive legislation that relates to them, specify the broad building and planning criteria they must meet, and then let both private and public builders get on with the job.

Instead of an obsession with targets, planning law and process, the authorities need to become newly serious about price-cutting innovation in the process of housing production, and about innovation in the final product itself. Britain’s homes need to be cheaper and better. One way toward raising productivity levels, as the Mace Construct report makes clear, is to build large-scale housing developments – and to raise the logistics of getting materials on-site up to the levels reached by logistics at Amazon.

But there is another way. In America, in 2025, 147 plants manufactured more than 100,000 homes, employing more than 60,000 workers. For long, thin, small ‘single section’ homes, average prices were $95,000; for a multi-section home, $156,000. In, too, the US Department of Housing and Urban Development proposed to liberalise the kinds of designs it would allow to be manufactured, to provide buyers with still more of what Donald Trump calls ‘price relief’.

It won’t be easy making a success of manufactured housing in the UK. But ventures in modular homes so far, by firms such as Legal & General and Ilke Homes, have only collapsed because the housing bureaucracy we have described allowed them no guarantee of land and orders to keep their production lines moving. That’s a planning failure, not an engineering one. Indeed, with robotics and Labour’s beloved AI, house-making should be easier than ever in future. And among many improvements in product quality, manufactured homes should be able to withstand heatwaves and cold winters better than Britain’s current housing stock can.

Andy Burnham claims to want to lower the cost of homes, and to make more of them. But all the signs are that he and the British state will concern themselves more with targets and nutrient neutrality. The longer that goes on, the more housing looks set to prompt populist upheaval – the kind of dissent that is ridiculed and cancelled, but only because it proposes a better future.