Arcadis sets out UK housing crisis solution

Arcadis calls for public-private solution to deliver an additional.

1.5 million new homes in the UK

  • Cohesive, national, apolitical impetus needs to be given to solving the housing crisis
  • A ‘National Housing Service’ could hold key to delivering a long term, scalable solution
  • Proposed step-change in delivery will generate 97,500 new jobs and £1.307 trillion boost to UK GDP

Arcadis, the leading Design & Consultancy firm for natural and built assets, today proposes a comprehensive and financially-modelled plan to address the UK’s housing crisis. In its new report entitled “Solving the housing crisis: THE BIG IDEA”, Arcadis has laid out a 14-step plan of action, culminating in the proposed creation of a politically neutral ‘National Housing Service’, an agency tasked with addressing the triple threat of falling tenure diversity, constrained supply and a growing skills gap in both the development and construction industries.

With house building levels at an historic low, it is estimated that current new build outputs need to rise from the current levels of 150,000 to at least 240,000 new homes per annum in order to meet the existing demands of both first-time buyers and established homeowners.

Crises of affordability, supply levels and skills shortages have combined to create a perfect storm which is now an issue of national importance. Some of the key problems include:

  • Dominance of “homes for sale” over other tenures in an inflationary sales-value market has resulted in substantial affordability challenges, rendering the market inaccessible for many would-be homeowners;
  • Private housebuilders are now the dominant providers of new homes into the market and have no incentive to increase supply beyond a certain point, if it damages prices;
  • Lack of capacity and skills shortages in the house building industry have minimised the physical ability to achieve the required outputs.

At the centre of Arcadis’ recommendations is the creation of a new ‘National Housing Service’, tasked with providing a response – at scale – to address the housing crisis and increase housing supply in England over a sustained period of time. As an independent and politically neutral agency, the Service could be given the mandate for the sustainable delivery of nearly 1.5 million additional new homes of all tenures, generating up to 97,500 new jobs and 80,000 trainee placements, along with GDP growth of £1.307 trillion and investment returns for the taxpayer worth up to £38 billion over the next 30 years.

The essence of the ‘National Housing Service’ would be the creation of a self-sustaining, non-tax payer funded direct delivery model that unites the public and private sectors in harnessing the funding, resource and leadership necessary to increase housing output. Taking into account the difference between the sale price of a property, and the cost of development, this agency would create an environment in which the surplus generated can be recycled to develop more homes to meet the needs of the country. As further homes are built so the surpluses generated, and the revenues generated from rental properties, are sufficient to repay any early borrowing, offering long-term certainty of return on investment. The timescales for creating a sustainable steady state output would span nearly three parliamentary cycles, hence the need for political neutrality.

Simon Light, UK Client Development Director at Arcadis commented:

“It is clear that the current housing model isn’t working. From the widely reported struggle of first-time buyers trying to get on the ladder, to a serious lack of housing choice and availability, the housing crisis has never been more pressing. With the UK population projected to increase by an additional 10 million in the next 25 years, the private sector alone will never be able to meet the required number of new homes.

“We have seen the focus currently being given to the country’s infrastructure, but now is the time to apply an even bigger ambition to address the housing crisis. The only way to meet demand is through a strong public-private, direct delivery model. The influence of the wider economy and market cycles as a barrier to long term planning is why we can’t have a strategy solely reliant on private sector-delivered homes-for-sale. This needs to be augmented by a public sector-led or enabled supply, spread across affordable and social rent, shared ownership, private rent, private-for-sale and later living products. A more cohesive, national, apolitical impetus needs to be given to solving the housing crisis in a way that will fulfil social need and boost economic growth beyond a single parliamentary lifecycle.

“A ‘National Housing Service’ would alleviate pressures on housing supply and affordability, produce employment and skills opportunities and ultimately create higher levels of economic productivity and greater international competitiveness. It would also be wholly supportive of the continued growth of private sector output through the free market mechanism. We are absolutely passionate about improving quality of life for people across the country and are confident that our proposal will make a tangible impact to the UK.”

For more information and to read the report “Solving the housing crisis: THE BIG IDEA”, please click here.