The real crisis of housing supply

In all the fuss over housing targets, the absence of any targets for the supply of affordable housing in England has gone largely unnoticed. Not only is there no national target for amount of affordable housing needed each year, but in almost every local authority area, the amount of new affordable housing is only a tiny fraction of what’s needed.

When policy makers and politicians talk of a housing shortage, the real crisis of supply is the lack of affordable housing and the failure to provide homes at really affordable prices. 

In the 20 local planning authorities (LPA) where the so-called crisis of supply is at its worse, it is affordable housing that is in shortest supply. In many of these local authority areas, the supply of affordable housing is just in single figures. 

LPAAnnual Housing Requirement Annual Affordable Housing NeedAffordable Supply 2021-22Affordable Supply as % of need 
Epping Forest8641434431%
Isle of Wight61630415350%
Kensington and Chelsea6711018959%
North Hertfordshire90121512357%
Three Rivers5682149143%
Housing Delivery Test results 2021 and Affordable housing need and supply 2021-22

The table above shows the 20 local authorities with the lowest supply of market housing, as measured by the government’s Housing Delivery Test. The first column shows their annual housing targets. These targets are set by the standard method formula that forecasts the number of new households requiring a home of their own.  These targets are for new housing to purchase at full market price. For details of the standard method see:

The second column sets out the number of new households in that area who cannot afford market prices. This is the local need for affordable housing. Housing need is measured by the local authority, using a method set out in planning practice guidance. The number of affordable homes built in each area is detailed in the third column. Finally, the percentage of affordable homes built, against the number needed, can be seen in the last column.

It is clear from the table that the crisis of supply is a crisis of affordable housing. In some of these local authority areas, no households can afford to buy a full priced home. They need affordable housing and lots of it. In four of the local authority areas, the number of affordable homes required is higher than the target for market housing. These local authorities do not need market housing. They do not need to have targets for market housing. They just need to build affordable housing.

Any local authority where the number of new market homes built is less than 75% of the formula target is judged by the government to have failed the Housing Delivery Test and is  penalised. This can result in the local community losing democratic control over land use planning.

There is no penalty for a local authority that fails to build the amount of affordable housing it needs.

That is the real housing crisis.

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