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Lack of land could cause 258,000 housing shortfall

The government needs to double the number of new homes being built per year to 250,000 to have any chance of reining in the looming housing crisis

However the Coalition’s efforts could be hampered by a lack of available land, according to two new reports released today.

The independent studies, by the GMB Union and planning consultancy Turley, claim the UK needs 250,000 homes each year to stem price inflation, while Local Planning Authorities (LPAs) are facing a supply constraint due to a lack of suitable land.

Figures provided by the GMB show that average house prices stand at £172,069 or 6.3 times the average wage of £27,193 for full time workers in England and Wales.

In London the differential is more than double the national average, with the average London home costing £435,034, or 13.3 times the average wage of £32,800. In the London Borough of Kensington and Chelsea now stands at 27.8 times average earnings of those living in the borough. Homes in Westminster are 23.8 times earnings and Camden 19.9 times the average wage.

The prudent level of borrowing for a home is considered to be four times average earnings.

The figures come as new analysis by planning consultancy Turley show that England and Wales could face a shortfall of 258,000 homes over the next four years due to a lack of available land to build on.

The report shows that Local Planning Authorities (LPAs) have land available for 939,000 homes out of the estimated 1.197million needed between April 2013 and April 2018. Turley reported that 211 of the 318 LPAs in England and Wales faced a shortfall in available land.

Turley director John Acres said: ‘Local authorities are required under the National Planning Policy Framework (NPPF) to identify and update annually a supply of specific deliverable sites sufficient to provide five years’ worth of housing against their objectively assessed housing requirements. Our research and report shows that at least 211 of England And Wales’ 318  planning authorities fall short of their five year land supply targets.’

New planning policies may finally be helping to ease supply constraints however. The Home Builders Federation’s (HBF) latest Housing Pipeline report shows that planning permission for 43,926 homes was granted during Q1 of 2014, which is the highest level since 2008. The total permissions in the 12 months to Q1 now stood at 177,731.

Stewart Baseley, Executive Chairman of the HBF, said: ‘All political parties and commentators now agree we are facing an acute housing crisis that will only be solved by building substantially more homes.

‘Existing sites are being built out quicker and we now desperately need new sites to come on stream if we are to see increases in house building sustained. All builders are now identifying the planning system as the biggest threat to further increases in supply.

‘Too many sites with outline planning permission are now stuck in the planning system awaiting final permission to start on site. We estimate there could be as many as 150000 plots across the country in such a position.’

According to the Office of National Statistics, annual housing starts totalled 133,650 in the 12 months to March 2014, up by 31 per cent compared with the year before but still only around 53 per cent of the estimated 250,000 needed annually.

Last month a number of high-profile economists and business figures from the Bank of England to the International Monetary Fund identified the lack of new homes as one of the key issues facing the UK economy. Bank of England governor Mark Carney said that the housing market posed the biggest risk to Britain’s economic recovery as new homes drives up prices.

Readers' comments (2)

  • Does it matter how many home we built if they are going to get bought up by the over sea investors for their holiday homes. How is that going to help the Londoners?

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  • Would be interesting to see the figure of how many apartments were bought by people who actually lives in London and those living over sea. Say Battersea. Any one has a figure?

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