‘We shape our buildings,” Winston Churchill said, “and afterwards our buildings shape us.” He was speaking in 1943, after parliament was bombed and had to be rebuilt. Now parliament will again be rebuilt, figuratively, and whoever leads it will decide how the homes built across Britain will shape us all.
Odds are it will be the self-confessed “yimby” (yes, in my back yard) Keir Starmer, unless Rishi Sunak surprises us all. On both sides, talk is big on building. But what do the numbers really say? Are enough homes being built in the places where they are needed?
The short answer is: mostly not.
The long answer gets technical, but has very real consequences, whether that’s for the 42 per cent of adults under 34 who still live with their parents, or those homeowners — pilloried as nimbys (not in my back yard) — who are frequently irate at the invasion of cookie-cutter box homes.
The Conservatives never hit their target of building 300,000 homes a year by the mid-2020s. However, Sunak has claimed victory on a manifesto pledge to build one million homes in five years — and the data backs him up: 935,204 net additional homes were built over four years to March 2023, with figures for the past year (not yet out) due to push that figure past the million mark. The Labour Party is upping the ante with a promise to build 1.5 million homes in five years.
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Beyond the headline figure, the truth is more complex because the reality is that many of these homes are being built in the wrong places. More than half of local planning authorities in England (168) built fewer homes in the past three years than were needed, data from Lichfields planning consultancy provided for The Sunday Timesshows. Yet 37 authorities built more than twice as many homes as they needed.
Meanwhile, a third of councils (100) are being penalised because they failed the government’s housing delivery test. To pass the test, at least 95 per cent of the area’s target number of homes must be built. This target is still usually lower than the area’s housing need.
Sixty authorities fell so far short of their target — delivering fewer than 75 per cent of homes — that they lost sway over local planning decisions. This, at least in theory, is the biggest stick that the government can use to hit nimby councils until they permit enough homebuilding. It subjects the underperforming authorities to a “presumption” that makes planning approval more likely.
The trouble is, the big stick often does not hurt. If an underperforming council has green belt — as two thirds do — this land protection usually trumps housing need, and so new homes are blocked in spite of the presumption.
However, green belt is also not necessarily the leafy idyll of popular imagination. It is a collar around urban areas where building is banned to stop sprawl. Some parts are wasteland, such as an infamous derelict petrol station in Tottenham Hale, north London, where affordable homes could not be built because of its green belt designation. Labour’s plan to allow building on ugly green belt, classed “grey belt”, would unlock homes on such sites.
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• Labour to create ‘grey belt’ to meet housing targets
Fewer homes tend to be built where house prices are highest, mainly because it makes less economic sense for developers to build there. The 60 worst-performing councils, where the presumption applies, are mainly in the southeast (20), east of England (13) and London (12). Bottom of the list is Epping Forest in Essex, which delivered only 30 per cent of its required housing, followed by Southend-on-Sea (31 per cent), also in Essex, and Epsom & Ewell in Surrey (32 per cent).
“Planning has always been an incredibly contentious issue — and sadly, it’s most contentious in the areas that most need housing,” says Robert Colvile, director of the Centre for Policy Studies think tank.
“London and the southeast are the areas where housing pressures are by far the highest, reflected in the extraordinary rises in house prices in those areas. Yet they’re also where the locals tend to be most opposed to new housing,” he says.
Conversely, the 60 overachieving areas with the highest housing delivery tend to be in the northwest (19) and Yorkshire and the Humber (10), where prices are lower. Richmondshire, in North Yorkshire, tops the chart: the council built 1,562 homes, which exceeded its low requirement of 29 by more than 5,000 per cent. These councils may see housing development “as a way to lever in investment and improve their housing stock quality, culminating in a pro-development stance”, Edward Clarke, an associate director at Lichfields, says.
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Two thirds of councils (206) have local plans that are out of date. This is “the most striking thing” about the Lichfields data, says James Vitali, head of political economy at the think tank Policy Exchange. “Our current system is predicated on local authorities giving strategic direction about housebuilding in their area, but two thirds of councils are failing to do this properly. Any government serious about increasing the delivery of new homes must tackle this, and prevent councils from dragging their feet.”
Also, new homes carry a premium that is higher than ever. The average new-build home (£389,000) now costs 41 per cent more than an existing one (£276,000), the UK House Price Index shows. The gap has widened from 14 per cent in 2010. Regionally, average new-build prices range from £266,000 in the northeast to £564,000 in London.
Another impediment to development is that big builders dominate housebuilding. Of the 158,190 new-build completions last year, 39 per cent were built by just eight companies, our analysis of the housebuilders’ annual results found. They are: Barratt, Bellway, Berkeley, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Vistry.
And then there’s the pace of construction. Planning permissions have shifted towards fewer, bigger sites. But these take longer to build out. For schemes with more than 2,000 homes, it takes an average of 6.7 years from handing in the planning application to completing the first home, plus another 11-20 years to finish all the houses, a recent Lichfields study found.
And the outlook is gloomy. “Amid an acute housing shortage, housebuilding is falling sharply and the number of planning permissions being granted is at a record low,” says Steve Turner of the Home Builders Federation. The industry lobby found that about 265,000 homes were granted planning consent in 2023, down 19 per cent in a year.
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After investigating housebuilding, the Competition and Markets Authority (CMA) found in February that the number of new planning permissions “has at no point been significantly above 300,000, indicating that insufficient new permissions are being granted to support the provision of 300,000 new homes per year”.
The planning system is a “very significant driver of negative overall outcomes in the housing market”, the CMA found. “The time, expense and uncertainty associated with negotiating the planning system is exerting a downward pressure on the number of planning permissions sought and granted each year. This is contributing to a situation where not enough homes are being built where they are needed, and pressures on affordability continue to grow.”
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Over the past two years, the Conservative government caved in to rebel MPs who argued that housing targets forced through development against the wishes of local people. In December the targets were watered down to bite even less. This is “having inevitable consequences and local authorities are now planning to build fewer homes”, Turner says.
Since Michael Gove, the housing secretary, first mooted dropping mandatory targets, 64 local authorities have withdrawn their draft long-term plans for new homes. With the prospect of a pro-development Labour government looming, 13 councils have re-submitted their plans with lower targets.
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As a result, these areas will build 40,000 fewer homes in total than they need over the next 15 years, Turner says. Whoever wins the election, “We urgently need to see the damaging policy changes reversed,” he adds.
