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

Overview of the Report

The paper “The Foundations of the Housing Crisis – How Our Extractive Land and Development Models Work Against Public Good” is published by the New Economics Foundation (NEF), a charitable think‑tank independent of political parties. It is authored by Emmet Kiberd and Abi O’Connor, experts in housing policy and regional economics. The document forms the first output of NEF’s “Fixing Our Broken Development Model” series, produced under the Reclaiming Our Regional Economies (RORE) programme, which is funded by the National Lottery Community Fund and several foundations.

Scale of the Current Crisis

The executive summary highlights that at least 8.5 million people in Britain face unmet housing need. Private rent costs now consume three‑fifths of renters’ income, and house prices have risen to an average of 8.3 times annual earnings, reaching 12 times in some areas. Land values have increased by more than 600 % since 1995, now representing over £7.2 trillion (about 60 % of the UK’s net worth). The housing benefit bill was £23.4 billion in 2022, with £9.5 billion flowing to private landlords and projected to rise to £70 billion over five years.

Economic Impact of Social Housing

Building the 90,000 social homes required to close the backlog could generate a net benefit of £51.2 billion, including £7 billion in direct fiscal gains and £16.8 billion in indirect benefits such as improved health and employment. Acquiring 10,000 existing homes for social rent in London could save £1.5 billion in temporary accommodation costs and £340 million in housing‑benefit subsidies, with further savings of £440 million from health and earnings gains.

Key Policy Failures

The report identifies weak planning departments (over 50 % budget cuts) and ineffective land‑value capture mechanisms such as Section 106 and the Community Infrastructure Levy, which have failed to recoup sufficient uplift. Planning consultations are often tokenistic, limiting democratic control. Land banking leaves valuable sites idle, while developers capture most of the uplift, estimated at 90 % in countries like Germany and the Netherlands.

International Comparisons & Alternatives

Successful models in the Netherlands, Germany, France, South Korea and Japan use strong land readjustment powers, public ownership of land, and compulsory purchase at use value. These approaches enable public recapture of uplift for infrastructure, affordable housing and green space. The report argues that similar powers, if linked to robust democratic processes, could transform the UK market.

Proposed Reforms for a Sustainable Model

Key recommendations include:

• Granting local authorities stronger land‑readjustment and compulsory purchase powers.
• Expanding public land ownership to capture long‑term uplift.
• Restoring planning department resources to pre‑austerity levels.
• Funding public‑sector housebuilders for higher volumes of social homes.
• Introducing a new infrastructure levy to replace the current levy system.
• Reforming business rates and land taxes to shift revenue from private speculation to public investment.

Environmental & Social Co‑Benefits

The report notes that current development patterns exacerbate climate and biodiversity loss. It estimates that delivering the required new homes without a sustainable model would consume 70 % of the UK’s carbon budget. Sustainable design, higher energy standards and biodiversity net‑gain measures are essential to keep housing development within planetary limits.

Access & Metadata

The document is publicly available on the NEF website and can be downloaded from the provided link. It was last edited on 2 May 2026 and was submitted to the NEF database on 14 November 2025. The resource is classified as public.