House building in England: explained

There’s clear evidence that not enough houses are being built to meet current levels of demand. During the recent general election, all of the major parties put forward policies to build more houses. In this explainer we’ve looked into what they said, and how those promises look compared to the available evidence on housing need.

Housing is devolved to Scotland, Wales and Northern Ireland, so the UK government is only responsible for housing in England. That’s what we’re focusing on in this explainer.

How many new homes do we need?

It’s difficult to determine the exact number of new homes needed in England. 

A growing population with increased life expectancies means more homes are needed every year. For example, the number of people aged 85 and above is projected to more than double over the next 20 years, from 1.4 million in 2021 (equal to 2.4% of the population) to 2.6 million in 2045 (about 4.3% of the population). And more specialist, accessible accommodation will be needed to cater for the elderly population.

There’s also a backlog of housing need to consider as well. This refers to people currently living in unsuitable accommodation which could be overcrowded, unaffordable or not accessible. A report published in 2018, commissioned by the trade association for housing associations the National Housing Federation (NHF), and the homelessness charity Crisis, estimated there was a backlog of housing need of four million households in England.

The government currently estimates that 300,000 new homes are needed each year. However, some suggest that this number could be higher. One 2019 report for the NHF and Crisis estimated around 340,000 new homes need to be supplied in England each year, while Financial Times analysis from earlier this year estimated the number of new homes needed would be 421,000 a year, or even as high as 529,000 per year if current net migration levels hold.

The new Labour government stated in its 2024 manifesto that its goal would be to build 1.5 million homes across the next five years, the equivalent of 300,000 a year on average. Rachel Reeves reiterated that commitment in her first speech as chancellor.

What are the consequences of not supplying enough new homes?

A lack of housing means people are forced to reside in unsuitable accommodation. The English Housing Survey, a national survey of people’s housing circumstances and the condition and energy efficiency of housing in England, found that, in 2022, there were 3.7 million households (15% of all households in England) living in a home that fails to meet the ‘Decent Homes Standard’. 

The Decent Homes Standard means a dwelling must meet the statutory minimum standard for housing, provide a reasonable degree of thermal comfort, be in a reasonable state of repair and have reasonably modern facilities and services.

According to long-term trends, the cost of buying a home is increasing faster than earnings. According to the ONS, in 2023 full-time employees in England could expect to spend around 8.3 times their annual earnings buying a home. That’s up from 6.8 times their earnings a decade prior.

And more families in England and Wales had adult children living with them compared with a decade earlier, according to the 2021 Census, with most people in their early 20s living with their parents in what the ONS called a “continuing trend rather than a result of the pandemic”.

How many homes are currently being built?

The number of new homes supplied per year, or ‘net additional dwellings’, is not the same as the number of houses built. 

Net additional dwellings includes new builds, homes that are created by change of use (for example a shop into a house), conversions (for example a house into flats), and other changes to the dwelling stock such as caravans or houseboats. Demolitions then get taken away from this number.

The current supply of new homes has been increasing over time but it has not yet hit the previous Conservative government’s estimate of 300,000 new homes needed per year. Around 234,400 new homes were supplied in 2022/23. The supply of new homes has increased year-on-year from a low of 125,000 in 2012/13. It reached its peak in 2019/20 with 243,000 new homes. In part due to the pandemic, the number of new homes did decline in 2020/21 but rose again in 2021/22.

The Conservatives’ 2019 manifesto pledged to build "300,000 homes a year by the mid-2020s" and to build at least a million more homes by the end of the parliament. While the latest figures for 2023/24 haven’t been released at the time of writing, the Department for Levelling Up, Housing & Communities has used existing data to estimate that 1,001,000 new homes had been supplied between 17 December 2019 and 19 May 2024. This estimate won’t be confirmed until the official number of net additional dwellings are published later in 2024. 

What is stopping more new homes from being supplied?

According to analysis by the House of Commons Library last year, commentators agree there is no ‘silver bullet’ to increasing the housing supply, and there are a range of factors at play, from planning laws to land prices.

A report by the Competitions and Market Authority, published in February 2024, found that “the planning system is exerting a significant downward pressure on the overall number of planning permissions being granted across Great Britain” and that, over the long term, “the number of permissions being given has been insufficient to support housebuilding at the level required to meet government targets and measures of assessed need”. 

Labour said in its manifesto that their government would make changes to the planning system by updating the National Policy Planning Framework “to undo damaging Conservative changes, including restoring mandatory housing targets”.

There are other potential barriers too. Developers may face opposition to house building from local communities. Moreover, the price of land can also make house building difficult, and there’s evidence that high prices can encourage smaller homes to be built and make it difficult for small and medium-sized developers to compete for space.

The construction industry also faces recruitment issues and skills shortages. A report from the Construction Industry Training Board in May 2024 stated that the industry would need to recruit 50,300 extra workers per year by 2028 to meet UK construction output.

The government’s Employer Skills Survey in 2019 found that construction was among the industries where a lack of skills were felt “most sharply”, with 36% of all construction vacancies proving hard-to-fill due to applicants lacking appropriate skills, qualifications or experience.