England Can’t Build Enough Homes. Jamaica Is Watching the Wrong Lesson

Kingston, Jamaica — 5 March 2024

Britain’s housebuilding programme has, by any measure, consistently underdelivered against stated government targets for decades. The Conservative government had set a target of building 300,000 new homes per year in England. In the year to March 2023, England completed approximately 234,000 new homes, a figure that, while significant in absolute terms, fell well short of the annual target and represented a sector constrained by planning delays, labour shortages, materials costs, and weakening developer confidence in a market where mortgage availability had tightened and buyer demand had softened. Understanding why housing supply falls short of need, and what the consequences are, is among the most important analytical tasks in housing policy, not only in Britain but in any growing economy where demand for homes consistently exceeds the rate at which they are being built.

The Supply Gap and Its Causes

England’s shortfall in new housing supply is the product of a planning system that has historically been slow to allocate land, a development industry concentrated among a relatively small number of major housebuilders, and a political environment in which local opposition to new development frequently carries more electoral weight than the diffuse interests of future occupants who do not yet live in the area. The result is a system in which planning permissions are granted more slowly than necessary, viability assessments and appeals add delay and cost, and the volume of homes actually completed in any given year consistently undershoots the volume that population and household formation trends require.

In 2023, the challenge was compounded by financial conditions that made development less attractive. Higher borrowing costs increased the cost of development finance. Weaker buyer demand, as affordability deteriorated, reduced the revenue housebuilders could expect from completed homes. Cancellation rates on reservations rose as buyers who had committed to purchases found themselves unable to proceed when their mortgage offers expired or their financial situations changed. Housebuilders responded by pausing starts on new sites, slowing the rate of development on sites already under way, and reducing land acquisition activity.

Planning, Land, and the Political Economy of Housing Supply

The planning system’s role in constraining housing supply has been the subject of extensive analysis and repeated policy intervention in England, without the underlying dynamic substantially changing. Local planning authorities have discretionary powers that enable communities to resist development they do not want, even when national housing targets and local need assessments point clearly toward the need for more homes. The political economy of planning is asymmetric: those who oppose development are present and organised; those who would benefit from it do not yet exist as a constituency in the area concerned.

This dynamic is not unique to England. Any planning system that gives existing residents significant influence over new development will tend to produce outcomes that reflect the preferences of those residents, which typically include limiting the density and volume of new housing near where they live. The consequences are felt most acutely by those who cannot access housing in areas of high demand: workers who must commute long distances, families priced out of the areas where they grew up, and lower-income households displaced to less accessible locations as property values rise.

Jamaica’s Housing Supply Challenge

Jamaica faces a housing supply deficit that has persisted for generations and that has been addressed only partially by the combination of public sector development, NHT-supported construction, and private sector housebuilding. Informal settlement, in which households construct homes on land without planning permission or formal title, has absorbed a significant share of the demand that the formal housing market cannot meet. This is not a uniquely Jamaican phenomenon: informal settlement is a feature of rapidly urbanising economies worldwide, and it reflects a failure of the formal housing supply system to deliver homes at a pace and cost that ordinary working households can access.

Jamaica’s planning system, administered through the National Environment and Planning Agency, regulates development across the island. Like England’s, it operates in an environment where applications can be slow to process, where community and political considerations influence outcomes, and where the formal system’s capacity to guide and accelerate the development that is needed has not always matched the scale of the challenge.

The UK experience suggests that housing supply targets, while necessary, are insufficient on their own. They need to be supported by a planning system with the capacity and the political backing to make timely decisions, by development finance that makes building viable across a range of market conditions, and by a housebuilding industry with the skills, scale, and incentives to meet the targets set. Jamaica’s pathway to closing its housing supply gap will need to engage all of those dimensions simultaneously. The UK’s chronic undersupply, despite decades of targets, is a cautionary example of what happens when some of those dimensions are addressed and others are not.