A functioning housing ladder is critical to our towns, cities and society. It means people can move in and move on when the time is right.
Yet we all know the ladder in Britain has plenty of rungs missing. That absence puts pressure on society in multiple ways. People stay in homes that no longer fit their lives. Young workers delay moving for jobs. Families postpone having children. Renters struggle to accumulate deposits while house prices continue to outpace earnings.
Recent research illustrates just how stark the situation has become. Last year, Pocket Living produced hard-hitting analysis of first-time buyers and renters, identifying the extraordinary cost burden facing younger workers in London. Forty-two per cent of respondents reported spending an unsustainable share of their income on housing – nearly double the 22 per cent recorded in 2023.
Meanwhile Halifax reports that the average first-time buyer is now 33 years old and needs a deposit of around £61,000 to purchase a typical home costing roughly £311,000. At the same time, rents continue to absorb a large proportion of monthly income, leaving little room to save.
None of this is inevitable. The housing ladder can be rebuilt. But doing so will take time and it will require political bravery and a combination of coordinated interventions rather than a single policy fix.
Here are five ideas which, taken together, could help rebuild housing supply for renters and first-time buyers in Britain’s cities.
- Gentle densification – more bedrooms
- Simple asks – a flat rate tax for small sites
- Homes for people who matter – key worker co-living
- Equity loans for first-time buyers
- A starter space standard for sharers and first homes
I will explore each of these in more detail over the coming weeks. But the broad direction of travel is clear: we need to rethink both the scale and the type of homes we deliver.
1. Gentle densification
Enabling people to add bedrooms is one of the most cost-effective ways to address housing pressure.
Across much of the country – including large parts of London – traditional density-led development on smaller sites has become increasingly difficult to deliver. Land values, policy requirements and build costs mean many schemes simply do not stack up.
It will take time for those economics to recover. In the meantime we should not rely solely on large development sites to increase housing supply.
When we talk about new homes, we should also think in terms of new bedrooms. Britain increasingly operates in a sharing economy. Around a third of new private rental leases in London are for shared households.
Anyone looking across London from one of its taller buildings will see mile after mile of terraced streets. The question should not always be how to replace these places – but how to make the most of them.
The evidence is promising. In Tower Hamlets a design code allowing mansard roof extensions in the Victoria Park Conservation Area resulted in a 668 per cent increase in planning applications, with approval rates rising into the 90 per cent range.
Local authorities could go further by being compelled to introduce Local Development Orders that provide pre-approved templates for modest extensions and additional floors. This would allow small builders and homeowners to add bedrooms quickly and predictably.
In many ways this begins to resemble a limited form of zoning – something that has enabled countries such as New Zealand to unleash a wave of small builder activity in existing neighbourhoods.
2. Simple asks – a flat rate tax for schemes under 100 homes
One of the fundamental problems in the planning system is that it lacks proportionality.
Large schemes can absorb complex planning obligations, viability negotiations and infrastructure payments because the scale of development allows costs to be spread across hundreds of homes.
Small sites cannot.
Yet the policy framework often treats a 15-home development in the same way as a 500-home scheme. Viability negotiations become complex, planning timelines extend, and many sites are simply abandoned. Complexity and confusion has been mainstreamed following the former Deputy Mayor for Housing, James Murray’s decision to embed viability testing in all sites over 10 homes across Greater London. This armchair ideology painted developers as profiteering and has inadvertently contributed to making the country and the Capital’s housing supply far weaker.
A flat-rate infrastructure or planning tax for smaller developments could transform this landscape. Instead of negotiating Section 106 contributions and viability assessments for every site, smaller schemes could pay a simple per-home levy in exchange for faster and more predictable approvals.
The benefits would be substantial: lower transaction costs, faster decision-making and a renewed role for SME builders – historically responsible for a much larger share of housing delivery than today.
3. Homes for people who matter – key worker co-living
Cities rely on key workers: teachers, nurses, police officers, transport workers and emergency staff.
Yet these workers are often priced out of the very cities they serve.
Purpose-built key worker co-living accommodation could provide a practical solution. Well-designed shared housing with private bedrooms and communal facilities can deliver homes at lower cost while retaining quality and dignity.
For many younger workers this would represent a step up from the often poorly managed house-share market, while still allowing them to save for the future.
Cities such as London already have great examples of open market co-living development. The challenge now is to direct some of that innovation toward workers who provide essential services. Whilst the GLA is currently very resistant to this approach, I feel over time attitudes will soften given the importance this tenure can play in a city’s housing supply.
4. Equity loans for first-time buyers
Access to deposits remains one of the biggest barriers to home ownership.
The success – and controversy – of Help to Buy demonstrated both the power and the risks of equity loan schemes. But the core concept remains valuable: sharing risk between the buyer and the state to enable entry to the housing ladder.
A more targeted version of this model could focus on first-time buyers purchasing smaller urban homes. Carefully designed equity loans can reduce the deposit barrier without inflating prices across the wider market.
5. A starter space standard
Finally, we should reconsider the space standards applied to homes intended for first-time buyers and sharers.
Minimum space standards play an important role in maintaining housing quality. But in some circumstances they may also limit the creation of smaller, more affordable homes.
A “starter space standard” – carefully calibrated for first-time buyers and shared households – could allow developers to deliver well-designed but more compact homes, particularly in high-cost cities.
These homes would not replace traditional housing standards but would create an additional rung on the ladder for those trying to enter the market.
Summing up
None of these ideas on their own will solve Britain’s housing crisis and indeed some will be fiercely resisted by the current establishment who remain locked in a mindset that views profit and housing development as a negative for society. But taken together they illustrate something important.
Housing policy does not need to rely solely on grand gestures or massive development sites. London for example has slept walked into a world where only public land on contractor led deals now works. We need to find a way back and that is doing many small things better.
Incremental changes – more bedrooms, simpler planning rules, targeted finance and new housing models – can collectively rebuild the ladder. A ladder slowly dismantled over the past decade by poor policy making.
If Britain is serious about restoring opportunity for renters and first-time buyers, we need to start rebuilding the missing rungs of the housing ladder and accepting that economic growth does mean businesses are allowed to speculate and make profit.
