New National Housing Service could solve UK’s growing housing crisis

Radical “Big Idea” by consultant Arcadis proposes new 30 year strategy to deliver 1.5M homes with a step-change in delivery to generate 97,500 new jobs and £1.3 trillion boost to UK GDP 

Antony Oliver
17 November 2015

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Solving the housing crisis: The Big Idea

A politically neutral ‘National Housing Service’ is the key to solving the UK’s on-going housing crisis and help to deliver an additional 1.5 million new homes over the next 30 years, according to a new report by consultant Arcadis.

The radical plan sets out what it describes as a “step-change” in housing delivery, ramping up the current historically low levels of building to generate 97,500 new jobs and £1.3 trillion boost to UK GDP and returns to the taxpayer worth £38bn over the next three decades. 

“With the UK population projected to increase by an additional 10 million in the next 25 years, the private sector alone will never be able to meet the required number of new homes,” Simon Light, Arcadis

The report “Solving the housing crisis: THE BIG IDEA” lays out a  14-step plan of action, including the new delivery agency which would be tasked with tackling the triple threat of “falling tenure diversity, constrained supply and a growing skills gap” across the sector. 

“It is clear that the current housing model isn’t working,” said Simon Light, UK Client Development Director at Arcadis. “From the widely reported struggle of first-time buyers trying to get on the ladder, to a serious lack of housing choice and availability, the housing crisis has never been more pressing. 

“With the UK population projected to increase by an additional 10 million in the next 25 years, the private sector alone will never be able to meet the required number of new homes,” he added. “We have seen the focus currently being given to the country’s infrastructure, but now is the time to apply an even bigger ambition to address the housing crisis. The only way to meet demand is through a strong public-private, direct delivery model.” 

The report highlights a “perfect storm” affordability, skills and supply levels, pointing out that current new build outputs need to rise from the current 150,000 new homes a year to at least 240,000 to meet the demands of first-time buyers and established homeowners.

Key problems identified include:

• Dominance of “homes for sale” over other tenures in an inflationary sales-value market has resulted in substantial affordability challenges, rendering the market inaccessible for many would-be homeowners;
• Private housebuilders are now the dominant providers of new homes into the market and have no incentive to increase supply beyond a certain point, if it damages prices;
• Lack of capacity and skills shortages in the house building industry have minimised the physical ability to achieve the required outputs.

A ‘National Housing Service’ would alleviate pressures on housing supply and affordability, produce employment and skills opportunities and ultimately create higher levels of economic productivity and greater international competitiveness,” Simon Light.

The new ‘National Housing Service’, says the report, is key to a sustained increase in housing supply in England over a sustained period and, as an independent and politically neutral agency, could deliver up to 1.5 million additional new homes over the next 30 years. 

Creation of “a self-sustaining, non-tax payer funded direct delivery model” it adds would “unite the public and private sectors in harnessing the funding, resource and leadership necessary to increase housing output”.

The agency would use the difference between the sale price of a property, and the cost of development to create and recycle a surplus to develop more homes.  It estimates that the agency would be self-sustaining within three parliamentary cycles. 

“A ‘National Housing Service’ would alleviate pressures on housing supply and affordability, produce employment and skills opportunities and ultimately create higher levels of economic productivity and greater international competitiveness,” added Arcadis’ Light. 

“It would also be wholly supportive of the continued growth of private sector output through the free market mechanism. We are absolutely passionate about improving quality of life for people across the country and are confident that our proposal will make a tangible impact to the UK.”