The Foundations of the Housing Crisis - How Our Extractive Land and Development Models Work Against Public Good

“The Foundations of the Housing Crisis – How Our Extractive Land and Development Models Work Against Public Good” is a position paper from the New Economics Foundation (NEF), a UK charitable and independent think tank. It is authored by Emmet Kiberd and Abi O’Connor and forms the first output in NEF’s series “Fixing Our Broken Development Model”, produced within the multi-year Reclaiming Our Regional Economies (RORE) programme.

The paper argues that the UK’s housing crisis is rooted in an economic and policy model that enables value created collectively in places to be extracted for the benefit of relatively few private owners. It reports at least 8.5 million people in Britain experiencing some form of unmet housing need. Rising housing costs are presented as a key driver: the share of people finding it difficult to afford rent or mortgage payments increased from an average of 27% (Apr–Jun 2022) to 37% (Jan–Mar 2024), after exceeding 40% in summer 2023.

The analysis describes a long-run rise in rent burdens following deregulation and policy shifts, with private rented-sector rent rising from around 7–8% of income in the 1970s to 25% or more over the past 25 years. For homeownership, the paper highlights a worsening affordability ratio: in England, buyers spend on average 8.3 times annual earnings to purchase a home, rising to 12 or more in almost a quarter of local authorities and up to 38.4 in parts of London. It also notes that mortgage rate rises in late 2022 reduced approvals (by 33% in the cited period), increasing advantages for cash buyers.

A central claim is that the housing crisis is also a land crisis. Land values are reported to have increased by more than 600% between 1995 and 2022, reaching £7.2 trillion and representing more than 60% of the UK’s total net worth. Over that period, land’s share of households’ net wealth is described as rising from 23% to 45%, with 30% of households owning no property wealth. The paper emphasises “hope value” (uplift linked to expected planning permission) and reports £13.4 billion in landowner windfall profits in 2016/17, compared with an estimated £4 billion of uplift recaptured publicly via Section 106 contributions and the Community Infrastructure Levy (CIL).

NEF argues that planning could rebalance power but is constrained by capacity and design capability after sustained funding cuts (with planning described as facing resource cuts of more than 50%). The paper proposes an alternative development model drawing on international practice (including the Netherlands, Germany, France, South Korea and Japan): stronger land readjustment and compulsory purchase powers to acquire land at use value, higher long-term public ownership of land and housing to capture uplift for public goods, and restored resourcing for local planning. It also links housing reform to wider sustainability outcomes, including transport patterns, energy standards, and biodiversity goals.