These are the two things holding back housebuilding

Falling consumer confidence and development unviability are the two key issues hindering housebuilding progress, according to the Housing Commission's report. The crisis has been worsening for the past 50 years, affecting not just those sleeping on the streets, but also families in temporary accommodation and young people unable to buy their first home.

Prosper UK established the Housing Commission to develop solutions for economic growth and address the housing crisis, which includes both increasing supply and boosting demand.

Consumer confidence has been a major obstacle, as developers cannot sell or rent out the limited number of homes they build. This lack of sales and rentals puts pressure on housebuilders to stop constructing new properties altogether. Additionally, schemes approved for development are finding it increasingly challenging to be viable.

Modern building costs have risen significantly, with an additional £76,000 per standard home since 2020—half from regulation, policy, and tax, like the Future Homes Standard and nutrient neutrality, while home prices have barely increased. As a result, previously profitable housing projects, such as a 300-home Build to Rent scheme, now incur losses.

To tackle these issues, the commission recommends a three-year freeze on new regulatory burdens and two tests for each obligation on new housing—whether the cost is justified for new homes and whether it is proportionate. Furthermore, a strictly targeted, time-limited shared equity scheme is proposed, limiting its impact on site sales to around a fifth and funded by an industry access fee.

While these recommendations may not be popular, the commission emphasizes that a comprehensive approach is necessary to effectively address the housing crisis.