UK’s Housing Crisis: Is it a Shortage of Homes or Mounted Land Banking?

Housing developers have been allowed to practice land banking for some time now, and the UK housing market is feeling the brunt of it. A shortage of land, homes, labour – which is it? In this blog, Managing Director of Think Timber Gav Brown, discusses the unpredictable housing market and the challenges land banking create for the industry.

Finger-pointing seems to be the nation’s favourite game right now. With Labour’s promise looking out of reach, which might I add isn’t breaking news, the industry is exploring other paths to make sense of the UK housing crisis. 

To develop new homes, land is needed to meet the target and overcome the national crisis. However, large housing developers, for many years, have been buying large swathes of land and sitting on it. But why? Housing developers purchase land and then simply sit on it, waiting for interest rates to increase and the market to boom.

The Government’s Plan to Unlock Land

Due to there being a lack of available land in the UK, with houses already piled upon one another, the government has proposed to relabel some areas of protected land, known as the green belt, as the so-called ‘grey belt’ and thereby release them for development. All so it can meet its new homes target—to build 1.5 million homes in the next five years. This strategy will supposedly unlock more land to build more affordable housing. The green belt is in place to protect the countryside and the possible sprawl of urban areas in the UK – so doesn’t this strategy just defeat its purpose? Land is there, right under the governments nose. But they can’t force housing developers to build on land they’ve banked. Or could they? And if they did, could it solve the current UK’s housing crisis once and for all?

Mounted Land Banking

The government claims there are many components of the planning system to blame for the crisis, but mounted land banking could be seen as one of the biggest. In 2023, the Big Issue analysed company reports from the UK’s eight leading housebuilders and discovered the amount of land they hold increased by 49% since 2018. It was found that all eight on average have enough land to build for more than 11 years, based on the rate they built homes in their last full trading year. They have the power to turn the tap on or off whenever they want. The country is thirsty for new homes, yet developers are stalling. With fluctuating housing production schedules, suppliers – like ourselves – face logistical nightmares, unsure when demand will peak or fall.

The Industry’s Future

This land banking scandal is controlling the future of British housing. While developers hold the keys to more homes, it’s not just the market that suffers. The supply chain is also directly affected and caught in the industry commotion. As a strategic partner to the timber staircase sector, Think Timber is just one of many businesses affected by this uncertainty. If housing developers could only ‘bank’ so much land at a time, they would be compelled to build new homes twice as fast or sell the surplus land to local authorities. This could invigorate the market. It would provide a more predictable flow of demand which is essential for suppliers in the housing construction industry. With an implemented strategy like this, it could boost industry confidence, and maybe, just maybe, Labour could meet its desired goal.

Beyond Land Banking

Tackling this serious issue, as we know, is only part of the solution. Even if land banking was addressed, the housing supply chain still faces other hurdles. The industry’s skills shortage and certain economic circumstances won’t just disappear. In the 1970s, councils built on average 134,231 new homes annually. And what’s to say it couldn’t have continued? Imagine the impact on the industry—including businesses like ourselves—increasing labour opportunities and providing essential materials for an industry in need of reliable supply. It would have definitely boosted Think Timber as a supply chain partner, let alone the wider economy. A steady demand for building materials, consistent job opportunities and sufficient social housing will bring stability and predictability in the UK housing sector, ensuring the demand for both private developers and local authorities is met.

What do you think the industry’s future looks like? If you need help with your timber supplies or would simply like to discuss any future business concerns of your own, email us at sales@thinktimber.co.uk