The report tracks the financial performance of the UK’s largest housebuilders and shows that dividend payments to shareholders were 260% higher in 2022 than before the financial crisis, even after adjusting for inflation. The number of homes built by these firms increased from 66,902 in 2005 to 82,288 in 2022 – an increase of 23%.
In 2022, dividends payments by the largest housebuilders totalled £1.8 billion, constituting 47 per cent of profit before tax, compared to just 16 per cent in 2005.
The analysis estimates that if dividend payments and sharebuy backs had been reinvested in productive activity, tens of thousands of new homes could have been developed. On average, in 2022, the largest housebuilders paid over £22,000 in dividends for each new home built.
Dr Tom Archer, Senior Research Fellow in Sheffied Hallam University’s Centre for Regional Economic and Social Research, said: "Money is being lost from the housing system as shareholders extract huge returns, with little sign of this flowing back in to support new development. This raises serious questions about why reinvestment has not been prioritised to help increase the supply of affordable homes.”
The report notes that the dividends paid between 2016-2021 exceeds the £8.8 billion the UK government spent on its major affordable housing programme over the same period. It calls for reforms to curb excessive shareholder returns and capture more value for reinvestment, which would directly benefit the millions of households currently struggling in the housing market.
Dr Archer will appear alongside the report’s co-author Ian Cole, Emeritus Professor of Housing Studies at Sheffield Hallam University, on the BBC Two documentary Britain’s Housing Crisis: What Went Wrong?
In the first of two programmes, due to air at 9pm on Tuesday 17 October, key figures from government, finance and campaigning reveal the roots of the housing crisis – and the decisions that led to the situation.
Read the full report - The Invisible Hand that Keeps on Taking: Value extraction from large housebuilders and its impact on the UK housing system.