Sometimes you read a sentence and it inspires a 2,000-word article. That happened when I read this quote by an Open Philanthropy managing director about their new $120 million Abundance and Growth fund: “We think that land use is an unusually leveraged area…By changing a couple of rules, you can then let private capital that wants to build stuff go build it. And that seems potentially high return.” It struck me that private capital is having problems building these days, even in places where the rules have been changed.

Let me back up: For the past several years, much of the YIMBY [Yes In My Backyard] movement has been characterized by the belief that if government just got out of the way with its bad zoning, burdensome regulations, and community input, developers could build the housing they want and they’d build enough of it to actually bring housing prices down.

This theory of change makes a lot of sense: 75 percent of all residential zoning is set aside for single-family homes — the most expensive and inefficient housing type — and if you could unlock even just a small fraction of that land mass, we’d have so much more housing. This perspective particularly made sense in the 2010s and first two years of the pandemic when mortgage interest rates and commercial lending rates were below 5 percent.

But after interest rates rapidly increased in 2022, this model hasn’t quite worked the same as it once did. Private capital is having a very hard time penciling out right now: the cost of land is high, the cost of materials is high, the cost of labor is high, and the cost of debt is high. Talk to developers about why they aren’t building as much right now and they will tell you their problem isn’t so much government, it’s the math. Yes, we still need YIMBYism and the Abundance movement to fight for more by-right development, faster permitting, better building code, etc. because without that we’re truly sunk — but changing a few rules is not going to entirely change the math in many cities.

And in a special bit of irony, a lot of developers are pointing to private capital for our current lack of development. Banks are really pulling back on multifamily development. Some developers just can’t get the debt they need to make deals work.

According to an October 2024 Marketplace report:

“Banks have reduced credit access for multifamily developers in fairly large margins, so multifamily developers are having a hard time finding financing,” said Jackie Benson, an economist with Wells Fargo.

Banks, she said, see the phrase “commercial real estate” and it’s a no for them.

Look no further than real estate guru Brad Hargreaves’s recent LinkedIn post for another note about how the funding landscape is changing:

Another private market factor that’s crimping where and how new housing gets built: insurance. For example, government is trying to make it as easy as possible to build in L.A. right now, but who wants to build housing that isn’t insurable?

Current conditions are pretty different than they were just five years ago. And some of the most urgent and large-scale opportunities for residential development are being offered in unconventional sites, such as properties owned by faith-based institutions and old office buildings that need to be converted. These nontraditional properties require creative approaches and sometimes complex financing that won’t get solved by simply changing zoning.

It’s going to make Libertarian-leaning real estate folks unhappy to say this, but: To build a lot of housing, and fast, I think we’re going to need the public sector to step up in many instances — not just step aside.

Like 1.5 million new homes in Oregon

I’ve been casually studying the housing push underway in the UK since Keir Starmer took office as prime minister last year. It’s got me thinking a bit about how you can both try to reform government and work with it to build housing.

I tend to hate comparisons between the U.S. and other countries — the U.S. is unique because of its size, diversity, and 20th-century development patterns. But I do think it might be useful to look at the UK, because they have had a similarly bad housing crisis in recent years, a similarly bad record of building housing, and a similarly bad record of NIMBYism.

It’s going to make Libertarian-leaning real estate folks unhappy to say this, but: To build a lot of housing, and fast, I think we’re going to need the public sector to step up in many instances — not just step aside.

But despite our similarities, the U.S. and the UK are approaching housing completely differently right now.

• Their national government is leading the charge on housing, whereas our national government — and many of the leading movements focused on housing — are still convinced the best way forward is to reduce government involvement. Just listen to J.D. Vance’s speech to the National League of Cities where he touted zoning, but failed to discuss all the other ways government could speed housing production.
• The UK work has a YIMBY bent to it, but also a set of values — brownfield first, greybelt second, affordable homes, boost public services and infrastructure, and improve genuine green spaces — that are guiding the development. The YIMBY and Abundance movements in the U.S. tend to just want more housing built, wherever, however.
• We’re gutting our government bureaucracy. Meanwhile, I’ve heard that the UK government pays salaries that are competitive with the private market (all of which is much lower than U.S. salaries, but still), resulting in a pretty sophisticated government housing workforce.
• Keir Starmer’s plan envisions 1.5 million new homes over five years. The UK’s population is roughly one-fifth the size of the U.S., and its land mass is about the size of Oregon. (For comparison, Oregon permits less than 20,000 homes per year.) Even the UK government has said this is “biggest building boom” in a generation. Adjectives like “historic” and “seismic” are being thrown around.

Let’s dive into how the UK plans to build so many homes and why it will be so important to see not only which country builds more housing per capita, but whose housing stock is more actually more affordable — because isn’t that supposed to be the whole end game of YIMBYism and the Abundance movements?

I haven’t been following the UK’s housing policy for very long, but as I’ve done research on the topic, I’ve come to believe this is an important turning point for the UK. Housing production stands to get aggressive. The UK currently produces a little more than ~ 200,000 new homes per year; so the new housing plan would mean increasing housing production by about 50 percent over the next five years.

According to the UK government’s website, they’ve already:

• Launched a New Homes Accelerator to unblock an estimated 300,000 homes stuck in “planning limbo”
• Set up an independent New Towns Taskforce, as part of a long-term vision to create up to 12 large-scale communities of at least 10,000 new homes each
• Awarded £68 million to 54 local municipalities to unlock housing on brownfield sites
• Awarded £47 million to seven municipalities to unlock homes stalled by environmental rules
• Announced an additional £3 billion in housing guarantees to help builders apply for more accessible loans from banks and lenders
• Extended the existing Home Building Fund for next year providing up to £700 million of vital support to SME housebuilders, delivering an additional 12,000 new homes.

These initiatives present a mix of approaches: the federal government is driving the new towns push, giving money to cities to repurpose their existing brownfield sites, reducing environmental regulations when they’re preventing housing production, and using government capital to support small and medium private homebuilders.

That being said, the housing market has really yet to show signs of turning around.

According to the Times:

Labour’s target to build 1.5 million homes by 2029 suffered a double blow from official data showing that planning approvals fell to a ten-year low last year, while the pace of housebuilding has fallen to the slowest rate since the financial crisis.

This extreme lack of housing development makes these interventions all the more important.

New towns

New towns are the housing plan element that have gotten the most attention. Britain has been building new towns since a first wave of developments in the 1940s, a second wave in the 1960s, and a final wave in the early 1970s. The latest push for new towns comes from a recognition that for the past 50 years, UK planning processes in established communities offered little predictability and that has hindered development. These new towns have the potential to build at scale, without NIMBYism getting in the way. But before you say “California Forever,” the towns are most likely not going to be built in entirely new locations, but as additions to existing developments.

According to a report in the Guardian:

Up to 12 new towns will be under construction by the next election after 100 potential locations in England were identified as part of Keir Starmer’s promise to deliver the largest housebuilding programme since the postwar era.

Each new town will have the potential for at least 10,000 homes with accompanying infrastructure, as the government promised to sweep away red tape and overcome environmental objections to get them built.

I’ve seen elsewhere that at least 40 percent of the housing will be affordable. These new towns will also help local governments reach new mandates for building thousands of homes.

Additionally, new town development is made possible with public-private partnerships. According to the Guardian, “The new towns would be led by regional development corporations, with an initial injection of public funding to buy land which would be returned after sites had been sold at a higher value to private developers, in part to pay for infrastructure.”

I’ve rhapsodized about government land leases recently; here is another way that government can get a return on their investment by recouping their outlay on the project.

“Beating the blockers”

Beyond building new towns, the new housing agenda has various elements aimed at beating “the blockers” — the British term for NIMBYs. (Such a better term — we should adopt it!). Starmer himself has come out saying that housing has to be prioritized — over nature, even over zoning: “Are we going to push away the planning rules and make them clearer, as we have done today, get away the blockers that are stopping the houses being built? Yes, we are absolutely intent.”

The limits of zoning reform are already on the horizon in the U.S. If we’re serious about building more housing, we’re going to have to find a way to collaborate with government to do it.

But rather than just try to upzone the country, the UK seems to be more focused on strategic land assembly. The UK has something called Compulsory Purchase Orders which are similar to eminent domain capacities for American governments. New legislation changed how the CPOs are used so that local governments or councils can more easily purchase land for affordable housing. Though this move did spark concern from some rural landowners such as farmers, government response has insisted they’re focused on purchasing brownfields. A new infrastructure bill passed recently aims to help with streamlining the planning process, making land assembly more feasible.

Eminent domain has been a third rail in the U.S. But since only government can seize land, eminent domain is a compelling reason to engage government in housing production. Could the UK demonstrate a compromise between Chinese-style requisitions, which have enabled massive urban (over)development, and American wholesale avoidance of it? We’ll see.

We’ll believe it when we see it

There’s a lot still to figure out about this housing plan.

If you paid attention to the numbers above, there’s about 500,000 new homes that have been accounted for — but where will the remaining 1 million come from?

And will the public really tolerate a 50 percent increase in housing production with all the construction that will entail?

Many of the new towns are 15 years away — a lot can get delayed or canceled in the meantime. And frankly — do new towns make sense when the UK population is set to peak in 20 years?

Still, as the U.S. embarks on a discussion about the Abundance faction of the Democratic party this year, I think the UK’s housing push offers an interesting model that’s worthy of more study. The limits of zoning reform are already on the horizon in the U.S. If we’re serious about building more housing, we’re going to have to find a way to collaborate with government to do it.

Diana Lind is a writer and urban policy specialist. This article was also published as part of her Substack newsletter, The New Urban Order. Sign up for the newsletter here.

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