New towns: Helping solve the housing crisis

As the UK persistently delivers too few homes for a growing population, the government has returned to a strategy popular more than 50 years ago.

Between the 1950s and 1970s, successive governments saw more than 30 new towns built before the preference switched to regeneration and smaller urban extensions. The current government is hoping new settlements of more than 10,000 new homes will help meet demand, delivering hundreds of thousands of new homes by 2050.

Last September, the government set up an independent advisory panel, the New Towns Taskforce, which will produce its recommendations for suitable locations imminently. The government’s aim is to create large-scale new communities that will support and generate economic growth.

We at Carter Jonas believe there are many advantages to new towns and have been assessing the policy to inform decisions on how it can be realised, how the challenges can be addressed and where the new settlements could be delivered.

The scale of the housing crisis

The UK has been grappling with a housing crisis for years, meaning there are not enough affordable homes for families.

New build construction rates in England have remained relatively stagnant over a 17-year period, rising from 193,080 to just 198,610 units per annum between 2006/07 and 2023/24. This has driven a nearly 60% rise in house prices in the decade to 2021, while average earnings rose just 32%. In London, affordability ratios (median house price to median earnings) have been particularly stark, rising from 7.4 to 12.7 between 2003 and 2023.

Private rented accommodation has been in high demand. Rents in England have risen by 18% and more so in London: by 22% between December 2022 and December 2024. Would-be homeowners are having to remain in private rented accommodation for longer due to rising house prices and higher mortgage rates. Extra demand also comes from many of the 1.3 million households on social housing waiting lists in England and rising levels of migration.

Although the increase in Build to Rent properties is helping to broaden the market and offer greater choice for occupants, it is clear that the problem should have been addressed by building sufficient numbers of homes over the past 20 years.

Rich history to learn from

The UK has a long history of inspiring new settlements. In 1903, Letchworth Garden City was founded and 1920, Welwyn Garden City. The concept for these earlier garden cities was to ensure access to green space while creating economic opportunities and developing communities.

Following World War Two, the 1946 New Towns Act represented a fundamental shift by government in urban development, with it taking a lead in the planning and creation of new towns. New Town Development Corporations, delivery vehicles set up for each town, had significant powers and could access public funding.

In the 1960s, housebuilding in England averaged over 301,000 per year with new settlements as well as local authority housing and the expansion of existing settlements contributing to this. Between the 1960s and 1980s, major new towns such as Milton Keynes, Stevenage, Crawley and Bracknell were formed, with Development Corporations playing key role. From the 1980s, there was a greater focus on private investment. Notably, in Milton Keynes, while the Development Corporation laid the initial groundwork, later phases saw significant private investment, particularly in retail and commercial spaces.

The ‘eco-towns’ of the 2000s experienced some limited success, notably with North West Bicester retaining its credentials. However, the initial policy to create up to 10 eco-towns has proved particularly challenging, especially following the global financial crisis of 2008 and the change of government in 2010, which led to a greater focus on localism. Thus, in 2015, plans for many eco-towns were cancelled. The Conservatives were set to build 14 new settlements through their 2017 Garden Towns and Villages initiative but building new towns is a long-term endeavour and due to the Covid pandemic a number of these schemes have been delayed.

That said, Carter Jonas is advising on several remaining garden communities and has recently been successful in achieving planning consent for Brookfield Riverside, which forms an important component of a new Garden Village at Cheshunt in Hertfordshire. We review the annual business plan for a number of planned and ongoing new settlements on behalf of the Defence Infrastructure Organisation (including Whitehill-Bordon in Hampshire) as well as providing general surveying advice on a significant part of the 11,000 homes planned for Waterbeach Town East in South Cambridgeshire.

Today’s challenges

Carter Jonas has identified various factors that will make building new settlements today different from in the past, bringing fresh challenges. Not least the difficulties in accessing funds.

With the public purse squeezed as it is currently, there will be less access to government finance and a greater reliance on private sector investment. However, it cannot be guaranteed that investors will be happy to take on housing projects and commit to substantial upfront costs with the housebuilder model focusing on shorter investment cycles. It is likely that public money or financial guarantees will still be needed for the initial investment.

The reform of local Government in England - the merger of councils to create unitary authorities - provides an opportunity to put the strategic planning strategy in place and to enable the new towns to come forward with political support. However, local support may be more difficult to achieve.

Construction and development risk continue to rise with the introduction of biodiversity net gain, building safety regulations and energy efficiency requirements. Additionally, higher land, labour and materials costs are impacting on viability.

But there is some hope of mitigating these challenges. Labour’s introduction of ‘grey belt’ land, previously Green Belt land deemed suitable for development, might ease the issue of restrictions on building on plots around towns and cities. But what falls into this category is still open to interpretation, to be determined locally.

Advantages of new towns

Although challenging in some respects, biodiversity net gain can also offer the opportunity to establish valuable high-quality green spaces for residents. Indeed, one of the great benefits of new towns is the opportunity for environmental sustainability, which can help address the government’s net-zero emissions agenda, improve the health and wellbeing of residents and enhance biodiversity. New towns could serve as models for sustainable urban development creating environmentally-friendly communities.

New settlements also create economic benefits as, over time, they will require and enable the establishment of new businesses which will create employment opportunities. They will provide housing options that give people the chance to move across the country for work, which can relieve pressure on overcrowded cities.

Creating new towns with a mix of tenures should lead to truly integrated communities that are able to grow and foster a sense of belonging. This includes creating units for the UK’s ageing population, such as specialised housing solutions, assisted living and retirement communities.

What success will look like

With such potential, new towns have the potential to produce thriving, sustainable communities and growth opportunities. If they do so, they will have achieved the goal. But, ultimately, success will depend on whether the number of units delivered can significantly address the housing crisis. Whether new towns reach the government’s target of hundreds of thousands of new homes by 2050 remains to be seen.

It has to be remembered that new towns are not a quick fix. Far from it: while previous new towns have made a significant contribution to delivering much-needed homes, they have also taken decades to build. As such, they will only ever be one component in addressing the housing crisis.