Why do we need new homes?

Britain’s chronic home shortage is well publicised and the solution, touted by the government and house builders, is to build new homes. The Government is releasing its own land for development (read our budget article), whole new towns are being planned and high value schemes are in action, including the New Homes Bonus, to bring about the new homes that Britain so desperately needs. But why does Britain need them and are brand new homes the solution?

  1. Single Occupation

Whereas historically families would live under one roof, grandparents through to grandchildren, the trend today is towards single occupation. This might be put down to a mix of high divorce rates – the UK has the fourth worst rate in the world at 3.08 per 1000 people – and a cultural shift towards living on ones own and ‘flying the nest’ at the earliest available opportunity. Of course, under-occupation, accentuated by single occupation and some of the points below, is a much publicised problem, not least by us.

  1. Life Expectancy

People are living much longer; the UK’s life expectancy is now up to 78.2 for males and 82.4 for females. Longer lives mean more pensioners and thus greater pressure on housing provision particularly as the trend away from living with your grandparents is now so strong.

  1. Second Homes

Second homes across Britain lie dormant for months of the year, unoccupied when thousands of potential homeowners need to make their first steps onto the property ladder. The total stood at 246,494 in 2011, according to analysis for primelocation.com, and looks set to increase again this year.

  1. Immigration

The most recent analysis of immigration showed that a net migration into the country of around 250,000 people, the equivalent of a City the size of Wolverhampton, occurred last year, well above the Government’s target of 100,000. The figures have been attributed to less people leaving and an influx of polish workers entering the country. Whatever the reason, immigration puts huge pressure on the housing supply, particularly affordable housing.

  1. Investment Properties

The number of buy-to-let properties rose substantially in 2011 according to the Council of Mortgage Lenders, with around 140,000 purchases in total. This puts upwards pressure on house prices, making them less affordable, whilst removing opportunities for potential homeowners to get on the ladder. The effect has been to weaken the position of potential purchasers and make homeownership less obtainable.


The problem is there for all to see and the reasons are clear, but the solution is less clear-cut. Housing associations and house builders are pushing to build more homes, but many argue that the more pressing priority, rather than using up green spaces, is to bring back into use the streets of empty houses plaguing Britain’s major cities.

It is estimated that 700,000 homes lie dormant across the country, a figure which, if brought back into the market, would negate the detrimental effects of all of the above points. The Government has a £100m funding scheme for projects bringing empty homes back into use, but critics argue this is much too low and that its effects are negated by incentives to construct new homes, like the New Homes Bonus.

Of course, house builders are private companies and are interested fundamentally in profit. Whilst regeneration and refurbishment are better value for money, creating many more new homes per pound, they provide less opportunity for large-scale profit and thus will always fall by the wayside until it is in the interest of house builders to do something about it.


Comment on this article