8 March 2025. Here is the latest in our series of brief briefing documents to help give you a bit of background on resolving the key issues of poverty, inequality and financial hardship. We welcome your comments and ideas
Making housing more affordable in the UK requires a comprehensive strategy that addresses both supply and demand factors, as well as financial barriers. Here are several ways in which housing affordability can be improved:
1. Increase Housing Supply
- Build More Affordable and Social Housing: One of the main drivers of high housing costs in the UK is a lack of supply, particularly in affordable and social housing. Government investment in building new social housing and incentivising the private sector to build affordable homes can help alleviate the housing shortage. The introduction of more affordable rental and shared ownership schemes can also help.
- Utilise Brownfield Sites and Empty Properties: Encouraging the use of brownfield sites (previously developed land) and bringing empty homes back into use can increase the housing stock without needing new greenfield development.
2. Reform Planning and Land Use Policies
- Streamline the Planning System: Making the planning process faster and more efficient can help reduce delays and costs associated with housing development. The UK government’s proposed reforms to the planning system aim to streamline the process and make it easier to build homes in areas where they are needed most.
- Encourage High-Density and Mixed-Use Developments: Allowing for higher-density housing and mixed-use developments in urban areas can increase supply and reduce the cost per unit of housing. This can include policies that support the development of smaller homes, co-living spaces, and apartments in areas with good transport links.
3. Reduce Land Costs and Reform Land Banking
- Reform Land Value Capture and Taxation: Land value capture mechanisms, such as land value taxes or development levies, can help reduce the speculative value of land and reinvest in affordable housing. This can discourage land banking (where developers hold onto land without building) and reduce the overall cost of land for housing development.
- Limit Land Banking: Introducing policies to penalise or discourage land banking can encourage developers to build rather than hoard land. This can involve introducing penalties for developers who do not develop land within a certain period after acquiring it.
4. Enhance Financial Support for Buyers and Renters
- Expand Homeownership Support Programmes: Programmes like shared ownership and Help to Buy can help first-time buyers enter the market. These programmes should be expanded or modified to focus more on genuinely affordable homes and target regions where housing is least affordable.
- Introduce Rent Controls or Caps: In areas with rapidly increasing rental prices, introducing rent controls or caps could help make housing more affordable in the short term. However, this needs to be carefully balanced to avoid discouraging investment in the rental market.
5. Implement Tax Reforms
- Reform Council Tax: Council tax is often seen as outdated and regressive. Reforming it to better reflect current property values and ability to pay could help make housing costs more equitable and affordable.
- Adjust Stamp Duty Land Tax (SDLT): Reducing or eliminating Stamp Duty for first-time buyers, while increasing it for second-home owners and buy-to-let investors, can help make housing more affordable for those seeking to purchase their primary residence.
6. Improve Access to Affordable Financing
- Encourage Low-Cost Loans and Mortgage Products: Expanding access to low-cost mortgages or interest-free loans for first-time buyers and low-income families can make homeownership more attainable.
- Support Community-Led Housing and Co-Ownership: Encouraging community-led housing projects, housing cooperatives, and co-ownership models can provide alternative routes to affordable homeownership.
7. Support the Private Rental Sector
- Regulate Rental Market and Improve Tenant Rights: Strengthening tenant rights, introducing longer tenancy agreements, and providing support for renters in disputes can improve stability in the private rental market.
- Provide Incentives for Long-Term Rentals: Offering incentives such as tax breaks for landlords who provide long-term rentals at affordable rates can help stabilise the rental market.
8. Address Regional Disparities
- Invest in Regional Development: Investing in infrastructure, education, and job creation in less developed areas can reduce the pressure on housing markets in high-demand areas such as London and the Southeast. This can help balance housing demand across the country and make housing more affordable in all regions.
9. Strengthen Regulations and Standards
- Introduce Higher Standards for New Builds: Ensuring that new homes meet high standards for quality, energy efficiency, and accessibility can reduce long-term living costs for homeowners and renters, making housing more affordable over the life of the property.
10. Encourage the Private Sector to Build Affordable Housing
- Implement Quotas for Affordable Housing in New Developments: Require developers to allocate a certain percentage of new housing projects to affordable homes. Strengthening these policies can ensure that affordable housing is included in both public and private sector developments.
Implementing these strategies in a coordinated manner would require collaboration between central and local governments, the private sector, and community organizations. Each measure would need to be adapted to local conditions to ensure maximum effectiveness in addressing housing affordability across the UK.
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