The UK housing market is grappling with long-term challenges that have resulted in a shortage of affordable, safe, and secure homes that cater to people at different life stages. 

Frontier Economics’ report, commissioned by UK Finance, takes stock of the trends in both the supply of, and demand for, the main housing tenures: owner-occupied, private rental sector and affordable housing (including social rented housing and shared ownership).  

Despite substantial construction growth over the past two decades, the UK still lags behind other countries in several key metrics. The UK has fewer homes per capita, the lowest number of vacant homes per person among the Organisation for Economic Co-operation and Development (OECD) countries, and a high level of under-occupation, with nearly 10 million homes in England having two or more spare bedrooms. 

Our research identified two primary issues: insufficient construction of new homes and the inefficient use of the existing housing stock. Addressing these problems will require time and a comprehensive approach to support first-time buyers and renters. This includes making homes more affordable and ensuring fairer outcomes in the rental market. 

Frontier collected evidence by examining data, reviewing existing literature and conducting interviews with key stakeholders in the mortgage sector and the home-building industry. This allowed us to identify the main issues that are preventing the UK from achieving its housing goals.  

Using this evidence, we suggest a package of policy recommendations, that given their interdependency, will require cross party support to ensure a commitment of at least five years, enabling policy makers to strategically plan and implement the measures over the long-term.  

Our policy recommendations include: 

Supporting the Home-Building Industry: 

• Conducting a thorough review of the current planning system to make it simpler and more rules-based, facilitating easier construction of new homes. This will create jobs and strengthen the construction sector while ensuring that new homes meet buyers' needs. 

Supporting Homebuyers at All Life Stages: 

• First-Time Buyers: Implementing policies to ease the path for those struggling to afford their first home. This support could include shared ownership schemes and maintaining low stamp duty rates for first-time buyers but should be temporary until housing supply increases. 
• Last-Time Buyers: Assisting the estimated 4 million people over 50 who wish to move to homes better suited to their needs but face obstacles. 
• Ensuring that the Older People’s Housing Taskforce168 findings and recommendations are implemented. 
• Providing a ‘free to consumer’, one‑stop independent, government‑endorsed service to advise those aged over 55 on housing and funding options, with the aim of closing information gaps and giving elderly people the confidence to move home. 

Supporting the Rental Market: 

• Clarifying the government's vision for the private rental sector to ensure it receives appropriate consideration in housing policy. This includes creating a streamlined registration system for landlords to aid local authorities in enforcement, provide tenant insight into landlord compliance, and reduce landlord burdens. Allowing mortgage lenders access to this register could improve housing quality and standards in the private rented sector. 

By implementing these proposed policy changes, the UK can move towards a housing market that is more efficient, fair, and capable of meeting the diverse needs of its population. 

Addressing the UK's housing market challenges requires coordinated action to support the home-building industry, homebuyers, and the rental market. A comprehensive, across-the-board approach is essential to ensure the housing market can deliver the homes needed in the long term. 

Click here to read the full report - Homes we need: An assessment of the UK housing market for UK Finance.