We recently wrote about the housing shortage and why the Labour Government is failing so badly with its housing targets. Today we are following that up with some more data that has been released. Figures just released show the UK is facing a deepening housing crisis: we’re not just missing the mark on new home construction, the gap between what’s needed and what’s being delivered is growing. For landlords and property investors, however, that gap represents real opportunity.
How Big is the Shortfall?
-
The UK government estimates that around 300,000 new homes per year are needed to meet demand.
-
Some analyses suggest the figure needs to be even higher — for example, the National Housing Federation has said at least 340,000 new homes per year may be required just to address the current shortfall.
-
Another report (Bidwells) estimates that England alone is short of about 2.5 million homes, and that to close the gap (including future population growth) England would need to build 550,000 homes a year until 2031.
How Much We’re Falling Short
-
The government’s target of 300,000 homes/year isn’t being met.
-
For example, in the year to March 2024, new home completions in England dropped to around 198,600 — well below the target.
-
In the latest Homes England figures (for 2024–25), there were 36,872 new home completions via its programmes. While that was an increase on the previous year, it’s a small portion of total demand.
-
A sector forecast by Savills predicts around 840,000 home completions across five years to 2028/29, which is 42% short of what’s needed to hit the 1.5 million homes target over that period.
What This Means for Investors & Landlords
1. Continued Rental Demand & Price Stability
With new supply lagging far behind demand, landlords are likely to continue benefiting from strong occupancy rates, rising rents (especially in high-demand areas), and relatively stable property prices. There’s less “new supply pressure” pushing rents or values down.
2. Capital Appreciation Potential
As the housing gap widens, scarcity becomes a signal for value. Properties already built (or ready to build) tend to appreciate faster when fewer new homes are entering the market, particularly in well-connected locations.
3. Better Negotiation Power & Deals
Developers facing constrained margins, planning delays, or resource bottlenecks may be more open to favorable terms. Deals for off-market properties, land, or developments may be negotiated more competitively. This is where our expertise and market knowledge we believe can be invaluable to you.
4. Policy Tailwinds – Change is Likely
Because this gap has become visible and politically urgent, investors could see increased government support — planning reform, incentives for affordable housing, or streamlined approvals. Those who are ready to act early stand to benefit as policy catches up.
Putting It All Together
The facts are clear:
-
We need at least 300,000 new homes per year, possibly more, just to stop the shortfall growing.
-
Current completions are well below that target.
-
The backlog is big — millions of homes are “missing” when compared with what’s needed for current demand and future growth.
For landlords and investors: this means that investment property is a safer bet than many realise. The market dynamics favor those who have properties in place now or who can deliver soon. Demand is not going away; supply constraints are here — and that underpins both rental income and capital growth. With rates for a 5 year mortgage fix via a limited company around 4.6% now is an excellent time to negotiate a great deal on a property, demand is very high and supply is becoming more and more limited.
