Why New Build Homes Must Lead Our Response to the Housing Crisis
30th July, 2025
"1.5 million homes or retrofitting a nation's housing stock? Can we do both?"
At the Connections for Prosperity Conference organised by regional thinktank Centre for the New Midlands, Social Housing Partner Joanna Lee-Mills joined panellists from the Chartered Institute of Housing, Midland Heart and Birmingham City University to debate this critical question, which poses as one of the UK’s most pressing policy dilemmas.
The UK faces two defining crises: housing and climate change. Both demand urgent action, yet our construction capacity remains finite and stretched to breaking point. The critical question isn’t whether both challenges matter – they do – but how we sequence our response to maximise impact when resources are limited.
The case for prioritising New builds
The debate between building new homes and retrofitting existing stock often presents a false choice. Housing providers are under ever increasing strain in relation to the condition of their homes – both through additional regulation and statutory responsibility. However, when 130,000 households languish in temporary accommodation and 1.3 million more wait for social housing, the moral imperative becomes clear: we must prioritise those without homes over improving homes that already exist. Simply put, you cannot retrofit a home that doesn’t exist.
This prioritisation isn’t merely about addressing immediate suffering – though that alone would justify it. Building new homes first creates the stable foundation necessary for effective climate action whilst simultaneously addressing hidden sources of emissions that the housing crisis itself generates.
The hidden climate cost of housing shortage
What’s frequently overlooked in housing versus climate debates is how homelessness and housing instability actively drive carbon emissions. Families bouncing between temporary accommodations generate substantial transport emissions with each move. Workers priced out of areas near their employment face daily commutes that pump unnecessary carbon into the atmosphere. Recent research confirms that emergency housing that has been hastily arranged and poorly maintained typically performs far worse on energy efficiency than purpose-built permanent homes.
By tackling the housing shortage directly, we’re not abandoning climate commitments – we’re addressing a root cause of avoidable emissions, whilst providing the stable communities that enable meaningful environmental action. It’s broadly accepted that families focused on finding basic shelter cannot meaningfully engage in broader climate initiatives.
The scale of crisis: beyond statistics
The numbers tell a stark story of systematic failure. We’re currently missing 4.3 million homes in the UK – enough to house Greater London’s entire population. At current building rates, clearing this backlog would take half a century, without accounting for continued population growth.
And behind these statistics lie real human consequences. Nearly 130,000 households currently exist in temporary accommodation – the highest figure ever recorded. These aren’t mere data points, but families cramped into single B&B rooms, children changing schools with each move, and elderly residents torn from communities where they’ve spent decades building connections.
The social housing situation is equally desperate. Greenwich exemplifies this crisis, where the National Housing Federation calculates a 55-year wait for family-sized social housing. To put this into context, today’s newborns will reach middle age before their parents might secure stable homes.
This represents more than housing failure – it’s a crisis rippling through every aspect of British life, affecting productivity, health outcomes, educational achievement, and community cohesion.
The investment opportunity
Against this backdrop, the government’s £39 billion Affordable Homes Programme represents unprecedented opportunity. Potentially the largest social and affordable housing investment in 50 years, it offers £3.9 billion annually over the next decade – a substantial increase from the previous £2.3 billion. Combined with an additional £10 billion through Homes England to leverage private investment, the total commitment approaches £50 billion.
However, significant challenges threaten this investment’s effectiveness. Regional disparities raise concerns – the Midlands, England’s largest regional economy outside London, received just £275 million (2.8% of the total) for 2024-2030. This suggests even substantial investment may not reach where it’s needed most.
Moreover, money alone cannot solve the crisis. Planning delays continue throttling development, whilst complex obligations around Section 106 agreements, Biodiversity Net Gain, the Building Safety Act, and Community Infrastructure Levy contributions can render projects unviable.
Even under optimal conditions, this investment might deliver around 35,000 homes annually – significant improvement, but still 90,000 homes short of what housing experts calculate we need each year for social rent alone.
The retrofit challenge: understanding trade-offs
The government’s commitment to the Warm Homes Plan acknowledges the importance of improving existing homes’ energy efficiency. This programme will reduce energy costs through insulation upgrades, modern heating systems, and solar installations – crucial support for households struggling with energy bills.
Yet we must acknowledge the harsh reality of trade-offs. The construction sector faces a perfect storm: over a third of workers approach retirement, apprenticeship numbers have plummeted, and 350,000 skilled workers have left since 2019. Every plasterer fitting insulation represents one not working on new homes. Every pound spent on retrofitting remains unavailable for new construction.
The scale of retrofit requirements is sobering. Bringing all homes to EPC C standard by 2030 would require approximately £73 billion – directly competing with investment needed for 1.5 million new homes. Both goals matter, but when resources are scarce, we must prioritise those without any home over improving existing ones.
A strategic path forward
Rather than viewing this as either/or, we should approach it as a sequencing question. By focusing first on dramatically increasing housing supply, we build the broad political coalition necessary for ambitious climate action later. Public support for environmental initiatives tends to evaporate when people lack basic security – stable housing provides that essential foundation.
To maximise impact, the government should pursue several key actions:
- Prioritise social rent properties within the £39 billion programme, rather than the broader “affordable housing” category. Social rent homes provide the deepest affordability and most significant impact on homelessness.
- Urgently streamline planning processes to ensure this investment’s potential isn’t theoretical. Planning reform must accelerate delivery whilst maintaining quality standards.
- Focus immediate retrofit efforts strategically on the most critical cases – perhaps the poorest-performing social housing where residents face both fuel poverty and health risks – whilst directing bulk construction capacity toward new supply.
- Establish transparent metrics tracking not just homes built but reductions in temporary accommodation placements, waiting list times, and homelessness figures. These indicators will identify when we can begin shifting resources toward comprehensive retrofit programmes.
- Build bridges between housing and climate advocates, recognising both groups want sustainable, affordable communities. The homes we build today must meet high environmental standards, creating a legacy serving both immediate housing needs and long-term climate goals.
The moral foundation
This isn’t merely policy debate about resource allocation – it’s about fundamental fairness. Retrofit programmes undoubtedly offer long-term benefits through reduced energy bills and improved health outcomes, but these advantages flow primarily to those fortunate enough to already have homes.
New build homes on the other hand, address the acute suffering of those trapped in temporary accommodation or priced out of communities entirely. They provide the foundation for stable lives, enabling everything from consistent education for children to meaningful participation in local climate initiatives.
Seizing the moment
The government’s unprecedented £39 billion investment offers genuine opportunity to break the housing crisis cycle that has plagued the UK for decades. But this window won’t remain open indefinitely. Construction capacity, already strained, will only become scarcer and political will, currently focused on housing, may shift to other priorities.
We cannot afford to spread efforts so thin that we achieve neither adequate housing nor meaningful climate action. By focusing first on rapidly expanding housing supply – particularly social housing for those in greatest need – we provide immediate relief to hundreds of thousands of families whilst building stable communities necessary for sustained climate action.
The choice isn’t between homes and environment – and nor does it trivialise the task faced by housing providers in meeting increased standards applicable to existing housing stock, and the cost of meeting those standards. It’s between decisive action addressing the most urgent needs first, and a diluted approach risking failure on all fronts. For 130,000 households in temporary accommodation and 1.3 million more on waiting lists, that choice is clear.
They need homes – not promises or debates, but roofs over their heads. Everything else must follow from that fundamental truth.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
This page may contain links that direct you to third party websites. We have no control over and are not responsible for the content, use by you or availability of those third party websites, for any products or services you buy through those sites or for the treatment of any personal information you provide to the third party.
