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How Many New Homes Do We REALLY Need To Build?

How Many New Homes Do We REALLY Need To Build? Hello everyone, I hope you are well. In today’s post, I will be sharing a guest post from Ritchie Clapson, CEng MIStructE, co-founder of propertyCEO. Ritchie will explore the question, ‘How many new homes do we really need’? Over 540,000 households had homeless people in 2018/9, and 1.6 million couldn’t afford to rent or buy a home. More new homes are needed, but accurately determining demand is complex. The Government aims to build 300,000 new homes yearly, but it’s unclear if this figure is accurate.

How Many New Homes Do We REALLY Need To Build?

The UK is not building enough new homes, but how many do we need? Determining the accurate demand for new homes proves to be a complex task. Various metrics provide different perspectives, adding layers of confusion. It may help to know how many people want to rent or own a home but can’t. According to the Government’s English Housing Survey of 2018/9, the numbers are significant. Over 540,000 households reported having someone living with them who would otherwise be homeless, and 1.6m households reported having a concealed household (i.e. an adult who wants to buy or rent on their own but who can’t afford to do so).

Lichfields projected that 389,000 new homes need to be built annually to house concealed and organically formed households, exceeding the government’s target of 300,000. The housing charity Crisis conducted a similar study and estimated that we needed to build 340,000 new homes yearly to make a 4 million home shortfall within 15 years.

Where Did The 300,000 Number Come From?

If you check the Commons Library online, you’ll see the 300,000 number referred to as an ambition. The House of Commons Committee of Public Accounts had a hard time obtaining explicit calculations, and the best answer they received was that they based the figure of 300,000 on several studies, with at least one dating back to 2004.

Strategic Land Group issued a report in 2023 which considered several different data points. One often-cited source is the Office of National Statistics, whose most recent survey projected that 160,000 new households would form annually until 2028. The ONS’s figure is based on the actual availability of new homes, so if we built more new homes, the ONS’s projection would be higher, so using their number as a basis for the new homes requirement doesn’t work.

Another reference point comes from the Centre for Cities, which produced a report in early 2023 which calculated that the UK had a residential housing shortfall of 4.3m homes. Interestingly, they maintain that the decline in housebuilding can be traced back to 1947. Housebuilding rates in England and Wales have dropped by over a third after introducing the Town and Country Planning Act 1947, from 2 per cent growth per year between 1856 and 1939 to 1.2 per cent between 1947 and 2019. They report that we would need to build at a rate of 654,000 new homes annually to make up the deficit within the next decade.

Even if we accept 300,000 as being accurate (or as good a place as any to start), we don’t necessarily have a clear idea of what that means. To give you a way to imagine how big an ask building that many homes each year is, Wales has around 1.3 million households, so over four years, we would add another Wales every time a World Cup comes around. Leeds has about 350,000 households. We should be building (pretty much) a new Leeds every year—no small feat.

How Many Houses Have We Been Building?

Over the last twenty years, we’ve averaged less than 190,000 new homes per year, and the most significant number we managed was 243,000 in 2019/20. So even a step up to 300,000 would mean building over 20% more than in our best recent year’s production. Interestingly, Lichfields decided to tot up the number of new homes included in every council’s Local Plan across the country, which turned out to be 216,000. Shockingly, we would need to increase production by 40% to get from the number of new homes that local councils think should be built to where the Government wants us to be – a telling gap.

Issues Beyond Bricks And Mortar

Plenty of scale home builders would be delighted to build new housing estates and towns up and down the country. But most people don’t want new houses built anywhere close to their homes. According to Statista, England’s population density is 434 people per square kilometre. There aren’t any large tracts of land going spare in England where you could build a new county without anyone noticing.

We will need to build next to where many people are already living, which will be massively unpopular. Proposed planning reforms were cited as a critical reason for the Government’s defeat in the Chesham and Amersham by-election. NIMBYism persists.

Thinking Differently

There is one area where the Government has found a way to push things forward: the conversion or redevelopment of unused commercial buildings (a.k.a. brownfield land). Countryside charity CPRE’s State of Brownfield 2022 report suggests that brownfield land for up to 1.2m new homes is dormant in England. They also cited research that suggests that housing developments on brownfield sites are completed six months more quickly than those on greenfield land.

The significant advantage of these projects is that they will be connected to existing infrastructure. And from a political perspective, brownfield development isn’t a vote loser like greenfield is. As the economy has evolved, so have our retail and business premises requirements. We no longer need much of our current commercial space, and the number of unused brownfield sites increased by 30% between 2018 and 2022. And recycling empty buildings is usually a vote-winner – after all, who wants a derelict factory on their doorstep or a dead high street filled with empty shops?

But if you thought brownfield redevelopment was a slam dunk that automatically gets us four years of new housing, think again because most brownfield land is in the form of relatively small buildings and plots that don’t appeal to the more prominent home builders. Persimmon and co-build many new houses on large empty fields using existing designs. A one-off, smaller conversion project isn’t in their repertoire. Instead, it falls to the smaller SME developers to take on these projects, and luckily, small-scale property development is currently enjoying something of a resurgence, with many first-time developers entering the market.

Many are existing landlords who have woken up to the fact that the buy-to-let market is a shadow of its former self and that even doing something as simple as putting flats above a shop can unlock six-figure profits. The Government has helped by creating increased permitted development rights that make it easier than ever to convert these buildings. But SME developers only account for 12% of the country’s housebuilding, down from 30% in their heyday.

Conclusion

Considering various projections and challenges, the Government’s target of 300,000 new homes per year looks to be on the light side. The issue’s complexity calls for a nuanced approach that involves meeting targets, addressing public sentiment, and leveraging alternative solutions, such as brownfield redevelopment. Local and national Governments must do even more to ensure first-time property developers can exploit brownfield opportunities.

I hope you enjoyed that.

Talk soon

Ritchie Clapson propertyCEO (1) 1.35MBAbout The Author

Ritchie Clapson CEng MIStructE is a highly experienced property developer with over 40 years of industry expertise. He is also an author and industry commentator, as well as a co-founder of the leading property development training company, propertyCEO. Ritchie is committed to resolving the shortage of housing in the UK and empowering ordinary people to become part of the solution. To discover how you can get into property development, visit www.propertyceo.co.uk

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Working with Strong women, I help empower women not to give up on their goals and find true happiness within themselves. #lifestyle #womenempowerment #selfcare

6 Comments

  • Kimberley Asante

    Your post on “How Many New Homes Do We Really Need to Build?” on Life With Sonia delves into a crucial topic that impacts communities and urban planning. By addressing the question of housing needs, you provide readers with valuable insights into the challenges and considerations involved in meeting the demand for new homes. Your analysis of factors such as population growth, affordability, and sustainability adds depth to the discussion, encouraging readers to think critically about housing policies and solutions. Keep up the excellent work in exploring important societal issues and sparking meaningful conversations!

  • angie

    oh wow the government going into building houses. Sounds like they are striving to overdue it just like they have done many different things. To want to build more houses than have been built in the past 20 years someone is thinking big. Likewise I do agree that the problem of homelessness is bad as well.

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