Affordability of Housing in The United Kingdom - Barker Report

Barker Report

See also: Barker Review of Housing Supply

In Budget 2003, the Government asked Kate Barker, a member of the Monetary Policy Committee, to undertake a review of housing supply in the UK. Barker’s interim report was published on 10 December 2003. She found that the number of houses being built in the UK was not keeping pace with demand. In 2001, around 175,000 dwellings were built in the UK – the lowest level since the Second World War. Over the prior 30 years, UK house prices went up by 2.4% a year in real terms compared to the European average of 1.1%. As a result of these price rises first-time buyers in 2001 paid on average £32,000 more for their homes. In 2002, only 37% of new households in England could afford to buy a house, compared to 46% in the late 1980s.

Barker considered a range of factors that might be constraining the supply of housing in the UK. She identified the main constraint as land supply and the housebuilding industry's response to risk, which leads to reluctance to build out large sites quickly. The regulatory relationship and control over the use of land also influences the way in which land is made available for development.

The Barker Review’s final report set out a range of policy recommendations for improving the functioning of the housing market:

  • Government should set out a goal for improved market affordability;
  • additional investment to deliver additional social housing;
  • a Planning-gain Supplement to ensure that local communities share in the value of development;
  • a Regional Planning Executive to provide advice on the scale and distribution of housing required;
  • allocation of additional land in Local Development Frameworks;
  • a Community Infrastructure Fund to help to unlock barriers to development; and
  • Local authorities should be allowed to “keep” the council tax receipts from new housing developments for a period of time.

In response to the issue of housing affordability highlighted in the Barker Report the Department for Communities and Local Government created a non-departmental public body, the National Housing and Planning Advice Unit, to provide advice to the Government, Regional Assemblies and other stakeholders. The Unit's initial report, Affordability Matters (published in June 2007) argued that there are strong reasons to promote affordability - deteriorating affordability is associated with house price volatility, the diversion of investment from more productive areas of the economy, reduced labour market flexibility, and a poorer standard of living for young people.

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