In what may come as a surprise for anyone who has recently experienced the housing market in Britain, the demand for new housing in this country is apparently “muted”.
These words, from a recent stock market report by leading housebuilder Taylor Wimpey, are reflected across the housebuilding industry, with a complete collapse of new housing development across parts of Britain in recent months.
This is a sick joke for anyone either homeless or living in substandard housing. What these huge companies mean, of course, is that profitable demand is muted.
There can be little doubt about the true extent of the housing crisis. As of the end of last year, the housing charity Shelter estimated that one in 153 (382,000) people were homeless in Britain.
In London, the crisis is even more acute, with almost one in 20 children living in ‘temporary accommodation’, mainly due to families being evicted from rented housing.
Beyond this, millions also live in overcrowded or substandard housing. The crisis shows no sign of slowing down, with it recently being reported that overall housing costs have risen by 41 percent in the last five years, to an overall total of £226 billion annually.
Housebuilding stall
At the same time as this crisis, housebuilding nationally has fallen to a 12-year low. Perversely, the collapse is even more extreme in London, with the number of new homes starting construction having fallen 84 percent in the space of ten years, with only just over 5,500 being started in 2025.
‘Affordable’ housing has also not escaped the crisis. It has been reported by the Home Builders Federation (HBF) that 8,500 affordable homes which developers have been required to build as part of planning permissions will be unoccupied due to housing associations not being able to afford to buy them as a result of funding cuts.
The situation has reached such dire levels that the HBF has called for major state subsidies, in the form of a new ‘help to buy’ scheme.
The cynic would suggest that such calls are motivated by profitability rather than a genuine concern for the housing crisis. The previous help to buy scheme in the 2010s delivered huge profits for developers and allowed one CEO to be ‘awarded’ a bonus of over £100 million.
Deregulation
At the behest of housebuilders, both the previous Tory governments and the Starmer government have been cutting back on regulations, in a desperate attempt to encourage housebuilders to build. This is in spite of ongoing scandals regarding external cladding on high-rise buildings post-Grenfell, and RAAC crises in schools.
Among other ‘reforms’, the planning system is now much easier for developers to obtain planning permission for housebuilding, while trying to blame this and ‘NIMBYism’ for the lack of housing.
This has gone even further in London, with the affordable housing requirements on new developments being slashed from 35 percent to 20 percent, in an attempt to reverse the trend.
Clearly, this is not where the real issue lies. Despite these reforms, there has been a slowdown. What’s more, half of all developments granted planning permission since 2012 have not yet been built.
Industry crisis
One factor that would limit increasing the number of houses built (even if developers wanted to) is the ongoing labour shortage in the industry. By one estimate, the number of construction workers in the UK has fallen by 13 percent since 2005.
There are a number of reasons behind this decline, with one being the hard work and low pay culture of the industry. With the increased casualisation of the workforce, many workers have left the industry in the hope of better security and stability elsewhere.
Another reason is the previous reliance of the industry of cheap labour from the EU prior to Brexit, with it being estimated that 8 percent of construction workers nationally (and 27 percent in London) in 2016 were EU nationals.
‘Land banking’ and profit
Fundamentally, however, the real issue is the profit system. Developers will only develop housing when it is profitable, and will limit supply to ensure prices remain high, along with their profits.
Housebuilders have increasingly struggled to sell the same number of houses profitably. The general squeeze of pay and living standards over the last two decades, along with the soaring cost of renting, has made it increasingly impossible for young people to buy their first home. And this is before you factor in increases in mortgage interest rates over the last 4 years.
The phenomenon of ‘land banking’ (developers acquiring land with no intention to develop it for many years) has also grown recently. Many large large developers hold enough land to supply them for the next ten years, at current building rates.
There’s only one party which is investing in building new homes, where they’re needed.
There’s only one party which will make renters better off in May, with a ban on Section 21 notices and new rights for tenants.
It’s Labour.
— The Labour Party (@UKLabour) April 9, 2026
This is also only the land in direct ownership, and developers will often also hold options to acquire even more land, should they manage to obtain planning permission or it become more profitable. Anecdotally, this seems to have significantly increased in recent years, although no publicly available figures exist to confirm this.
Holding such a large amount of land ensures that the tap of housebuilding can be turned on and off to keep prices, and therefore developers profits, high. This also has the extra ‘benefit’ that other developers are not able to build on the land and increase supply.
But don’t take our word for this – this was found to be the case eight years ago in a government review on the house building sector, led by then-Tory MP Oliver Letwin!
The real solution
Despite claims by developers and the government, tinkering with the planning system or affordable housing requirements, or more state subsidies, will not magically solve the housing crisis. The need to build houses only when profitable is what is driving the housing crisis.
But with the capitalist system in crisis and the threat of further austerity, there will be no return to the days of state-led mass social housing building of the postwar period, which was one of the concessions won by the working class.
The resources and skills to end the housing crisis exist in society. What is lacking is the conscious control of these resources in a democratic manner.
Only with the expropriation of the big landlords, housebuilders, construction companies, and the rest of the billionaire class can we solve the housing crisis. With control over these monopolies, we can plan and build housing based on actual demand and need, and forever end the scandal of homelessness and poor-quality housing.
