Lyons housing review shines light on UK housing shortage and the need for action

Peter Campbell

By 2021 the UK will have a housing gap of £185bn, the equivalent to 886,000 households, or a city twice the size of Birmingham, explains ACE policy manager Peter Campbell.

The Lyons Review on Housing published yesterday is a welcome addition to the debate, and rightly recognises the need to build more, faster. Some 243,000 houses will need to be built per annum if the UK is to meet the growing demand, a figure close to that identified by the Association for Consultancy and Engineering in its report The Housing Gap. If left unchecked, this gap will hit 886,000 by 2020, or a city twice the size of Birmingham!

A number of ACE’s recommendations, such as putting local housing plans on a statutory footing and empowering local authorities to use the uplift in property values generated through development were included in the final document.

"Several crucial areas of the review are lacking in the necessary detail that would ensure clarity about how they would function"

These will go some way to ensuring delivery takes place and that a key objection from local communities where development is proposed can be overcome. There are a number of areas, however, in which Sir Michael could, and should, have gone further.

Several crucial areas of the review are lacking in the necessary detail that would ensure clarity about how they would function. This includes the recommendations regarding how the uplift mechanism will work in practice, as well as what kind of reforms the Community Infrastructure Levy will undergo should Labour take office in May next year.

The real risk here is that the measures, which are designed to free up the release of land and reduce uncertainty by calming the opposition to new developments, will actually increase uncertainty as industry lacks the information it needs to prepare for changes to the system. Ultimately, this could have the exact opposite effect on the numbers of houses built and see reductions as developers hold off on delivery until clarity is forthcoming.

As far as the uplift mechanism works, ACE has proposed a potential solution in the follow-up to its Housing Gap paper, Revolutionising Housing that will enable local authorities to capture the increase in value and use it to fund infrastructure development concurrently with new housing.

Through an early agreement with the landowner to sell for a share of the uplift and intelligent use of data that shows how land values increase with development, local authorities could leverage financing for the improvement transport and utilities connections.

ACE will continue to work with all the political parties on their proposals to help meet the housing gap in the coming months and beyond the 2015 General Election. In the end, this engagement is what will ensure we have the best chance of building the homes we need.