From View From The Top, 15 April 2026
The Squeezed Middle
Who They Are, Why The Gap Exists, and What It Actually Takes To Fix It
The government launched the National Housing Bank this week. I want to take that seriously — because the problem it’s trying to solve is real.
But I also want to be honest about what government housing vehicles have historically delivered. And what it actually takes to get capital to the people and places that need it.
WHO THE SQUEEZED MIDDLE ACTUALLY ARE
Let’s start with the people. A household earning £55,000 a year in London. Two incomes. Stable employment. Responsible with money.They earn too much to qualify for social housing. They earn too little to buy in any borough where they’d actually want to live. And they’re renting — indefinitely — at a cost that leaves little room to save the deposit that would change their situation.
This isn’t a fringe case. This is millions of households across the UK.
The income band is roughly £35,000 to £80,000. In London the ceiling is higher because everything costs more. In regional cities — Manchester, Birmingham, Bristol, Leeds — the same dynamic plays out at slightly lower numbers but with the same structural logic.
Too much for the safety net. Too little for the market.
THE NUMBERS BEHIND THE GAP
England needs approximately 300,000 new homes per year to keep pace with household formation and address the existing backlog.
Actual delivery has run consistently below that — in recent years closer to 150,000 to 200,000 net additions annually. London is particularly acute. Housing starts in the capital are running at roughly half what’s needed.
But the quantity gap is only part of the story. The type gap matters as much.
The homes being built are not the homes being needed. High-end city centre apartments. Luxury schemes in regeneration zones. Products aimed at investors and owner-occupiers at the top of the market.
The intermediate segment — genuinely affordable, not luxury, not social — is chronically underbuilt.
Because it’s the hardest segment to make viable.
WHY THE FUNDING HASN’T REACHED THE GROUND
Here’s where the National Housing Bank enters the picture.
The funding gap for small and mid-size developers is well documented. These are the builders — typically delivering between 10 and 250 units per scheme — who collectively account for a significant share of new housing supply, particularly outside London.
They lost their primary funding source after 2008 when the clearing banks retreated from development finance. Some came back, cautiously. Many didn’t.
What replaced them was a fragmented mix of challenger banks, specialist lenders, and private credit funds — some good, some not — at higher cost and with more restrictive criteria than the pre-crisis market.
The result: viable schemes that don’t get funded. Sites that sit with planning consent but no capital to build. Small developers who can’t access the market at all.
Government has tried to address this before. The Housing Finance Corporation. Homes England guarantee schemes. The British Business Bank’s involvement in development finance. Each announced with genuine intent. Each partially captured by the same structural problem.
The criteria favour scale. The processes favour sophistication. The timeline favours patience that small developers don’t have. A builder with a site in Doncaster and a six-month window to start on site cannot wait nine months for a government-backed facility to approve his application.
He needs capital that moves at the speed of the market.
WHAT THE NATIONAL HOUSING BANK NEEDS TO GET RIGHT
To be fair to the ambition — there are things a National Housing Bank could do that private capital cannot.
It can absorb first-loss risk in a way that unlocks private co-investment. It can provide longer-dated funding that suits build-to-rent and affordable tenures. It can set standards — on design, on affordability, on placemaking — that purely commercial capital won’t impose on itself.
If it does those things — genuinely, operationally, at the SME level — it could be transformative. But that requires something government housing vehicles have rarely managed.
Reaching the ground in the markets – Not pooling at the top. Not flowing through intermediaries who capture the economics. Not designing criteria around the borrowers who are easiest to lend to rather than the ones who most need the capital.
The burden of proof is on the policy. The history of this market earns that scepticism.
WHAT PRIVATE CAPITAL DOES DIFFERENTLY
The operators and lenders who have stayed in this market — through 2008, through the post-crisis decade, through the rate environment of the last three years — have done so because they understand something government vehicles struggle to replicate.
Local knowledge. Operator relationships. The ability to make a credit decision based on a site, a developer, and a local market — not a standardised scoring model.
A lender who knows the planning environment in a specific local authority, who has a relationship with a developer who has delivered three schemes in that area, who understands what the exit looks like because they’ve done it before — that lender can move quickly and price accurately. That’s not what a national institution does well.
It’s what fragmented, relationship-driven, operationally engaged private capital does well.
And in a market where institutional capital has retreated, where government vehicles have historically underdelivered at the SME level, and where the structural demand from the squeezed middle continues to grow — that capability is more valuable now than it has been in a decade.
HARD LANDING
The squeezed middle didn’t appear overnight.
They accumulated — quietly, over years — as policy lagged reality, as funding retreated from the segments that needed it most, and as the gap between what the market builds and what people actually need grew wider. The National Housing Bank is an acknowledgement that the gap exists.
Whether it closes it is a different question entirely.
The capital that doesn’t wait for that answer — that is already in the market, already lending to the builders, already backing the schemes — will look very different in five years from the capital that held back for policy certainty. It always does.
