Why the North needs a headstart to tackle the housing shortage

House-building in the North of England needs to see the greatest uplift compared with other regions if the country is to reach the government’s national target of 370,000 homes per year. However, historical figures on net additional dwellings suggests that Labour is unlikely to meet its ambitious targets by 2030.

 

That’s according to the latest forecast by West One Loans, a leading provider of property finance and specialist mortgages, which compared figures on local housing need in each region, according to reforms as a result of the National Planning Policy Framework.

 

Reforms to the NPPF

 

According to the new framework, local housing requirements across England are set to increase by 21.4 per cent.

 

The changes come as a result of the government’s proposed reforms to the National Planning Policy Framework, and other changes to the planning system, with the most recent consultation held between  July and September of last year. The framework acts as a rulebook for planning, giving local authorities an idea of what’s required in order to achieve sustainable growth in the planning system.

 

One major change proposed is a national housebuilding target of just over 370,000 new homes per year. At local authority level, the government is looking to remove or revise existing intervention criteria in a bid to stop nimbyism halting projects.

 

Where do we need to see the most new homes built under new guidelines?

 

According to research by West One Loans, on a regional level, it’s the North East of England that needs to see the largest improvement. Under previous standards, some 6,123 homes a year were required by government calculations. However, under the new standard method, this figure will now sit at 10,976 – an increase of 79.2 per cent.

 

In the North West, the number of homes now required on an annual basis has increased by 61.3 per cent, with the South West (41.8 per cent), South East (37.9 per cent) and Yorkshire and the Humber (33.5 per cent) also seeing some of the largest increases.

 

Historical figures suggest targets remain unrealistic

 

But are these latest revised guidelines realistic? Figures show that the government has been unsuccesful in its ability to deliver a substantial number of new homes to market across England. This is despite the fact that the government bases its housing supply success on net additional dwellings delivered, rather than actual new homes built – which accounts for the entire housing supply picture, including change of use, conversions and other gains, as well as being offset by demolitions, thus skewing the reality of how many new homes are actually built.

 

During the Autumn Budget in 2017, the previous government set out plans to reach 300,000 net additional dwellings by the mid-2020s. An ambitious target when you consider that over the previous 10 years, the closest the UK came to achieving such a goal was in 2007/08, when 223,534 additional net dwellings were delivered.

 

In the years that have followed, successive administrations have also fallen short of similar targets, with 2021/22 seeing the highest number of net additional dwellings delivered at 234,462 and no real consistency achieved in terms of increased delivery rates on a year on year basis.

 

In fact, as we now reach the original deadline of the mid-2020s, the latest figures show that additional net dwellings numbers have actually fallen over the last two years, hitting 221,071 in 2023/24.

 

Whilst the current government’s intention to deliver 370,000 new homes a year are admirable, these figures suggest that they are also highly unrealistic, given the previous and consistent failings with respect to net additional dwellings growth.

 

“Our new Labour government has been quick out of the blocks with respect to new housing delivery, and its introduction of grey belt land classification is certainly one of the more positive steps we’ve seen in recent times,” says Co-Head of Short-Term Finance at West One Loans, Guy Murray.

 

“However, while admirable, the target of 370,000 new homes per year seems ambitious at best, particularly when you consider the failure of the previous government to come anywhere close to its target of 300,000 new homes per year.

 

“The key to boosting housing delivery is developer incentivisation, and this can take many forms – tax breaks, grants, credits or rebates, or improvements to help streamline the process, such as easing zoning regulations.

 

“Of course, the biggest incentive is a buoyant market, and we’re yet to see the current government make any real statement with respect to stimulating buyer demand levels. In fact, they’ve done quite the opposite by failing to extend current stamp duty relief thresholds beyond the end of March.”

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Data Tables and Sources

*Source: Gov UK - Proposed reforms to the National Planning Policy Framework and other changes to the planning system - December 2024.

**Net Additional Dwellings data sourced from Gov UK - Live tables on housing supply: net additional dwellings (2006/07 to 2023/24)

See the full data tables and sources here.