What Will Labour Do To Help End the Housing Crisis?
In my last newsletter, I highlighted the depth of the UK housing crisis. I explained how housebuilding has not kept pace with demand in recent decades, leading to increasingly unaffordable property prices.?
This has increased homelessness and demand for privately and socially rented housing. This, in turn, has highlighted the need to improve housing quality and reform laws and regulations in these sectors.?
In this newsletter, I examine the new Labour government’s plans to tackle the housing crisis. In particular, I’ll look at what policies were outlined in the King’s Speech, how they compare to what was promised in Labour’s manifesto and how effective I think they will be.?
A New Direction
At the beginning of July, the Labour Party won by a landslide in the general election. This gave the party a majority in the House of Commons.
This means the new government will be more able to enact its policies. But many of the housing promises in Labour’s manifesto were vague and it’s hard to say what they mean for the sector.?
Since then, we’ve been given more details on how the government plans to tackle the crisis. The King’s Speech took place on 17 July 2024. This is when the King officially opens Parliament and gives a speech outlining what his government plans to do.
The commitments relating to housing are explained in a House of Lords Briefing . The policies it covers can be divided into four broad categories:
In the next section, I’ll explore each policy area in detail.??
The National Policy Framework
The National Policy Framework (NPF) lists the policies that developers and authorities must abide by when planning and constructing new buildings.?
One of the Labour Party’s first steps was to update the NPF and reintroduce house-building targets.?
The government has pledged to build 1.5 million homes over the next five years, that’s 300,000 per year. Chancellor Rachel Reeves has also said that a new task force will be formed to restart stalled housing sites and that 300 new planning officers will be recruited.?
Take a brownfield-first approach to housebuilding
Brownfield sites are urban areas that have been previously developed but are no longer used. The government has said that it will fast-track approval of housing built on such sites wherever possible.??
This is a good idea. It will help ensure that land is efficiently reused. Also, creating a preference for brownfield sites will reduce the need to build on green land, which will help avoid building on green spaces.
However, brownfield sites are usually relatively small and are often only suitable for building flats. They can also be expensive to develop - for example, if the ground is contaminated from previous industrial use.??
While this is a good policy to have, it is unlikely to make much of a dent on the UK’s housing shortfall.?
Grey belt development
Green belt land does have some development within it, examples include petrol stations and car parks. The problem is that if these areas are abandoned, they get the same protections as the rest of the green belt. Any developer who wants to build in these areas will face stringent limitations and regulations.?
The government has said that it will create a new category called the “grey belt,” which will prioritise house building on developed green belt areas. It says that it will set “golden rules” to ensure these developments benefit communities and nature.?
This is another good policy. These grey belt sites often cannot be developed due to green belt regulations, even though they hold little ecological value or natural beauty. Building homes on these sites is unlikely to have an impact on the local environment.
Combined with the plans for fast-tracking brownfield sites, this is much more likely to make an impact on the UK’s housing crisis.?
Affordable green belt homes
Any development built on green belt land will have to include at least 50% affordable housing, up from around 10% under the previous government.?
This is another good policy, which, if enforced, could have a huge impact on affordability for first-time buyers.
However, building affordable homes is less profitable for developers. In the past, these companies have exposed loopholes that mean they don’t need to meet the 10% affordability requirement. In other cases, the affordability requirement is waived or simply ignored by developers and local authorities.?
Another challenge I foresee is that the increased affordable housing targets may drive less scrupulous developers to cut corners in a bid to reduce costs. I think regulations should be introduced to ensure the quality of new affordable homes.?
Boosting public services and infrastructure
New towns or development on green belt land will include the development of local infrastructure, such as GP surgeries, schools and nurseries. Local authorities will decide what infrastructure is required and will negotiate its implementation.?
This will help avoid “ghost towns” like Northstowe , where people need to leave the area to access services. Towns like this often make it difficult for older people who cannot drive to live there. For older people…?
The only problem with this policy is that it could lead to regional inequalities, as it will depend on each council’s ability to negotiate with developers.
Protecting green spaces
New developments on green field land will have to include plans to improve local green spaces. The aim is to create accessible areas which local people can enjoy.
Open parts of the green belt for housing development and set ‘golden rules’ to ensure these developments benefit communities and nature.
This is a good counterbalance to the grey belt policy and will avoid housing being built at the expense of people’s wellbeing and the environment.?
More power to combined authorities
A combined authority is where multiple local councils collaborate to make collective decisions on transport, economic development, and housing.?
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They are often led by a directly elected mayor. Examples include:?
All combined and mayoral authorities will be required to strategically plan for housing growth in their areas.?
To do this, Labour wants to give mayors more powers and devolved authority. In particular, they will be given new planning powers and freedoms to make better use of grant funding. However, no details on what this will involve have been released yet.
Once again, the effectiveness of this policy depends on the abilities of the mayoral authorities.?
Build new towns
The government will build new towns in a bid to reach its house-building targets. As part of this, it will set up a New Towns Commission within its first six months and identify potential development sites within a year.?
This is likely to be controversial; environmental activists and local residents will likely protest against such developments. However, new towns have been successful in boosting housing supply in the past, and if done right, they can be good places to live.?
Affordable housing?
Labour has pledged to provide the biggest increase in social and affordable house building in a generation.
Developers of new towns will be required to make 40% of homes affordable. To support this, Labour has said it will strengthen developer planning obligations.??
The government has said that it will “make changes to” the Affordable Housing Programme, which provides funding for building affordable homes to developers and local authorities. The National Housing Federation (NHF) has advised that the scheme should be extended to 2029 and provide ￡4.6bn per year.
The government has also said that it will introduce a permanent mortgage guarantee scheme for first-time buyers. This is when the government acts as a guarantor on some mortgages to encourage lenders to provide low-deposit deals. No details have been released as yet, but it is likely the government will extend or rebrand the previous government’s scheme.
I mentioned the difficulties in getting developers and local authorities to meet affordable housing quotas earlier.?
Strengthening planning obligations is likely to make developers reluctant to construct new homes. However, offering funding for affordable homes should negate this issue.?
Social housing
The government has said that it will:
However, no further details have been released so far. It’s also worth noting that changes to the Affordable Housing Programme will benefit social housing providers seeking to build new properties.?
While it’s good that these issues have been recognised, there is no clarity on what is going to happen and when - so it’s difficult to say what this means for the sector.?
Private rental and leasehold reform
The Renters Reform bill, which included a ban on Section 21, “no-fault evictions,” was dropped by the previous government in the wake of the snap general election.?
However, a watered-down version of its leasehold reform bill did make it through. This ensured that no new houses could be sold as leaseholds.?
The Labour Party Manifesto stated that it would end the leasehold system and put a ban on building new leasehold flats. However, the King’s Speech contained no details regarding this.?
The Party also said that it would immediately ban “no-fault” evictions. As the name suggests, this is when a landlord can evict their tenant, even though they have not broken their tenancy agreement.
No-fault evictions were created so that landlords could regain control of their property, for example, if they wanted to sell it. But many unscrupulous landlords have used them as a way fo getting rid of tenants who raise too many repair requests or complaints.?
The ban on no-fault evictions has yet to be enacted. However, the fact that it is mentioned in the King’s Speech suggests it will happen within the next parliamentary session. In other words, by July 2025. ?
According to data from Shelter, one household was served a Section 21 every eight minutes during 2023. Many of these households will have had children. Uprooting a family in this way costs them money, puts their jobs at risk, and disrupts schooling and social lives. Each day these reforms are delayed will impact people’s lives, they cannot happen soon enough, and I urge the government to take action soon.???
What Does This All Mean?
It makes sense that the government has focused on planning policy and making new homes affordable. These policies will help bring down the overall price of housing and help to stimulate the economy.?
I generally support these planning reforms. However, the lack of detail in some areas is disappointing. Problems with the leasehold system and private rental sector affect millions of people. This means that many families, often with children, don’t have the security they need, which affects their social lives, finances, and mental health.
To me, a promise to ban Section 21 evictions “immediately” means we should see action within the first three months. It will be disappointing if it takes longer than this.???
The vague promises regarding social housing are also disappointing. Words such as “strengthen”, “priortise” and “support” are meaningless. The sector needs to see a tangible, time-bound plan.?
1.3 million UK households are currently on social housing waiting lists. Many of these households will have children, and many will be living in temporary accommodation. They need new social houses to be built as soon as possible, and the government needs to tell us how it intends to make this happen.
Is planning-first the right approach?
It’s early days; the new government has only been in power for a couple of weeks. And it’s great to see that they are taking steps to solve the housing crisis.?
However, the level of detail and how quickly they have acted on different policy areas reflect their priorities. It seems that social housing and the private rental sector changes are coming second to planning reform.?
This doesn’t necessarily mean that the government won’t improve these elements of the housing sector. But as yet, it still remains to be seen what, how, and when they will do it.?
I hope that more detail and a clearer idea of the timings will be announced in the coming weeks. I’ll keep you updated as soon as I learn more so make sure you subscribe to this newsletter and our email updates stay in the loop.