Who is to blame for the UK’s housing crisis?

The finger has been pointed at many possible reasons, but who or what is responsible for the current state of the country’s housing shortage?

Planning

Richard Carr New Build Homes

Who is to blame for the housing shortage?

Poole-based property developer Richard Carr has worked in the industry for 30 years and has seen just about everything. He’s currently managing a number of high profile developments in the south of England including the £100m redevelopment of Salterns Marina in Poole.

New analysis produced by the London School of Economics has pointed the finger squarely at the government for the housing crisis, explaining that decades of planning policies that constrain the supply of houses and land and turn them into something like gold is to blame.

Richard Carr does believe that the planning system needs reform, however he doesn’t blame local planning authorities as he believes they have been under resourced for many years.

Foreign investment

Paul Cheshire, Professor Emeritus of economic geography at the London School of Economics, told propertywire.com that the problem isn’t foreign speculators buying luxury flats, which lie empty as an investment. The simple fact is that not enough homes have been built in the past 30 years.

He also believes that homes have been built in the wrong area. For example, twice as many homes were built in Doncaster and Barnsley between 2008 and 2013 compared to Oxford and Cambridge. The demand for homes was and still is far greater in the south and pace of production hasn’t kept up with demand.

  • From 1969 to 1989 over 4.3 million houses were built in England but from 1994 to 2012 there were fewer than 2.7 million.

“This is what explains the crisis of housing affordability. We have a longstanding and endemic crisis of housing supply and it is caused primarily by policies that intentionally constrain the supply of housing land. It is not surprising to find that house prices increased by a factor of 3.36 from the start of 1998 to late 2013 in Britain as a whole and by a factor of 4.24 over the same period in London,” said Cheshire.

Government

Too many barriers are being put up by the government which is preventing housebuilding in the UK, Richard Carr believes. From property taxes such as s106 payments and Community Infrastructure Levy to the insistence on using ‘development control’ which requires any legally defined development to get specific permission from a local planning authority rather than a rule-based system like in continental Europe, the government has made building tougher.