The housing market is broken. That was the stark conclusion of Theresa May in introducing the government’s white paper on housing in February 2017. Its wide agenda and suggested that the government might question previous preoccupations and promote a broadly based approach to housing in order to ‘make Britain a country that works for everyone’. This collection of 12 essays supports that ambition, and urges the government to go further, offering additional thoughts about measures that could promote a sustainable increase in the supply of new homes to closer match prevailing demand.


We publish now, immediately after the General Election, having postponed our original launch which was planned for early May. The housing crisis and the importance of building more homes has been a prominent issue in the election campaign with something tantamount to a bidding war between the parties as to who would build most. We would stress that it is not just the number built but also the balance of tenures and affordability which need to be thought through for an effective housing strategy. All of the major parties have, at last, recognised that there is a bigger part to be played by local authorities and housing associations in commissioning the building of new homes. We have also seen a number of individual pledges which we would like to see included in future housing policy (including the Conservatives' willingness to reform CPO powers and Labour’s commitment to suspending RTB unless the homes sold are replaced).

Our overall impression is that parties remain too strongly wedded to owner-occupation and particularly to the belief that they will be able to provide a significant response to the aspirations of first time buyers. We strongly believe that Britain’s housing crisis cannot be solved by too narrow a focus on owner occupation. It is, we recognise, the tenure of choice for most of our fellow citizens but it simply cannot provide the number of homes needed or at a price which can meet this aspiration and it is time to be honest about that. All manifestos place greater emphasis on homes built to rent together with greater encouragement for the role that can be played by housing associations and local authorities as well as institutional investors. We believe this is a key development in beginning to provide homes for all circumstances and to relieve the pressure on rents and house prices.

The incoming government has an opportunity to demonstrate the positive impact that government can have in a modern market economy. The prime minister has made clear her willingness to intervene in markets where they are dysfunctional. Nowhere could this be better demonstrated than in the land market. There also needs to be a focus on the long-term objective of rebuilding the capacity of the housebuilding industry and especially its supply chain. We need to recognise a broadly based industry that includes the traditional housebuilders, but it must extend well beyond them if it is to maintain its efforts over the economic cycle and the most certain challenges of Brexit. Government can do more than just offer encouragement. It can spread its available investment with more precision; promote research and development; and support the risks that will have to be taken in board rooms, council chambers and in personal lives. Building confidence that we can and will avoid the stop-start experience that has been the cause of a housing crisis, where our homes have increasingly become assets for domestic and international speculation rather than the foundation of our own security, health and economic wellbeing. Most of all, government must be determined, for there is no more fitting subject to an industrial strategy than rebuilding this almost entirely domestic industry.

The publication was kindly supported by LGIM Real Assets and PwC.

Sir Michael Lyons,
June 2017