UK Housing Crisis Analysis and Solutions

This assignment delves into the complex issue of the UK housing crisis. It examines factors contributing to the crisis, such as limited supply, high demand, and speculative practices by real estate agents. The document proposes solutions including increased government funding for affordable housing, investment in infrastructure and transportation, and planning reforms to encourage homebuilding.

Running Head: HOUSING CRISIS 1
Main Causes of Current Housing Crisis in London and the UK

Housing crisis in the UK 2
Housing crisis refers to the shortage of the affordable and properly equipped housing for
the people. In several parts of London and the UK, a severe crisis of the housing supply has
occurred. It has most severely hit London and the South East of the UK. The housing crisis in
London is not the shortage of the supply of the living homes but it is the shortage of the supply
of affordable homes. Developing affordable housing is quite a challenge in the global cities like
London as the demand for the new homes is global whereas the supply is local (Brooker, 2017).
Due to the migration, the output of the new homes is well below the required. According to the
reports, the annual requirements of the new homes are between 240,000 and 280,000 a year
(Bowie, 2017). In London, the housing requirement is approximately 62,000 homes per year;
however, the numbers of homes, which are constructed, are between 15,000 and 18,000 (Bowie,
2017).
There are significant numbers of people who are unable to access the home market. The statistics
show the severity of the housing crisis in London. It can be critiqued that there is huge gap
between housing supply and demand in the country. Housing facility and the housing policy are
the main parts of the state welfare and the state policy. Housing is a basic need and it is essential
to deliver it before health and education as the primary human requirement. As it is primary
need, the state has intervened in a number of ways as a part of the housing market. Several
housing policies have been made as a part of government intervention to modify the housing
market (Lund, 2017). In this regard, the present essay will discuss the major causes of the
housing supply deficit in London and the UK.

Housing crisis in the UK 3
The housing supply deficit is the major cause of concern of the government in London and other
regions of the UK. Most of the middle-class people are struggling with the housing loans and the
extremely high cost of the housing property. The people are unable to apply for the housing
loans or buy homes at the posh city of London. Moreover, the rent of different apartments is very
high which is eating up the finances of the people. The migrants and the foreign workers are
unable to purchase an apartment or rent a well-conditioned apartment. These people are forced to
coexist with other people or live at roads. It is a social issue, which indicates the bad living
conditions in the city.
Although there are numbers of luxury balcony apartments, there are extremely costly and can be
bought only by billionaires, super-rich, and alpha-elites global investors. These foreign investors
are attracted by the tax-friendly environment of the country. These are wealthy places, which is
home to the richest people all across the globe. The foreign investors are frequently investing in
the real estate of the country, which is increasing the cost of the apartments and houses. In the
past, like other parts of London, these were mixed areas. It means that both wealthy and middle-
class people reside their together. However, the middle-class and poor people were displaced
from the central parts of London to the periphery or out of the city (Hilber, 2015). This reason
has increased the prices of the houses drastically.
Although there is a housing crisis in the country, there has been a simultaneous construction, in
which a large number of luxury residential towers have been constructed in the country. The
affordable housing has been replaced by the luxury towers, which are empty due to their high
cost. The housing crisis in the country does not affect the poorest or financially weaker sections,

Housing crisis in the UK 4
but it also affect the significant amount of city dwellers who cannot buy properties and
extortionate rent.
The housing market shows the position of the UK in the world economy. The international
economic developments and the 2008 recession affect the housing market of the country. The
housing market is the part of the UK economy as the growth in the house prices in both primary
and the secondary market is driven by the consumer demand. In the present economy, the
potential consumers are both home dwellers as well as the investors.
The retail developers and the retail investors have also played a critical role in the housing crisis
in the UK. Before developing housing colony or the housing society, the retail developers have
to take the consent of the government for the development of the residential colony. However,
these retail developers do not take the permission and the licensers when they need it but when
they consider that the price of the property will be maximum. Several times, the residential
planning consent is taken by the retail investors; however, they do not consider developing the
colony themselves. They investors are interested in increasing the value of the land or the
property in an optimal time and sell it to the investors. It can be critiqued that the optimal time is
not the time when the price of the property is minimal but at the time, when the investor can
attain maximum profit. In the determination of the housing price, the financers of the retail
developers also play a critical role. The developers build the housing projects and open them for
sales, when they consider that they can avail maximum profit from it (Dorling, 2014). In the
housing projects, the retailers need finances to buy land, prepare the development proposal, and
build the houses.

Housing crisis in the UK 5
Homelessness is a major issue in the economy of the UK. The homelessness represents the extent
of the problem and the notions associated with it. The homelessness is the phenomenon, which is
associated with many people who have no accommodation. The homelessness was be considered
as a personal matter rather than the social phenomenon, which is rooted at the individual’s
lifestyle caused by structural factors. However, over the years, it has emerged as a social problem
as the root causes of homelessness lies with due to the incapability of the government to provide
adequate houses to the people. The real estate investors and housing colony investors are
exploiting the high cost of the apartments and developing strategies to maximize the prices to
increase the cost of the apartments (Ryan-Collins, Lloyd, & Macfarlane, 2017).
The term homeless refers to a person, who does not have the legal rights to occupy a dwelling,
accommodation, which is reasonable for occupancy. There are several minimal requirements for
home, which includes privacy, personal space, room, and sufficient space to perform daily
operations, heating, and security arrangements. There are also concealed households in which
people involuntarily live with their friends and relatives to save the housing cost. There are
several significant factors behind the phenomenon of homelessness. There are several reasons
such as housing market, unemployment, and poverty (Lund, 2017). However, the housing crisis
is London has emerged due to different issues.
It can be critiqued that the housing crisis in London is not about the house but about the
people who are struggling to pay housing mortgages and finding difficulties in buying a home
for sustenance. There are a large number of families, which are trying to buy a home; however,
they are unable to make the down payment for the home. It also causes negative impact on the

Housing crisis in the UK 6
society as the young children living with these families are forced to change their school every
time their family moves. The biggest challenge in the house ownership is the soaring price of the
houses. The house prices are almost seven times the income of the people. In this case, it is
becoming difficult for the people to save and buy a home of their own. Along with it, the housing
cost and loans are also becoming very expensive. In several cases, the people are taking risky
mortgage loans, which are stretching their financial limits. The people have to struggle to pay the
monthly repayments and several times, they are unable to pay them. A large number of homes
were reacquired by the banks, as the customers were unable to pay back their loans.
With the soaring prices of the homes, a large number of middle-class and lower-middle class
families are renting homes. However, there are several challenges in renting homes, as these
homes fail to meet the standard of the decent homes. Other issues for the tenants are the unstable
housing conditions, soaring rents, hidden fees, and the fear of constant eviction. The living
conditions in these homes are not healthy which negatively affects the well-being of the tenants
as well as the growth of their children. The overall impact of the homelessness is that a large
number of people are force out of their homes and they are forced to spend their lives in living in
unhealthy conditions (Shelter, 2017).
Another issue with the homelessness is the creation of a rootless generation, who lives like a
nomad people. With the current soaring prices, the future generations will not be able to buy a
home. These people will have the habit of moving to different cities and will not stay at a
specific place. It will also destruct the family values and increase the characteristic of
individualism in the people. It will further destruct the society in the UK and London. It can be

Housing crisis in the UK 7
critiqued, that today also, a large number of families cannot afford a home. These people are
living at unhealthy conditions at rented homes. The children in these homes are struggling with
different issues associated with homelessness. They struggle with the frequent change in the
surroundings, environment, and schooling. It will also create a rootless generation, which will
drift from one place to another and will not be able to play a significant role in the community.
These people will switch from one short duration tenancy to another tenancy (Watts, 2017).
Due to the enormity of the housing crisis, the government has actively intervened to address the
issue. The housing crisis has played a key role in the budget. The government requires
intervening wherein the country needs several houses to address the demand of the housing. It is
proposed that the housing associations will be encouraged to borrow loans for the housing
project. The financial cushion provided by the government will assist the organization in
securing long-term financial health (Mayo, 2017). The government has also proposed a big
publically funded program in which about one million homes will be delivered to the public in
the next five years.
The difference between supply and demand of the housing has created huge challenges for the
organizations. The value of the homers is not because there is availability of homes, but because
the value of land is very high, the planning system has created equilibrium and the society and
the landowners of the country want the home rates to be high. Moreover, the rates of property
also increase when the banks mortgage loans (Brooker, 2017).

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However, the prices of the houses have declined after the financial crisis in 2008. The figure
shows, that there was huge impact of the financial recession on the housing markets. The British
capital or London performed very badly as a part of slowing market.
The city of London is suffering from major housing crisis because of the huge cost of living in
the city and the requirement of huge funds for the growth and the productivity of the country.
The housing crisis of the city is also a significant social issue as it is causing poverty, health
issues, and inequality between different generations. The most significant impact of the housing
crisis is the homelessness and rough sleeping on the footpaths. It can be critiqued that the crisis
has not emerged as a novel issue; however, it is resulted by the systematic failure of the
organization to invest in the development of new homes as per the requirements of the city. It is
necessary for the systematic planning of the city that the city offers affordable homes for the
growing population of the city.
However, the city planners failed to invest in building new homes, which increased the need of
building new homes to meet the backlog of the previous years. Moreover, it is important that
about half of these homes need to be affordable for the middle-class of the city. In this regard, it
can be stated that the private sector builders will never be able to meet the housing requirements
and deliver this scale of housing. Therefore, it is important that the government address this
crisis by designing a sustainable program in which the government invests in affordable housing
for the people. It should provide several houses for the social rent levels. The government should
also encourage the private builders and reduce taxes so that they can build new houses. It is
important that the government build houses from the bottom up with the limited number of

Housing crisis in the UK 9
powers and financial funding. It is important that the homes built are genuinely affordable which
are equivalent to the social rent levels. The government should make efforts to reduce rough
sleeping, reducing the number of foreign buyers, and controlling the greedy property owners.
However, the issue of the housing crisis is very large and the government should intervene to
protect the city from the crisis (Khan, 2017).
It can be concluded that the financial crisis in London is a major social issue. The people all
across London and the UK are struggling to find a proper housing for themselves. There are
several causes of the housing crisis in the country. One of the most significant reason is the rise
of the high-end luxurious homes, which are bought by the foreign investors. They are attracted
towards the tax friendly regime of the country. However, it is elevating the price of the houses in
the country. The real estate agents are also playing with the demand and the supply of the
houses, which is increasing the prices of the houses. The biggest issue in the housing crisis is that
there are enough houses; however, they are extremely costly. The immigrants and the middle-
class people are unable to buy a new home due to the high cost of the houses.
It can be recommended that the government should allocate a budget to increase the funding for
the affordable housing. The government should maintain a long-term commitment for
developments of funds so there is new approach for the local authorities to meet the requirements
of the council homes. There should be investment in the transportation and infrastructure
development, which can foster homebuilding in the community. There should be investment on
planning power development for the development of affordable housing in the country

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(Sturzaker & Mell, 2016). There should be investment in the structural problems in London,
which can address the issue.

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References
Bowie, D. (2017). Radical Solutions to the Housing Supply Crisis. Policy Press.
Brooker, N. (2017). Why solving the UK housing crisis requires more than new homes. Financial
Times. [Online]. Available at: https://www.ft.com/content/f3143c7e-c56b-11e7-a1d2-
6786f39ef675 [Accessed on: 12 January 2018].
Dorling, D. (2014). All That Is Solid: How the Great Housing Disaster Defines Our Times, and
What We Can Do About It. Penguin UK.
Hilber, C. A. (2015). UK Housing and Planning Policies: the evidence from economic research.
Khan, S. (2017). We’re starting to fix London’s housing crisis. But the government has to help.
[Online]. Available at: https://www.theguardian.com/commentisfree/2017/oct/27/were-starting-
to-fix-londons-housing-crisis-but-the-government-has-to-help [Accessed on: 12 January 2018].
Lund, B. (2017). Understanding housing policy (third edition). Policy Press.
Mayo, M. (2017). Changing Communities: Stories of Migration, Displacement, and Solidarities.
Policy Press.
Minton, A. (2017). Big Capital: Who Is London For? Penguin UK.
Ryan-Collins, J., Lloyd, T., & Macfarlane, L. (2017). Rethinking the Economics of Land and
Housing. Zed Books Ltd.