Housing in the UK is too expensive—particularly in areas with the best job opportunities;
Our housing affordability crisis is primarily the result of not building enough houses;
Housing scarcity lowers living standards, reduces productivity, curtails innovation, hinders family formation, damages our health, and harms the environment;
The main cause of insufficient quantity of housing is the UK’s dysfunctional planning system;
The planning system should be reformed to deliver cheap, high-quality housing in areas that people want to live;
Wherever possible, to make them politically durable, reforms to the planning system should be ‘win-win’—addressing housing scarcity whilst benefiting existing residents and communities;
Social housing is vastly less efficient than cash transfers as a way to help those most in need. The same resources could help many more people if they were used more efficiently.

Let residents in each street vote to allow existing houses to be extended upwards or outwards;
Allow development on small areas of the green belt within walking distance of train stations, whilst preserving areas of exceptional beauty;
Liberalise a range of design regulations, including rules on space requirements, height restrictions, window size, corridor width, stair steepness, and minimum lift numbers;
Simplify the developer contribution process by replacing section 106 agreements with an single infrastructure levy;
Give social tenants eligible for the Right to Buy a ‘Flexible Right to Buy’, entitling them to buy a new home using the value of their Right to Buy discount;
Legalise subletting for social tenants to make better use of existing social housing stock.

UK house prices are rising much faster than wages—especially in major cities where people want to live. Renters face virtually all of their pay rises going straight into the pockets of their landlords. The direct result of housing becoming less affordable is that people have less money to spend on other things. The indirect consequences include:

Lower productivity—people find it more difficult to move within range of better jobs;
Stagnant innovation—new ideas are less likely to be generated when it costs more to live and work close to others in major cities;
Reduced family formation—people have less children than they want to if extra bedroom space is more expensive;
Worse health—urban sprawl means people have to make longer journeys for work or pleasure, so more people use cars and therefore get less exercise from walking and cycling;
Environmental damage—increased emissions from transport and a lack of replacements for poorly insulated old buildings exacerbate climate change.

The simplest explanation for housing becoming less affordable is that we are not building enough houses. That explanation is fundamentally correct. Housing supply is unresponsive to rising housing demand because it is extremely difficult to get permission to build. Despite the enormous costs of housing scarcity, planning authorities and local residents have every reason to oppose new developments near them: local services would face increased pressures and existing homeowners would experience a fall in the value of their house.

Our discretionary planning system empowers these ‘NIMBY’ (Not In My Back Yard) attitudes in many ways: ‘green’ belts, design regulations, affordable housing requirements and much more. There are also no effective mechanisms to compensate local residents for the costs that they face as a result of new development. Sums that councils extract from developers are often spent on things that do not benefit residents affected by the developments. If this were changed, the gains would be enormous.

Meanwhile, social housing is a hopelessly inefficient, illiberal, costly response to the problem. People on low incomes get poor quality housing in expensive areas, with little incentive or ability to properly maintain the property. Instead, we should give poorer people more money and let them decide their own priorities between better housing, food, clothes, training and everything else.

The Adam Smith Institute argues that the benefits from liberalising the planning system far outweigh the potential costs. We also recognise the vital role of compromise where group interests conflict, ensuring that it is politically possible to deliver cheap, beautiful housing for everyone. Our work therefore focuses on delivering ‘win-win’ solutions to the housing crisis where possible, whilst ensuring existing developments are able to be utilized more efficiently.

Build Me Up, Level Up: Popular Homebuilding While Boosting Local Communities (September 2021)

Home Improvement: Fixing England’s Broken Planning System Once and for All (October 2020)

High Street Heist: How to Save the High Street by Relaxing Anti-Competitive Zoning Rules (January 2020)

Size Doesn’t Matter: Giving a Green Light to Micro-Homes (January 2019)

Flexible Right to Buy (October 2018)

YIMBY: How to End the Housing Crisis, Boost the Economy and Win More Votes (August 2017)

A Garden of One’s Own: Suggestions for Development in the Metropolitan Green Belt (January 2016)