Why does Britain treat housebuilding as one big burden?
Housebuilding is one of Britain’s most obvious economic opportunities, yet government and citizens alike seem to see it only as a burden, writes Brandon Lewis
There is a peculiar British habit of treating housing as a social problem to be managed rather than an economic opportunity to be seized. For too long, successive governments have shunned the potential for the planning system to build the foundations, quite literally, of future prosperity. That has to change, and bringing first-time buyers into the market through a concentrated effort could deliver one of the most powerful economic boosts available to any government, without a penny of additional borrowing.
The numbers tell their own story. A structural housing shortfall estimated to be over 4m homes, fewer houses per capita built than any comparable European economy, and a market fuelled by surging demand in which prices have outpaced wages for a generation and workers are priced out of living near where jobs are being created. What they fail to reflect is the potential for an economic multiplier in the sector. Every pound invested ripples outward into adjacent industries and supply chains, with the Home Builders Federation estimating that in 2023 alone, housebuilding generated £53.3bn of economic output and supported up to 3.4 jobs per dwelling built. That is real employment is real constituencies – the type that Britain’s regions have been starved of.
First-time buyers power spending
It is in the first-time buyers market where the wider economic transformation really begins. A young family moving into their first home needs furniture, appliances and curtains, and well as solicitors, surveyors and removal companies. They will invest within their community, put down roots and even start a business. They are in fact one of the most economically active cohorts within the consumer economy, spending on average almost £9,500 in the year after their purchase. Why suppress our economic potential by locking them out?
The barriers are well understood, even if the political will to remove them has often been lacking, including by my own past government. Policy choices, including high stamp duty thresholds and excessive red tape, can be reversed, and recent government pushes to reform the planning system are a welcome start. However, the wider system still hinders any ambition, often squeezing out a dwindling percentage of smaller housebuilders – half of whom cite the planning system as their biggest barrier to delivery.
On first-time buyers specifically, the political opportunity is considerable. Dwindling homeownership rates among under-45s has become a quiet social crisis sitting behind many of the cultural anxieties of contemporary politics, waiting to be seized by a government speaking to their aspiration. A targeted, credible programme, whether through reformed mortgage guarantee schemes, incentives for smaller deposit lending or a genuine Stamp Duty overhaul (as the Conservatives are now rightly proposing) would carry real political weight alongside its economic logic.
Citizens play a part too
In order to seize the political opportunity in a sustainable manner, design reforms should matter as much as the principle. Infrastructure investment, genuine affordable housing requirements and community interest benefit agreements ensure that the interests of communities are not cast away for the benefit of developers. We can’t just blame government, as politicians respond to constituents who resist local development. As citizens, we all have a part to play in supporting delivery of housing, as a matter of principle.
Britain cannot build its way to growth by accident, but it can do by design. A housing market delivering at scale and properly functioning first-time buyer marker would give an economy in search of momentum exactly what it needs. The bricks and mortar are there. The question now – as ever – is political will.
Brandon Lewis is a former minister and Conservative party chairman