The UK Housing Crisis: Causes, Impact, and Solutions

When couple Jason and Sam were evicted from their rental home in Portsmouth, they naturally began looking for a new home.

However, even though Jason has a steady job as a bus driver, they were unable to find anywhere they could afford.

As a result, the family has been living in temporary accommodation, waiting for a council house to become available - along with more than 1,100 other local families.

The family are victims of the UK housing crisis. Properties are more expensive than ever, rents are unaffordable and homelessness is on the rise. 

This article explores what has caused the UK housing crisis, what impact it is having and what is being done about it.

The Scale of the Housing Crisis

As a result of these factors, the government estimates that 300,000 new homes are needed annually to meet current demand.

However, UK housebuilding has regularly fallen short of this. For instance, in 2012/13, around 125,000 new homes were supplied, which increased to a peak of 243,000 in 2019/20. 

However, this declined to 211,870 during the pandemic, and only recovered to 210,320 in 2022/2023.

This has led to a cumulative deficit and the UK has a backlog of approximately 4.3 million homes.

Housing shortfall drives low affordability

This persistent housing shortage has significantly increased property prices, making homeownership unattainable for many. 

Over the past two decades, house prices in the UK have risen at twice the rate of wages, intensifying affordability issues. 

In 2023, the average annual disposable household income in England was £35,000, while the average house price stood at £298,000 - equating to 8.6 times the average income. This ratio has nearly doubled from 4.4 in 1999. 

Regional disparities further highlight the issue. In London, only the top 10% of earners can afford to purchase a property in the area. 

The consequences of unaffordable housing

The UK's housing crisis has far-reaching societal impacts, particularly due to the unaffordability of housing. Key areas affected include:

Decline in homeownership

Homeownership, including mortgaged properties, in the UK has been decreasing over the past two decades. The rate peaked at 70.9% in 2003 but fell to 63.9% by 2018. 

This decline is particularly evident among younger adults; for instance, homeownership among 25 to 34 year olds dropped from 55% in 1996 to 34% in 2016. This trend reflects the growing challenges individuals face in purchasing homes.

Pressure on the Rental Market

Housing affordability issues have increased demand for rental properties, but supply has not kept up.

This has caused rents to rise. In the 12 months leading up to November 2024, average private rents in the UK rose by 9.1%, reaching £1,362 per month in England. London saw an even higher increase of 11.6% during the same period. 

This surge in rental costs has outpaced wage growth, intensifying housing affordability challenges and contributing to economic inequality.

Economic Inequality

The disparity between housing costs and incomes exacerbates economic inequality. Around 20% of UK tenants spend more than half of their income on rent, highlighting the financial strain on renters. 

In contrast, the median income of homeowners is 141% higher than that of social renters and 30% higher than private renters. This gap underscores the stark financial divide between renters and those who own their homes, whether outright or with a mortgage.

Low to middle income families in the UK are significantly poorer than their counterparts in Western Europe, largely due to exorbitant housing costs. While UK prices are overall 8% higher than the OECD (Organisation for economic co-operation and development) average, housing in the UK costs 44% more.

Overcrowding

The shortage of affordable housing forces many families to live in overcrowded living conditions. In 2020-21, 3% of households in England were overcrowded, with higher rates in rented sectors: 8% of social renters and 6% of private renters experienced overcrowding.

Pressure on social housing

The issues above have led to greater demand for social housing. However, several other factors have put strain on the sector. 

Social housing stock is not being maintained. Each year, the number of social homes being lost from the system exceeds those being added.

According to a new Radix Big Tent Housing Commission report, only 9,535 new social homes were built in 2022/23, a sharp decline from 22,661 in 2003/04. In 2021 alone, 29,000 social homes were either sold through the Right to Buy scheme or demolished due to poor conditions.

Homelessness

The UK's housing crisis has led to a significant increase in homelessness. As of December 2024, at least 354,000 people in England were homeless, including 161,500 children. This represents a 14% increase from the previous year. 

Additionally, the number of rough sleepers in London rose by 19% between April 2023 and March 2024, reaching 11,993 individuals. This figure is 58% higher than a decade ago. 

Why Can’t the UK Build More Homes?

Several government policy shortcomings have exacerbated the UK's housing crisis. For example, the UK’s planning system creates barriers to house building, including:

⚠️ Lengthy approval processes

⚠️ Poorly resourced local authority planning departments

⚠️ Complex regulations

⚠️ Opposition from local residents

⚠️ Green belt restrictions

⚠️ Lack of or inconsistent local plans making planning decisions difficult

Also, some government policies have even directly worsened the housing crisis. For example:

The Help to Buy Program: This initiative was intended to assist first-time buyers by providing low-interest loans. Although this improved affordability for some, it has faced criticism because it did not include plans to increase the housing supply. This led to inflated house prices.

Austerity measures: The post-2010 austerity policies led to a 60% reduction in capital investment for new affordable homes. This decrease and borrowing restrictions on local authorities resulted in a sharp decline in social housing development, exacerbating the housing shortage.

Benefit Cap Implementation: Introducing the benefit cap in 2013 limited the total amount of state welfare benefits a household could receive. This policy disproportionately affected families in high-rent areas, contributing to increased poverty and homelessness among vulnerable populations.

What Steps Is the New UK Government Taking to Solve the Housing Crisis?

The new UK Labour Government came to power promising to end the housing crisis by building more homes and speed up the development process. 

Critically, it has reintroduced housing targets that were scrapped under the previous administration. The government is aiming to build 1.5 million new homes over the next five years.

Here are some of the key initiatives it is pursuing:

✅ Mandatory housing targets: Councils are now required to meet specific housing targets, particularly in high-demand areas like London and the southeast. For example, Southend-on-Sea in the East of England has a target of 1,173 new homes per year, while Wealden in the South East is expected to deliver 1,186 homes annually. This approach aims to ensure a consistent supply of new homes where they are most needed.

✅ Utilisation of 'grey belt' land: Normally green belt land cannot be built on. However, the updated National Planning Policy Framework introduces the concept of 'grey belt' land - lower-quality areas within the green belt that can be designated for development. This strategy seeks to balance the need for new housing with environmental considerations.

✅ Streamlined approval processes: The government plans to reduce bureaucratic hurdles by simplifying planning regulations and accelerating approval timelines. This includes setting a 12-week deadline for local authorities to propose housing plans, aiming to facilitate quicker project commencements.

To encourage the development of build-to-rent properties and affordable housing, the government is also considering various tax incentives, including:

✅ Social housing tax credit: Inspired by the U.S. Housing Credit system, the UK Parliament is exploring the introduction of a Social Housing Tax Credit. This initiative aims to attract private-sector investment into affordable housing without increasing public-sector debt. 

✅ Housing guarantee schemes: An additional £3 billion has been allocated to support small and medium-sized enterprises (SMEs) and the build-to-rent sector through housing guarantee schemes. These schemes provide developers with access to low-cost loans, facilitating the delivery of tens of thousands of new homes. 

Improving the Quality of Rental Homes 

Building new homes isn’t the only way to alleviate the UK’s housing crisis. 

Landlords can play their role by ensuring their properties meet the Decent Homes Standard and by prioritising proactive maintenance.

Doing this:

🏠 Keeps more homes habitable and available for renters.

🏠 Prevents properties from falling into disrepair and being lost to the UK’s housing stock.

🏠 Improves living conditions for the UK's 8.6 million renters, creating healthier and more stable communities.

We know that achieving this is easier said than done for landlords. After all, many face increased costs and regulations.

That’s why we created EVO to help them keep their properties in top condition.

Maintain high-quality homes with EVO

Our end-to-end system takes the hassle out of repairs and maintenance, using technology and automation to ensure fast, efficient responses to repair requests.

How It Works:

✅ Simple reporting: Residents use the EVO app to request repairs in seconds, making it easier to report even minor issues before they escalate.

📸 Photo & video uploads: Tenants can capture the problem directly in the app, reducing the need for an initial inspection and speeding up the repair process.

⚡ Automated job matching: Requests are instantly assigned to the next available tradesperson - no more phoning around or chasing quotes.

📅 Flexible scheduling: Residents choose from several time-slots that work for them, making the process smoother and more convenient.

🔧 Informed tradespeople: Before arriving, the assigned professional gets full access to job history and property details, ensuring they bring the right tools and parts.

✔️ Quality assurance: Every job is reviewed and signed off by the EVO team, and all work comes with a 12-month warranty for peace of mind.

By using EVO, landlords and housing providers can enhance tenant satisfaction, maintain property value, and help secure the UK’s rental housing stock for the future.

👉 Contact EVO today to find out how they can help you maintain and improve your rental properties.

Conclusion: Solving the Housing Crisis May Take Many Years

The UK housing crisis is a complex issue driven by housing shortages, rising costs, policy failures, and deteriorating rental conditions.

Without decisive action, affordability and availability will continue to decline, impacting millions of people - young people, property buyers, renters, landlords, and housing providers alike.

Solving it will be challenging. However, a combination of policy reforms, planning system improvements and investments in better property management practices and technology-driven solutions like EVO are excellent first steps.