Affordable housing has been a long-standing issue in the UK. Demand continues to consistently outpace supply, creating major challenges for policymakers and developers. Worst of all, this has had a severe impact on millions of people struggling to find secure and affordable homes.
This chronic shortage of affordable homes means that by 2030, an extra 1.7 million households could be living in unaffordable homes – a 35% increase.
The UK Government has estimated that 300,000 new homes are needed per year in England alone, but the current rate of construction falls short of this target. In 2023-24, net additional dwellings were 221,070 in England, a 6% decrease on 2022-23. Of those homes delivered that year, only 62,289 affordable homes were completed, a decrease of 2% compared to the previous year.
This shortfall is particularly prominent in urban areas where demand is highest. Soaring house prices and rental costs are one reason why it’s becoming increasingly challenging for low- and middle-income households. Other factors can include:
- Land availability and cost: UK land prices are one of the highest in Europe, driven by restrictive planning laws and high demand. This makes it expensive to develop new housing, particularly affordable units.
- Policy and regulation: Although government initiatives – such as the Affordable Homes Programme and shared ownership schemes – are in place, some argue that more policies need to be introduced to try to close the gap between supply and demand. Complicated planning processes also impact the delivery of affordable housing.
- Economic pressures: Housing developers continue to feel the pinch, due to rising construction costs, inflation and economic uncertainties. This has reduced the amount of affordable homes being delivered. There were 43,439 starts on site in England in 2023-24, a decrease of 39% compared to the previous year.
- Demographic changes: Population growth and urbanisation have increased housing demand. The population of England could increase to 60.3 million people by 2045.
Inevitably, all of these factors have serious implications, with wide-ranging social and economic consequences.
The inability of homeowners to afford their homes can lead to poor housing conditions, contributing to physical and mental health problems. This can also lead to economic inequality, where homeowners are unable to save or invest in other important areas of their lives.
In worst-case scenarios, households may find themselves homeless. In England, 358,370 households contacted their local authority after being threatened with homelessness or losing their home in 2023-24 – 10% more than the year before.
The current situation regarding affordable housing is dire. To get out of this crisis, a coordinated effort from the UK Government, private developers and local authorities is required. Innovative and inclusive solutions are needed to help create a future where everyone has access to secure, affordable housing – no matter where they live in the UK.
In 2025, the time to act is now. Failure to do so will only exacerbate the supply of affordable housing for future generations.
Other notable statistics from the Ministry of Housing, Communities & Local Government’s latest report about affordable housing supply in England include:
- 65% of new affordable housing completions were for rent (including social, affordable and intermediate rent).
- 9,866 of new affordable housing completions were for social rent.
- 44% of all affordable homes delivered in 2023-24 were funded through section 106 (nil grant) agreements, compared to 47% in the previous year.
- 93% of affordable homes delivered in England were new build.
- 3,156 starts on site in London in 2023-24, a decrease of 88% compared to the previous year.
