The Commons: The UK’s Housing Market Emergency
James Feaver
Over the last few years, the UK has experienced an escalating housing crisis, with the BBC reporting in February 2020 that the gap between the housing stock and number of houses needed had exceeded a million homes. On top of this, 3.5 million homes were in a ‘non-decent’ condition as of 2022, and many are being pushed into the under-regulated, overpriced private rental market. Years later and this problem has still yet to be properly addressed, with average house prices reaching historic highs and wage growth not meeting the same rate of increase according to the Office of National Statistics.
House price sales compared to five years’ worth of earnings, England and Wales
(Graph here: Housing affordability in England and Wales - Office for National Statistics) Consequently, more and more young brits are living with their parents, with half of all people moving out by 24 years old in 2024. Comparatively, in 2011 this figure stood at 21. There are many reasons for this, including more young people staying in education, but more prevalently is the increase in house prices.
So how did the UK get itself into this mess? Home ownership has played a big part in UK politics since the 1980s, when Margaret Thatcher introduced her ‘right to buy’ scheme. This government program made it so those living in council homes had a right to own the property they lived in, giving tenants substantial discounts to encourage them to buy the property from the council. It majorly achieved its aims, with 1.7 million homes being sold by 1997 and earning the treasury more than £47Bn in sales. However, once these homes entered the private market, they were not returned to the council. This resulted in a significant decrease in the number of council homes available, as Thatcher prevented local authorities from spending the extra revenue on building new council homes. When right to buy was introduced in 1980, there were around 7 million social houses, with the vast majority being council owned. By 2022, this had fallen to 4.4 million, with only 1.6 million being council owned and the rest being managed by ‘for profit’ providers. Consequently, the waiting list for social housing is high, standing at over 1 million at the start of 2024.
The private housing market has not fared much better for those looking to get on the housing ladder. Due to a lack of house building over the past half-century, average house prices in real-terms have risen five-fold since 1970. Recent governments have also not been building the number of houses necessary to keep up with predicted demand. England needs roughly 300,000 houses per year according to the Department of Leveling Up, Housing and Communities in 2024, which is 70,000 more than was built in 2022/23 (net additional dwellings). There are a number of factors that contribute to this increased demand, including longer life expectancy, increasing population numbers, and a decreasing number of people in each household. Increased demand and limited supply inflate prices, making it more difficult for young people to save for their first house, forcing many into the private rental sector. The rental market in the UK has gotten significantly bigger over the past two decades. 2.8 million people were renting in 2007, compared to 4.5 million in 2017. Unfortunately, the rental market has not been spared from the housing crisis. Average rental prices in England have increased by 8.7%, peaking at £1,348 per month in the 12 months to October 2024, all whilst living conditions for tenants have declined.
The new Labour government have developed a number of plans to try and improve the housing situation. Their key pledge announced in their 2024 manifesto was to build 1.5 million new homes in England by the end of the parliament in 2029/30, many of which would be classed as ‘affordable housing’. This would put them on track to meet the 300,000 homes per year needed. Alongside this, the government are introducing plans to make it easier to “get Britain building”. This includes building on what the government calls ‘graybelt’ land, which is land previously designated as environmentally important and protected from development or ‘greenbelt’ land. By reclassifying certain parts as graybelt, the government intends to revitalize house building. It is hoped that by significantly increasing the housing supply, it could bring down spiralling prices and make it easier for first-time buyers to get on the housing ladder. It is worth noting that since housing is a devolved power, Scotland, Wales, and Northern Ireland will not benefit from this plan.
The government are also attempting to tackle some of the rental sector issues by introducing the ‘Renter’s Rights Bill’, which would take away a landlord’s ability to remove a tenant through a ‘no fault’ eviction notice. The bill also intends to bring down rent prices by ending “the unfair practice of pitting renters against each other in bidding wars.” Furthermore, it intends to raise standards in the rental sector by extending ‘Awaab’s Law’, which currently only protects those living in social houses from dangerous conditions, to the private sector.
It remains to be seen how effective the government’s measures will be, with the location of 1.5 million homes coming under significant scrutiny, and the Renters Rights Bill currently in the report stage in the House of Commons. The current bills also do not address the outdated and needlessly complicated leasehold system in Britain. The government have committed to addressing it after a series of consultations and reviews, but as of today, while there seem to be steps in the right direction it is remains to be seen whether this will have the impact desired to solve many of the UK’s housing problems.
