Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.
The government is reportedly considering the creation of a state-owned housing developer to address ongoing shortfalls in new home delivery. Housing secretary Steve Reed is said to be reviewing plans for a publicly-owned housebuilder that could borrow at lower rates than private developers, according to details leaked to The Guardian.
Ministers are currently unable to make major announcements until the Prime Minister leaves office. However, the proposals are expected to appeal to Andy Burnham, who has previously called for greater public control over essentials such as housing.
Recent analysis by Savills shows the government is significantly behind its housebuilding targets. The estate agency forecasts that only around half of the government’s target of 300,000 new homes per year will be completed over the next five years. Savills predicts an average of 167,500 completions annually between now and 2029/30, which is 56% of the target. Over the five years to 2029/30, England is expected to deliver a total of 837,500 new homes.
The most challenging period for housebuilding is expected over the next two years, with low levels of planning consents and starts constraining the development pipeline. Affordability pressures are also weighing on demand. Latest figures show new home completions fell by 4.1% to 190,602 in the year to March 2025, representing a 10.2% drop in the two years since the Help to Buy scheme ended. Savills estimates around 189,000 new homes were built in 2025/26, but expects output to fall sharply to just over 150,000 homes in both 2026/27 and 2027/28.
Savills identifies development viability as the key challenge, with build costs rising by 17.5% in the four years to February 2026, while house prices increased by just 4.5%. This has made it increasingly difficult for new schemes to proceed.
These trends are relevant for UK letting agents and inventory clerks, as ongoing shortfalls in new housing supply and viability challenges may impact rental market dynamics and property availability.
Source: Mortgage Strategy