Every new development I see builds houses right on top of each other like this to maximize profit.

To find houses spaced like the 'before' pic, you basically have to find neighborhoods built 30+ years ago.

This looks like the UK, and fire concerns are very different here than in the US on account of differences in climate and construction.

The external faces of those buildings are all brick and/or concrete, and not terribly susceptible to fire, so fire would have a hard time breaking out of one building and into the next

The UK has a population density almost 8 times that of the US. Our houses get ram packed together.