Real Estate Blog: Why Labour’s latest plans are not enough to solve the housing crisis

At its annual party conference (earlier this month), Labour unveiled its proposals for housing reform, pledging to “get Britain building again” with a package of reforms aimed at securing the construction of 1.5 million homes over the next Parliament.

The proposals include:

• Streamlining the planning process.
• Raising stamp duty taxes on foreign buyers.
• Ending the practice of land banking.
• Delivering more affordable housing.

But are these proposed reforms enough to address the housing crisis?

The planning problem 

One of Labour’s main solutions is to reform the “restrictive” planning system which it blames for holding back the delivery of new homes and infrastructure. It wants to streamline the process and reduce delays by:

• Recruiting hundreds of extra planners.
• Reducing litigation.
• Creating new development corporations with powers to “remove blockages”.
• Utilising “grey belt” land.
• Giving local communities a greater say over “how” and not “if” housing can be delivered to best serve that local community.

Labour’s proposals for reform are welcome, but if the Local Government Association’s claim that over 1.1 million homes in England that have been granted planning since 2010/11 remain unbuilt[1] is true, it does suggest that even wholesale planning reform will not be the silver bullet Labour hopes it to be.

Affordable housing 

Perhaps the most ambitious pledge from Labour is to deliver the biggest boost in affordable for a generation, including building more council housing. It wants to:

• Unlock government grants to deliver new homes.
• Strengthen planning rules and section 106 agreements to prevent developers from “wriggling out” of their responsibilities.

The first proposal will be a welcome announcement to many, but with Homes England reporting that it fell 14% short of its target of supporting 39,008 homes in 2022-2023 (with starts on site also down and 30% behind target) the proposals again fall short of dealing with what the regulator itself said had impacted on the capacity of the sector to build new homes: abnormal inflation, lack of labour and increasing material, labour and borrowing costs.

Whilst the first proposal is admirable, the second proposal may miss the point; Section 106 agreements are already tightly drafted and controlled by the planning process (developers can’t simply find clever loopholes to the obligations within them!) and affordable housing providers are now looking to their own development programme, rather than relying on the private sector to deliver it for them by way of planning obligations.

The main question that remains unanswered for me is – how? How will we find people with the skills to unlock and build these houses? How will we adequately resource our local authorities? How will we make technically challenging “grey belt” and brownfield sites viable? And, crucially, how will we pay for all this?

My view is that, unless we can have a sustained period of economic stability, with confidence in our markets restored and skill and materials gaps closed, Angela Rayner may find herself needing to make good on her promise to “put on her hard hat and hi-vis..."

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If you would like to discuss anything covered in this article please contact Holly Chadwick or another member of our Housebuilding & Strategic Land team.

[1] https://www.local.gov.uk/about/news/over-1-million-homes-planning-permission-waiting-be-built-new-lga-analysis