The primary driver of low housing supply has been the planning system and uncertainty about the amount of land available for development, think tank says.

A new report from the conservative think tank Policy Exchange argues that the housing crisis is in large part caused by a lack of trust in the planning system.

They claim that developers are not confident that councils will make timely decisions on planning applications.

They also argue that local authorities are not getting what they are promised when applications are approved, and that local communities do not feel they have any control over developments.

The report, entitled Homes for Growth: How housebuilding can revitalise the UK economy, says that delivering an additional 100,000 new homes each year could add £17.7bn to the UK economy.

Increasing social housing as part of this package could also save £10bn over five years in housing benefit.

In order to deliver these new homes, Policy Exchange argues that the planning system needs reforming.

The think tank proposed reducing uncertainty for businesses and improving confidence in local communities by ensuring councils have up-to-date local plans supplemented by design codes.

They also proposed piloting changes to planning regulations on a limited basis via ‘regeneration areas’, which could be tested at a local level and would introduce some experimentation into planning policy.

Policy Exchange also recommended introducing contractual obligations on councils and developers for timely delivery, a programme to expand social housebuilding, and the streamlining of development on underutilised brownfield sites.

The report’s author, Dr James Vitali, research fellow at Policy Exchange, commented: ‘The Government faces no challenge more pressing and more urgent than that of the UK’s chronic housing shortage. Failure to confront the undersupply of new homes will diminish the effectiveness of other measures to boost productivity in the UK.

‘The potential rewards for unlocking the housing market, however, are huge: a more mobile labour force, more productive cities, more investment in productive businesses, a reduced benefit bill, and renewed faith in the galvanising British ideal of home ownership.’