Britain needs 200,000 new homes a year. Is Gordon Brown going to build them in your backyard? As the former Chancellor of the Exchequer prepares to move into 10 Downing Street on Wednesday, that is the question in the mind of every housebuilder in the country.

The Prime Minister in waiting has already signalled his intention to overhaul the planning system, build five new eco-towns and create a “homeowning democracy”. But he must implement these policies fast if he is to convince desperate first-time buyers, squeezed homeowners and an increasingly jaded construction industry that he is a man of action as well as of words. “Every politician in the past 10 to 15 years has said that he will address housing issues,” says Stewart Baseley, executive chairman of the Home Builders Federation (HBF). “The time for talk is over. It is time to take action.”

Britain is facing a shortage of 60,000 homes a year, according to the HBF. A decade of debate since Labour came to power means that there is now a consensus that we need more houses. Even green campaigners now concede that this is so. What we still can not agree on is what type of properties these should be and where to put them. This is what Brown will have to decide.

Builders claim that only 10 per cent of land in Britain is being developed. They argue that there is no shortage of land, only a shortage of planning permission, and that more land needs to be made available if we are to meet the Government’s target of building at least 200,000 new homes a year by 2016.

Last year, 160,000 new houses and flats were built. At the same time, more than 220,000 new households were formed. The Government also estimates that the number of households will continue to rise at a rate of 223,000 a year until 2029.

Aware that the provision of new homes was failing to keep up with the level of new households, the Government suggested four main growth areas for housing — Thames Gateway, Milton Keynes & South Midlands, London-Stansted-Cambridge-Peterborough, and Ashford — in its sustainable communities plan of 2003. It is also supporting 29 new growth points across the country; these involve new homes, new jobs, town-centre regeneration and higher design and environmental standards.

Government policy has produced mixed results so far. Although there has been a steady rise in home building each year since 2001 (when figures dipped to the lowest level since the Second World War), critics say that too many flats are being built at the expense of family houses. In the late 1990s flats accounted for about 15 per cent of new properties. The latest figures show that flats make up 45 per cent of all new residences built.

Meanwhile, properties are becoming smaller as developers cram more units into the tiniest of spaces, partly to boost profits and partly to satisfy government guidelines to increase building density. Since 2004 new developments have had an average density of 40 homes per hectare, compared with 25 homes per hectare in 2001. The building frenzy led to a glut of flats in some places and to calls from MPs to increase the building of houses to redress the balance.

The government guidelines on building density were subsequently relaxed last November to give local authorities greater flexibility over what homes to put where according to local need and demand. Builders are now free to construct more houses.

Flats, however, encroach less on the environment than a sprawl of suburban semis. Although the number of new properties has been rising steadily, the amount of land developed dropped by 35 per cent between 1997 and 2004. Builders developed only 8,995 acres of land in 2004 compared with 13,912 acres in 1997. But this trend is likely to be reversed if we start building more houses, fuelling the complaints that we are “concreting over the countryside”.

Gordon Brown has already upset environmentalists with proposals to liberalise the planning system. Last month’s planning White Paper placed a strong emphasis on economic development with its aims to streamline the planning process to cut delays to much-needed housing schemes.

But Marina Pacheco, head of planning for the Campaign to Protect Rural England (CPRE), said that that the proposals overlooked the needs of schools, hospitals, transport and the environment. “Planning is an holistic exercise that can’t be looked at in one dimension,” she says.

Brown’s plans to boost environmentally sound building by delivering five new eco-towns and increasing the number of carbon-neutral homes by 2016 has left the CPRE equally cold because of the lack of detail provided. “We are not opposed to the idea but it is a drop in the ocean,” Pacheco says. “Brown talks a lot about green issues but we never see the nuts and bolts that are needed to make this vision happen.”

The CPRE is right to be sceptical. Eco-friendly building is not as easy as it looks. The builders who embarked on a much earlier environmentally conscious programme, the sustainable communities programme spearheaded by John Prescott back in 1997, discovered that their ambitious plans could easily be scuppered by issues such as the difficulty of sourcing sufficiently green building materials (in particular, windows). If the Millennium Communities Programme has taught us anything, it is that building “green” on brownfield sites takes a lot longer and costs a lot more. Building work on the Milton Keynes scheme, one of the seven projects around the country, will finally start this year, although the site was allocated in 2000. The state-of-the-art homes in the programme also cost between £3,000 and £10,000 more to build than the average home.

The real rub for developers, though, is that housebuyers are not prepared to pay that much extra for a greener home. Builders such as Taylor Woodrow taking part in the programme readily admit that it makes little sense to adopt the techniques learnt on the project to build on other sites where they can not charge an appropriate premium.

However, the biggest obstacle in Brown’s way is not Nimbyism, the green lobby or even the builders but the very economy he put in place as Chancellor of the Exchequer. The strength of the property market over the past few years has given a boost to building in a way that no government policy ever could.

Developers were prepared to put up with delays in planning and stringent demands for social housing to be built alongside private homes because rising prices meant that they could still make a profit. But the housing market is slowing down, and homeowners are reluctant to move because stamp duty is too high. Moreover, potential first-time buyers continue to be priced out of the market. And, as property prices stagnate, there is less incentive for landowners to sell their land for development.

To compound the problem, Richard Donnell, head of research at the property data company Hometrack, believes that as construction companies fight to stay competitive in a tougher economic environment, we are likely to see a string of mergers in the building industry that will lead to a reduction in the number of new homes being built.

“The Treasury under Brown has done a lot to try to understand the housing market,” Donnell says. “But policy is always behind the market. There is every chance of output declining over the next five years.”

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