Housing and Planning

Britain’s Housing Crisis has been Solved, Finds New IEA Report


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In the Media

Matthew Lesh quoted in The Express

Housing and Planning

Kristian Niemietz writes for The Telegraph

https://iea.org.uk/wp-content/uploads/2024/03/IEA-Discussion-Paper-123_Home-Win_web.pdf
The year is 2035. Wages have outpaced house prices and rents for an unprecedented 10th year following housing reforms.

  • The liberalisation of planning policies since late 2024 has powered Britain’s biggest housing boom since the 1930s.

  • In the mid-2020s, the government accepted the well-established idea that major planning reform is  necessary to build more houses and solve the housing crisis.

  • Key pro-development policies included incentivising local communities to accept more housing, allowing the construction of new towns, and granting automatic planning permission on the green belt around commuter stations.

  • More building has reduced housing costs and had tremendous positive effects across the economy.


It is easy to forget that just a decade ago, Britain was in the midst of an acute housing shortage. Britain’s homes were significantly fewer, smaller, and more expensive than those in neighbouring countries. Over one million people were on social housing waiting lists despite the UK’s large social housing stock. The promise of being part of Britain’s property owning democracy was dead for most people under the age of 35.

But according to new research by Kristian Niemietz, Editorial Director of the free market think tank, the Institute of Economic Affairs, this enormous drag on Britain’s economy has now been lifted after a decade of reform. A new generation of Brits can take cheap housing as a given.

A crucial set of reforms starting in late 2024 expanded planning permission and diluted the power of local obstructionists to block development (‘Nimbys’). These changes unleashed Britain’s biggest house building boom since before the Second World War.

This provided long-overdue relief for renters. “The flooding of the rental market with new rental properties has put landlords under a degree of competitive pressure they could not previously have imagined”, writes Niemietz. This result was that  rents have declined, quality has improved and there are more choices for renters .

First-time buyers took advantage of increased competition as well, with real estate agents scrambling to attract the  surge of young professionals and new families finally able to get on the housing ladder. More house building has reduced pressure on social housing, significantly cutting waiting lists and saving taxpayers money. 

The benefits went far beyond the direct victims of the housing shortage. As house building brought prices and rents down, particularly in the Southeast and London, it became easier for people to move to areas with the greatest economic opportunity. This increased mobility pushed up productivity, wages, social mobility, and economic growth across the board.

As workers benefitted, so did business. The increase in available land for business and research helped the UK to attract more of the world’s top entrepreneurial and academic talent. It also freed up capital that was previously invested in artificially pricey properties for investment in productive assets.

Britain’s housing crisis has taken several years to solve, according to the report.  The policy changes started off slowly, with the government paying off local anti-housing campaigners by transferring some of the benefits of local development directly to those most impacted by new housing. 

The positive incentives for house building were turbocharged in 2025, when the government devolved new income tax powers to local authorities. This put local governments in a better position to upgrade infrastructure in line with new housing and incentivised more planning approvals due to the need to compete with other local authorities for tax revenue.

In 2026, the government expanded automatic planning permission on green belt land around commuter stations. As part of this plan, the government renamed the green belt the ‘Urban Growth Boundaries’ to reflect the fact that green belt designation is not related to environmental protection.

A cascade of pro-housing policies followed, including Street Votes and the revival of the New Towns Policy. The success of the new towns prompted a nationwide move towards rules-based planning systems, replacing the discretionary policy which allowed local obstructionists to grind housing and infrastructure development to a halt.

A tidal wave of construction followed. Housing stocks surged as cranes towered over London and Britain’s other major cities. The solution was simple: remove barriers to building, more houses will be built, and prices and rents will fall.

Niemietz concludes: “Why did Britain ever inflict this crisis upon itself? Why did this country so needlessly impoverish itself for so long? Why did Britain ever give so much power to a minority of obstructionists and troublemakers?”

Kristian Niemietz, paper author and IEA Editorial Director, said:

“The purpose of this report is not to come up with any novel policy ideas for how to solve the UK’s housing crisis: the solutions have been there for years, and everyone who is even vaguely familiar with UK housing policy knows what needs to be done. All this report does is show what would happen if we actually did it.

“The future described in this report is necessarily fictional – but it is not at all pulled out of thin air. If the political will were there, this could very easily become our reality.”

ENDS

Notes to Editors

Contact: [email protected] / 07763 365520

Read a copy of Home Win: What if Britain solved its housing crisis?

  • This paper is written in the style of a report from the year 2035, or more precisely, from a possible future, in which Britain has successfully solved its housing crisis.

  • Wealth Generation: How to Boost Income Mobility in the UK, IEA research by University of Louisiana at Lafayette Asst Prof. Justin Callais and George Mason University Prof. Vincent Geloso argues that restrictive planning laws have undermined social mobility in the UK.

  • Homes on the right tracks, a paper by London School of Economics Professor Paul Cheshire and University College London lecturer Boyana Buyuklieva in 2019 estimated that granting planning permission on Greenbelt land within 800 metres of commuter stations in and around London, Birmingham, Newcastle, Bristol, and Manchester alone could boost the housing supply by 7% while using only 2% of Greenbelt land.

  • Under a ‘Street Votes’ proposal, the residents of an individual street can, in effect, collectively opt out of the planning system, and grant themselves incremental development rights, for example for building additional storeys on top.

  • Since the mid-1990s, real terms house prices in the UK have increased significantly more than in other OECD and Eurozone countries.




The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.



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