"Collaboration between developers, lenders, policymakers, and local authorities is essential to addressing the root causes of the supply-demand imbalance."
Few topics stir public and political debate quite like housing. It's one of the most politicised sectors of the economy, and for good reason - access to affordable, quality housing underpins social and economic stability.
The Government, emphatic in its election campaign and since taking office, has declared housing delivery a key priority. Yet, as recent figures on housing supply demonstrate, solving the problem is far from straightforward.
Population growth outpacing housing supply
The UK’s population has risen significantly, growing from 56 million in 2011 to over 59.5 million in the 2021 census - and it continues to grow. Over the same period, net additional dwellings increased by just 1.4 million.
This imbalance has only deepened. Over the past year, total housing supply, including new builds, conversions, and affordable housing, fell by 6%. Even more concerning, new housing starts for the year ending March 2024 dropped by a staggering 21% year-on-year. Without urgent action, the gap between demand and supply will widen further, pushing housing out of reach for many.
The numbers are stark, but they only tell part of the story. Behind these figures are families struggling to find a home, developers working hard to navigate mounting challenges, and a sector striving to address a deeply entrenched problem.
Complex challenges require collaborative solutions
The housing shortage is not a new issue. In the early 2000s, the Barker Review recommended building 300,000 homes annually for 20 years to stabilise the market. That target has never been achieved. Instead, a combination of factors has made the situation more challenging over time:
● Skills shortages: The financial crisis of 2008 drove many skilled workers out of construction, leaving gaps that remain unfilled. Brexit further compounded the problem by limiting access to EU labour.
● Rising costs: Construction cost inflation, combined with pandemic-driven supply chain disruptions, has squeezed project margins and delayed delivery.
● Planning delays: The average SME developer waits over 12 months for planning approval, despite the official 13-week target. These delays increase holding costs and reduce project viability.
● Economic instability: The aftermath of the mini-budget, combined with ongoing inflationary pressures, has dampened confidence across the sector.
These challenges are interlinked, and there is no single solution. What’s clear, however, is that addressing the housing shortage requires a coordinated effort from all stakeholders.
Streamlining the planning process
A key area for improvement is the planning system, which has become a significant bottleneck for developers. While additional funding to recruit planning officers is welcome, it’s only part of the solution. Systemic reforms are needed to make the process faster, more transparent, and more predictable.
SME developers are particularly vulnerable to delays, as extended timelines often lead to increased costs and decreased project viability. Streamlined planning processes would provide much-needed certainty, enabling developers to bring projects to fruition more efficiently.
Addressing the labour gap
The construction sector must also address its skills shortage. Encouraging more young people into trades is critical, but this alone won’t solve the problem. Investment in skills training, upskilling existing workers, and creating pathways for experienced professionals to return to the industry are all essential steps.
Addressing the labour gap isn’t just about quantity; it’s about ensuring the workforce has the expertise needed to deliver high-quality, sustainable homes.
How HTB supports developers
While some challenges require long-term solutions, developers can take confidence in the availability of funding. Today’s finance landscape offers more options than ever before, with lenders like HTB providing tailored support to meet the needs of housebuilders.
HTB specialises in development finance, offering bespoke solutions designed to help developers navigate market complexities. Our involvement in initiatives such as the British Business Bank’s ENABLE Guarantee Scheme demonstrates our commitment to supporting developers with the capital they need to deliver much-needed homes.
HTB’s sustained growth reflects the resilience of developers and their determination to meet the UK’s housing needs, even in the face of significant challenges.
Looking ahead: Collaboration is key
There is no quick fix to the housing shortage, but progress is possible. Collaboration between developers, lenders, policymakers, and local authorities is essential to addressing the root causes of the supply-demand imbalance.
● Streamlining planning: Systemic reforms can reduce delays and create a more predictable process for developers.
● Investing in skills: Developing a skilled, sustainable workforce will ensure the sector can deliver homes at the scale required.
● Providing reliable funding: Flexible, accessible finance will enable developers to overcome obstacles and push projects forward.
At HTB, we are committed to working closely with developers to help turn ambition into reality. By understanding the unique challenges of each project, we provide the support needed to make progress, even in uncertain times.
The scale of the challenge is significant, but so is the opportunity. With collaboration, innovation, and determination, we can address the housing shortage and build a stronger future for communities across the UK.
