Solving the Housing Crisis – What’s in the way?

In our previous article, When Britain Stopped Building: Our Greatest Economic Blunder, we examined the UK’s history as a housebuilding juggernaut and explored the events that led to the collapse of that system and its consequences. Our old housing policy was one of the great economic and social achievements of this nation, integral to fuelling growth during the golden decades of the 1950s and 1960s. Then we dismantled it, and it has been slow going ever since. Here at The Common Burden, however, we don’t just concern ourselves with how the mess was made, but also with how we clean it up.

As we established previously, Britain in 2025/26 is not dissimilar to Britain in 1946. The Second World War placed Britain in a position where the job market was flooded with an overabundance of untrained workers all in need of jobs and long-term careers, while much of the housing supply had been demolished by bombing. Modern Britain has an excessive supply of unskilled (or more accurately, mismatched) young people in need of work, and a housing supply that is seen as chokingly low. Today’s situation was not brought about by war, but by decades of poor governance; nevertheless, it presents essentially the same challenge. It therefore stands to reason that the solutions that worked eighty years ago could work just as well today.

There is, however, no silver bullet that will solve the housing crisis overnight. It is an objective fraught with challenges and costs, but it is not, as the political class seems to believe, insurmountable. What it does require is that the full depth of those challenges be recognised and accounted for honestly in any serious forward planning. We must also remember that while there are significant similarities between modern Britain and Britain in 1946, there are some key differences.

The mechanisms and tools used by Britain in the 1940s, 50s, 60s, and 70s were dismantled during the 1980s and have never been replaced. The first challenge, therefore, is re-creating the political and bureaucratic machinery, alongside the workforce and supply chain, required to replicate the productivity of that bygone era. At the same time, we cannot ignore that public attitudes are very different from where they stood in 1946, and that housing is far more intertwined with national finance than it once was. Nor can we forget that, unlike in the post-war period, a much larger proportion of homeowners today own their homes subject to mortgages, making negative equity a genuine threat to individual economic stability. Any future system must therefore be palatable to the modern British voter and structured in a way that shields those already leveraged from severe negative impacts.

Despite this, there is a strong and growing sentiment across Britain’s electorate that the housing crisis must be solved. The British public is far more understanding than the media gives it credit for. We are, as a people, willing to make sacrifices when presented with a serious, coherent, and well-thought-out plan.

This article, the second in our series on housing, examines the challenges that any new system of housebuilding will face, and must account for, if the crisis is to be solved without creating new and equally damaging consequences. We divide these challenges into two groups: those that already existed in 1946, and those that are unique to the modern setting.

Let’s get into it.

An Overview

There are many challenges facing housing development and housing policy today, but their importance varies. Our research has led us to conclude that the following issues represent the largest hurdles facing Britain’s housebuilding industry and we have categorised them into those that were also present in 1946:

·       High land costs;

·       High construction costs;

·       Skills and knowledge shortages; and

·       A burdensome and adversarial local planning system.

And those that are novel to the modern era:

·       The lack of direct state involvement in housing development;

·       The financialisation of housing and land.

Before exploring these challenges in detail, however, there are a few factors our research repeatedly encountered that are often cited as sources of delay in the housing industry, but for which we could find no measurable evidence. These claims are that housing production has been significantly slowed by the introduction of health and safety regulations, and that the local planning system is more burdensome than it once was.

We suspect these arguments represent instances of false consensus, but let’s examine why.

When it comes to the assertion that health and safety regulations have slowed housing development, we looked for a correlation between the introduction of new regulations and sustained dips in building output, as recorded in Housing supply: historical statistics for the UK. This data is available via the House of Commons Library and can be accessed by anyone wishing to fact check.

We found little in the way of health and safety or construction regulation during the 1950s and 1960s beyond the post–Second World War strengthening of fire regulations. The first major piece of health and safety legislation we identified was the Health and Safety at Work Act 1974. In the five years prior to the introduction of the Act, the UK built an average of around 320,000 homes per year. In the five years following, that figure averaged approximately 305,000 homes per year. This represents a modest decline, but one that coincides with the first wave of reduced local authority housebuilding in the late 1970s, and is nowhere near sufficient to substantiate the claim that health and safety regulation caused any significant or lasting delay in housing development.

Further building regulation changes followed in 1976 and 1985, neither of which were accompanied by a sustained fall in housing output. In fact, the 1985 regulations were followed by gradual increases in housing development, with private-sector output rising slightly as state-backed building declined. Additional regulations were introduced in 1994, yet once again there was no associated fall in housing production, only a gradual rise in private-sector building that continued until the 2007–08 housing market crash.

In short, we have been unable to find any tangible or significant correlation between the introduction of health and safety or building regulations and a negative impact on housing development rates. The clearest conclusion we could draw is that these regulations reduced workplace injuries and improved the structural safety of homes, but had no material impact either way on production. We suspect this false consensus arises from the shared, subjective frustration experienced by those working within the industry, but it is simply not supported by any objective measurement.

The second common assertion, that planning is more burdensome than it once was, is likewise misleading. The local planning system as we know it began with the Town and Country Planning Act 1947 and remains governed today by the Town and Country Planning Act 1990, its amendments and the national planning policy framework. In structural terms, it is fundamentally the same system now as it was then.

The 1947 Act introduced a number of core principles that still underpin local planning today. First, that development rights belong to the state, not the landowner. Second, that planning permission is granted discretionarily and never automatically. Third, that local authorities hold dominion over that discretion. None of the amendments or replacements of the 1947 Act altered any of these foundational principles.

The subsequent Town and Country Planning Acts of 1962 (which amounted to little more than a housekeeping exercise, consolidating an otherwise cumbersome framework), 1971 (which largely formalised county-wide and local plans and shifted disputes to earlier stages), and 1990 (which mostly formalised appeal and enforcement rights) did little more than modernise language and update guidance. The core principles, and the burdens that come with them, remained intact throughout and remain so today. Private developers have therefore always had to jump through broadly the same discretionary hoops they do now and did not enjoy access to a materially simpler planning system in earlier decades. Crucially, there is no measurable sustained decrease in housing production surrounding the introduction of any of these Acts. There is, however, a clear explanation for the persistence of this false consensus, which we address in our section on planning below.

We considered it important to address these false consensuses at the outset for two reasons. First, so that none of you, our readers, might mistakenly assume we have failed to consider them. Second, to underline the fact that reforming either health and safety regulation or the local planning system alone is unlikely to result in increased housing production. There is no demonstrable connection between these factors and the long-term collapse in housing supply, and there is an absence of logic in concluding that reform in these areas could restore supply.

Why does this matter? Because if we misdiagnose the cause of the problem, we waste time and resources fixing the wrong thing and all the while working people will continue to have more of their dwindling funds siphoned away by a broken housing system. Britain’s workers can’t afford for the government to get this wrong.

Now, let’s go through the challenges, starting with those present in 1946:

High Land Costs

This is the big one, and one of the most important differences between the way Britain approached construction in 1946 and the way it does today. In practical terms, this is the point of contention between those who need housing, and those that want to profit from housing.

A common false presumption in the modern development world is that land used to be cheap and now simply isn’t. The truth is more nuanced. In the years leading up to the end of the Second World War, landowners had already begun to anticipate post-war regeneration and took action to capitalise on it, driving land values upward in advance of development. The government of the day, far more concerned with the betterment of the whole than individual windfalls than it is today, recognised this problem early and responded proactively, most notably through the 1942 Uthwatt Report.

The central conclusions of that report included clear indicators that: landowners, in expectation of development, had begun inflating land prices and withholding land in anticipation of post-war rebuilding. Land speculation was making it increasingly likely that regeneration would become unaffordable, and that any attempt to rebuild at scale would fail unless land values were brought under control. In short, three years before the end of the war, Britain had already identified high land costs as a major barrier to national reconstruction. Today, we face the very same problem of inflated land prices driven by expectations of development to try and combat the housing shortage and the practice of drip-feeding of housing supply is prevalent.

In 1946 and onward, this problem was addressed directly. Under the Town and Country Planning framework and the New Towns programme, the state was empowered to acquire land for development through a system of compulsory purchase at something close to “existing use value”, with the uplift in land value captured by the state rather than the landowner. Land was valued according to the market value of its existing lawful use, often informed by its current economic yield. In other words, value was based on what the land was, not what it might become.

To use figures relevant to today’s land market, imagine an acre of farmland worth £30,000, producing £1,800 of output per year for the farmer. Under compulsory purchase, that farmer would be paid £30,000, which was the amount they could reasonably expect to sell the land for on the open market given its existing use.

Today, developers must negotiate directly with landowners, who are able to dictate value not on the basis of current use, but on hope value, that being the value of the land after it has been granted permission for housing. That same £30,000 acre of farmland, producing only £1,800 a year, can suddenly be treated as being worth £2,000,000 in high-demand areas.

Landowners would argue that this is fair, on the basis that the final development might be worth £6,000,000. This is the logic of the neo-liberal, individualist mindset of the modern era. The egalitarian mindset of the 1940s, however, rejected this reasoning entirely. The argument then was simple: the landowner was not owed the uplift in value because that increase did not arise from any effort, risk, or investment on their part, nor did the landowner have any means of bringing that increase about. Crucially, the landowner was no worse off after compulsory purchase than before, having been paid the land’s true economic value.

There was little recourse available to the landowner under this system beyond a legal challenge to the valuation itself, and even that challenge was often limited to arguments about actual use value. A farmer could argue that the land was worth £40,000 rather than £30,000 because rising food prices meant it would produce £2,400 the following year. What they could not argue was that the land was worth £2,000,000 simply because the state had decided to use it for housing.

This position was ultimately retreated from, beginning in 1951 and throughout Churchill’s second term. Over time, landowners began to receive more and more of the hope value of their land, until the New Towns system was wound down in the 1980s.

That shift gave rise to a much broader practice of land speculation, the practice by which landowners retain non- or low-productive land in the hope of selling it later, when its value is most profitable for them and, consequently, most expensive for developers. Landowners once again began to engage in drip-feeding, choosing not to release large amounts of prime development land at once, but instead releasing it in small portions over time to extract the maximum possible profit from each parcel. Today, this behaviour not only keeps land costs artificially high, but also slows development itself, as builders are forced to wait for landowners to decide when, or even if, land will be released.

This is why in some parts of the country there seems to be so much construction happening, yet housing supply is never solved. Land is made artificially scarce, and developments are kept small in scale. Widespread, yes, but miniscule in comparison to previous decades, as land is only released in small parcels slowly. The result is a false impression of land scarcity when, in reality, less than 10% of UK land is developed or built upon, and significant portions of the remainder have little economic yield.

This did not significantly delay housebuilding at the time, however, because during the late 1940s such a large volume of land was acquired to fuel the New Towns programme that local authorities held sufficient land to build for decades to come. Land costs only began to re-emerge as a serious barrier in the 1970s, as that pre-purchased supply dwindled and the need to acquire fresh land for public housing increased.

The practice of land speculation so dramatically increases the up-front cost of development that it makes it nearly impossible for new developers to enter the market and encourages existing developers to behave with extreme caution. This, in turn, reduces build-out speed and scale. If any attempt is to be made to restore Britain’s ability to build at scale, then one of the very first obstacles that must be confronted is the artificial inflation of land value. The government that introduces an effective system of land value control is likely to be the government that delivers the largest long-term increase in Britain’s housing production capacity.

High Construction/Material Costs

Although less complex than the issue of land value inflation, rising construction costs are also a significant barrier to increasing housing production, just as they were in 1946.

When the war came to an end, the UK housebuilding industry and its supporting supply chains had been devastated, and much of what remained had been repurposed to support the war effort. Rebuilding and reorienting the industry required significant upfront capital, which was not readily available. Severe material shortages followed, with key inputs, including brick, timber, steel, and cement, subject to rationing. This pushed unit costs sharply upward. The situation was replicated across much of Europe, Britain’s main trading partner, meaning international supply was also at historic lows.

This outcome had been anticipated well in advance. The Burt Committee, reporting in 1942 onwards, reviewed these constraints and predicted the post-war shortages long before the fighting ended. As a result, plans were formulated proactively rather than reactively and steps were taken to introduce systems of temporary and non-traditional construction to meet demand in the short term.

The egalitarian mindset of the time addressed this challenge through a combination of approaches. The first was a clear acceptance that the early costs of industrial inefficiency would need to be borne by the state, in order to create a market in which firms could safely depend on a long pipeline of future work. This stability allowed firms to invest, scale up, and expand capacity with confidence, without fear of sudden collapse.

The second approach was to reduce costs over time through scale, bulk purchasing, and the standardisation of design. The third was confidence in the multiplier effect of the construction industry itself. Public spending on housing was recognised as productive investment, one that would generate rapid future growth capable of offsetting the state’s upfront costs.

The result was an industry capable of sustaining mass housebuilding and acting as a powerful multiplier for GDP growth for decades to come.

Housing production after 1980 fell by over 40%, and it should surprise no one that the industries directly and indirectly supporting that output shrank alongside it. This included not just trades such as bricklayers and labourers, but also kitchen suppliers, haulage and logistics firms, timber and lumber mills, brickmakers, and many others across the supply chain.

Data from the Office for National Statistics and the Construction Industry Training Board show that hundreds of thousands of construction-related jobs were gradually lost following this shift. Apprenticeship starts collapsed, and have yet to return to levels consistent with the industry’s needs, and there was a dramatic fall in the number of firms operating in the sector, with small and medium-sized enterprises ceasing to have any meaningful presence. Several analyses by bodies such as the OECD, the UK Treasury, and the National Institute of Economic and Social Research consistently link weak housing supply and poor construction-sector performance to long-term constraints on productivity, growth, and employment.

From the 1940s through to the 1970s, many of these industries could rely on large, predictable public housebuilding programmes that lasted decades. That stability allowed firms to plan long-term, predict financial performance, and invest confidently in expansion, training, and innovation. The shift away from that model turned every project into a gamble. Stability disappeared, fewer firms remained in the market, and competition weakened, which naturally drove up the price of labour and materials. The modern industry was not destroyed by wartime devastation, but by the removal of the stability that came from confidence in long-term, state-backed projects.

When this is coupled with the dramatic increase in up-front land costs, the result is a sharp rise in the overall cost of building. This is why appeals to “just build more” without rebuilding the industry itself are empty. You cannot scale what no longer exists. Any serious solution must therefore include a strategy that rapidly restores not just the construction workforce, but the wider supply chain as well.

Skills and Knowledge Shortages

If we are to build houses at scale, then labour and management are required to see that through, which in turn requires experienced individuals with the know-how to deliver large-scale construction projects.

In 1946, the war had severely disrupted the natural transmission of skills between generations and removed huge numbers of workers from the construction industry altogether. Junior roles within the industry, such as bricklayers, carpenters, plasterers, plumbers, required years of supervised practice to establish competency. Yet the normal intake of new entrants through apprenticeships had collapsed for nearly six years, while many of those possessing the skills needed to train the next generation had been lost to death or injury and were unable to return to their pre-war trades. The result was not merely a numerical decline in labour, but a qualitative one as well.

These shortages were not confined to manual labour. More technical professions such as architecture and engineering had also been hollowed out by the war. Skilled practitioners were conscripted into military engineering and fortification work, while younger, still untrained, cohorts were diverted into officer supply rather than education and training. They also suffered death and injury, further depleting the civilian skills base.  Every tier of the construction industry faced a skills shortage, and it was widely understood at the time that this posed a significant bottleneck to post-war rebuilding ambitions.

One important distinction, however, is worth noting. The concept of the project manager as a discrete profession did not yet exist. Construction projects were overseen instead by engineers, surveyors, labour organisations, and in-house teams within local authorities. As a result, while there was no surplus of what we would now call project managers, this was not yet a problem, because no separate industry of project management had formed.

The government of the day addressed these shortages through a small number of deliberate interventions. First, scarce expertise was centralised within local authorities and development corporations, which operated under systems of shared resources across authorities and corporations. This prevented private firms from hoarding expertise and allowed multiple large-scale projects to be overseen with a relatively limited pool of senior personnel. To mitigate manual labour shortages, standardisation was introduced to reduce construction complexity, lowering training requirements and increasing the speed at which workers could become productive. This was coupled with mass training schemes that subsidised and actively encouraged entry into the construction trades.

We have already reviewed how the post-1980 wind down of the construction industry led to the closure of large numbers of firms, a collapse in apprenticeship uptake, and the transition of local authorities into a largely hands-off role in construction. There is therefore no need to labour the point as to why skills are insufficient across the industry, or why this absence will act as a barrier to future upscaling.

After forty-five years of contraction, and without any system in place to inject new skills and new entrants, much of the knowledge the industry once relied upon has simply retired, left the sector or died out. Additionally, very little of the knowledge that remains is in the hands of the public sector. What does remain is a far smaller industry with far less capacity. This is not a problem that resolves itself with a budget announcement. Skills take years to rebuild, and pretending otherwise is how targets keep being missed. If large-scale housebuilding is ever to return to historic levels, this damage will have to be actively undone.

A Burdensome and Adversarial Local Planning System

We previously tackled the perception that the local planning system used to be less burdensome and concluded that this was false. The reason this false consensus exists is that many have forgotten that a substantial share of Britain’s post-war housebuilding did not take place under the local planning system at all, but under a parallel system of master planning delivered through development corporations.

In the 1940s, 50s, 60s, and 70s, a substantial additional share of housing was delivered through the New Towns programme by development corporations operating under their own master-planning powers. In those cases, development corporations were not subject to the local planning system, allowing housing to be delivered at scale without the procedural burdens that applied to private development. The governments of the time understood that housing needed to serve two distinct purposes: the social requirement of access to secure accommodation, and the aspirational requirement of self-betterment.

As a result, two systems were conceptually created. The first was for the private sector, building high-quality housing at relatively small scale as aspirational assets which operated within the local planning system. The second was for the state, which by contrast, built affordable housing at scale as infrastructure, under the New Towns Acts, using development corporations and their system of master planning.

If the issue of planning is to be meaningfully addressed today, then a planning system designed specifically for the mass construction of housing at scale will be required once again.

With the challenges shared between 1946 and modern-day addressed, let’s now look to those that are novel to modern-day, and which will require new ideas to overcome:

The Lack of Direct State Involvement in Housing Development

When the 1946 mission to rebuild Britain began, there was already a foundation of state housebuilding that could be used as a launching pad for the scale of development that was to come. There had been a national programme of “Homes fit for Heroes” following the First World War, supported by the Housing Acts of 1919, 1923, and 1930, which had equipped local authorities with departments that had been building homes for decades. In the years leading up to the war, local authorities were already building tens of thousands of homes per year, with as many as 122,000 delivered in 1939. They were not yet large enough to deliver the scale the post-war rebuilding mission demanded, but the machinery already existed. It was not a question of invention, but of upscaling and investment.

Today, that foundation no longer exists. The most recent data available show that nationwide only 2,630 homes were built by local authorities in 2020, fewer than seven per local authority. Councils are no longer developers, and we cannot expect them to become developers without significant lead time and investment. They lack in-house design teams, construction-trained labour forces, project managers, and delivery expertise. What little involvement local authorities retain is typically confined to regulatory functions. There are still architects and surveyors within councils, responsible for delivering schools, roads, and other civic infrastructure, but they have limited to no experience of housing development at scale.

While Britain has faced housing shortages before, it is now doing so without any meaningful public-sector construction capacity for the first time in modern history.

The Financialisation of Housing and Land

When the government faced the challenge of rebuilding Britain after the war, housing was treated primarily as social infrastructure.

Homeownership sat at roughly 30% of households. Of the remainder, around 45–55% were privately rented and subject to rent controls, 10–15% were social housing, and the remaining 5% were uninhabitable or destroyed. Mortgages were tightly controlled: loans were short-term (typically between fifteen and twenty years), required high deposits often between 20 – 30% with some as high as 50%, carried low interest rates, and were closely tied to provable earnings. There was no abundance of exotic products such as interest-only mortgages or equity withdrawal. Mortgages were a deliberately boring part of the banking system. They were not a growth sector, and that lack of growth meant they were of little interest to pension funds or investment strategies.

You can therefore imagine a world in which mortgage debt was limited and the housing market was largely insulated from national and global financial markets. In such a system, sudden changes in house prices did not create ripple effects across the wider economy, nor did they threaten large sections of the electorate. Asset depreciation was not a major political concern, and almost no one was exposed to the risk of negative equity.

Today, ONS figures put nationwide homeownership at around 62%, with roughly 29% of all households owning with a mortgage. The private rented sector accounts for around 19% of households, with significant portions of that stock tied to buy-to-let mortgages, while only 16% of properties are socially rented. UK Finance data place outstanding mortgage debt at between £1.6 and £1.7 trillion. Interest rates are high, mortgage terms are long, with some now reaching 40 and even 45 years, and many pension schemes and investment strategies hold meaningful exposure to the housing sector.

This is why housing policy is now politically explosive in a way it never was in 1946, as any serious reform touches not just renters, but millions of households whose savings, pensions, and security are tied to property values. The potential political consequences of any shock affecting the housing market, and the risk of wider financial disturbance, are therefore at an all-time high. Any serious attempt to solve the housing crisis will need to be carefully calibrated to avoid destabilising ripple effects, or the government implementing it will need the political bravery, or sufficient public goodwill, to withstand the fallout.

Before we conclude, there is one last issue to consider that doesn’t quite fit as a modern-day novel issue or an issue faced in 1946:

Infrastructure Imbalance and the Centralisation of Labour, Capital, and Opportunity in Major Cities.

As a final point, we think it is appropriate to raise the issue of centralisation imbalances in the UK, and their effect on the housing crisis and the challenges it presents. Although we have not identified this as one of the primary barriers facing the housing industry, it is nevertheless worth addressing.

It is well documented that much of the nation’s productive work is concentrated in London and a small number of other major cities, with output per hour in London alone estimated to be 28.5% higher than the UK average. This concentration means that demand for new housing is greatest in areas that are already densely built up, while regions where housing could be delivered more easily often lack sufficient employment and productive opportunity.

While this problem also existed in 1946, there is a widespread agreement among experts that the imbalance is significantly more pronounced today. Although the challenge is therefore greater, and likely more complex to unpick, it is highly probable that the methods used by government in the post-war period still offer valuable guidance. At the time, this issue was addressed through a combination of the New Towns Acts, which acted as overflow locations drawing population out of major cities, and measures such as the Distribution of Industry Act 1945, which actively encouraged productive industries to locate outside urban centres by directing where industrial activity could take place.

Any serious plan to fix the housing crisis through mass housebuilding will need to grapple with the issue of centralisation carefully and deliberately. We can’t just build houses and hope jobs will follow. We need to direct housing and population in tandem with industry and employment opportunities to avoid wasting time and resources building ghost towns.

This concludes our examination of the major challenges facing those attempting to solve Britain’s housing crisis. There are many, but none are unmanageable with a coherent and well-designed strategy. None of these challenges are abstract and none should be dismissed. This shapes where we can live, what work we can take, whether we can start families, and how secure our futures feel. It deserves careful and deliberate consideration.

In our upcoming article, “From Shortage to Supply: Re-establishing Britain’s Housebuilding Capacity as an Economic Growth Strategy”, we will turn to potential solutions. Before that, however, we will review the current strategy being proposed by today’s government, as it attempts to implement its own version of a New Towns Act, and explain why it is failing, in next week’s article.