What next for Housing in England from the Manifesto Pledges ?

All three of the main political parties have now released their election manifesto pledges, do not worry this is not a political post, I am genuinely interested in what each party has to offer as a floating voter. My main focus however is on the one area I am passionate about – housing.

What has become clear is that an environment of increased costs of delivery, due to the perfect storm of cost pressures seen in the last 2 years (see my previous article on this subject), set against challenges to borrowing ability for consumers, has driven housing to levels of unaffordability never before seen for many, and in particular those trying to get a step on the property ladder. This is in part due to the cost of living crisis, but also a much wider piece around the ratio of the cost of housing to earnings, with the cost to build new housing outstripping the rate at which the market can support increased values, leading to viability issues and a lack of new housing being delivered.

It has also become clear that housing is much higher up on the electorate’s agenda this time around, with a recent BBC poll suggesting it was the most important issue to many, ahead even of the NHS for younger voters. This all means that politicians are having to sit up and take note of housing as an election issue.

So what are the parties pledging to do to help solve the housing crisis. I examine this grouped into the two principal areas of focus, building more homes, and environmental action, to analyse the pledges and compare the three main parties approaches to these prominent issues. This article focusses on England only due to the complexities involved in the devolved areas in the rest of the UK.

Building more Homes

All three parties agree that building more homes is needed and that increased supply will help with affordability issues. The much touted 300,000 homes a year target has never been hit this millennium, indeed you need to go back to the 1970’s to find the last time the industry was building new homes at this scale, fueled at that time by a massive centrally funded council house building programme.

Figures for 2024 are likely to be significantly lower as schemes have further stalled due to viability issues and uncertainty created by new legislation such as the Building Safety Act. It is clear that intervention is needed if this target is ever to be met, as the market alone will not deliver at these levels.

Both Labour and the Conservatives have renewed the 300,000 homes per year pledge, with the Liberal Democrats committing to building the homes people desperately need without committing to an actual number. The approach to achieving this differs slightly between the parties but there are common themes, addressing the planning system to remove blockers, and encouraging development on brownfield sites.

Whilst reform of the planning system would be welcomed by the industry, there are already many schemes that have planning permission but do not get built for other reasons, so that alone will not solve the issue. Equally building on brownfield sites is a complex issue, that often comes with increased costs to deal with historic uses of a site, or constraints imposed by surrounding land uses. To unlock this incentives will be required to support regeneration of brownfield sites in our urban areas. All three parties are pledging financial incentives to build on brownfield sites, which will be welcomed, including extension of the current full expensing rules to offset investment in brownfield sites against corporation tax, but this only helps of course if you pay corporation tax in the first place.

Both Labour and the Liberal Democrats have committed to investing in the creation of New Towns/Garden Cities. Details of where these will be located and what incentives they will carry to encourage development will follow, but these have been successful policies in the past, and the ability to plan and create a new town and integrate pre planned infrastructure such as district heating systems and local energy networks will enable housing of the future. The conservatives have made a similar pledge for urban regeneration schemes through urban development corporations in major cities across the UK.

Some previous policies are also mentioned and reinvented. The Conservatives are pledging to scrap stamp duty for first time buyers on new homes up to ￡425k and introduce an updated version of the popular Help to Buy scheme. These will be welcomed by the sector as they will help bridge the current affordability gap, particularly for those not already on the property ladder. The previous Help to Buy scheme did lead to an increase in delivery as it helped prop up values to aid viability, albeit alone it is not the solution to the housing crisis.

Labour have indicated the reintroduction of mandatory housing targets as one way of easing the planning constraints, with a return to presumption in favour of development. This is likely to be more controversial, with different parts of the sector split on how effective this policy actually is at increasing delivery numbers, without at the same time removing some of the other barriers to viability.

The protection of social housing from right to buy by Labour will be welcomed by some to genuinely keep social housing accessible and affordable to all. The Liberal Democrats have a similar policy with their Rent to Own model over a 30 year period allowing for strategic replacement as social homes transfer from rent to ownership over an elongated period.

All 3 parties are committed to ensuring an increase in the level of affordable homes that are built and mention is made of renewing the affordable housing programme. One thing that is clear from the track record over the last 50 years, is that left to the private sector alone, this will not achieve the volumes required, and central government funding will be essential to unlock greater numbers, whoever gains overall control in Westminster.

Environmental Action

It is clear that in order to meet our net zero targets housing is one of the key areas of focus. This means not just new housing, but an investment in our existing ageing housing stock, through incentives and grants to encourage homeowners and landlords to undertake improvements, alongside building new stock to the highest possible standards. Again all three parties recognise the importance of this issue.

The Liberal Democrats are pledging to offer the Home Energy Upgrade programme providing grants for free insulation and heat pumps for low income households, administered by Local Authorities. They are also keen to provide incentives to all households for installing a heat pump in their home to cover the real costs, and to investigate a subsidised Energy Saving Homes scheme to further encourage homeowners to improve the efficiency of existing properties. They have also suggested reintroducing the requirement for landlords to upgrade the energy efficiency of properties for letting to EPC C or better by 2028, something which previously resulted in a mass exodus of private landlords from the rental sector, reducing supply and driving up rents as a result.

The Liberal Democrats pledge to simplify the process of creating local energy networks, and making it easier for these to feed back into the national grid, would help incentivise greater uptake of these community schemes and help encourage adoption of this technology.

Both Labour and the Liberal Democrats will require all new homes to meet net zero targets, something already commonplace in public sector housing where Local Authorities are already committed to achieving net zero targets across their property estates. Driving this into the private sector will be another issue for viability appraisals to overcome. Something will have to give to make this achievable, most likely the level of affordable housing that can be supported.

Labour are pledging support via the ￡1.1B Warm Homes Plan, to provide grants and low interest loans, again administered by Local Authorities, to unlock some of the barriers for existing homeowners and social landlords to make improvements to the energy efficiency of their homes. They are equally committing ￡6.6B over the next parliament to improve the energy efficiency of over five million homes.

Labour are also committing to working with the private sector to improve the energy efficiency of homes, including ensuring private rental properties meet minimum standards by 2030, but not being as prescriptive as the Liberal Democrats of what this may mean, although we can assume a similar requirement for at least EPC C in line with previous policies. They have also committed to extending Awaab’s Law to the private sector ensuring nobody is forced to live in substandard rented accommodation.

The conservatives have much less actual detail in their manifesto of the support they will offer to help decarbonise our existing housing stock. They are making similar noises to the other parties around helping households to make the changes needed to decarbonise their homes, and are committing to ￡6B of funding for energy efficiency to make a million homes warmer, alongside an energy efficiency voucher scheme funding by central government open to every household to support installation of energy efficiency measures to their homes.

Both labour and the conservatives are planning a review of the nutrient neutrality rules that have further hampered schemes, but again this alone is not an issue to unlock viability of new housing, just one of many barriers to viability that need review.

The Challenge Ahead

It is clear from the manifestos that housing has gained more importance, but whether this will be backed up with the central investment levels and policy commitments remains to be seen. One clear thing is that whoever gains power in Westminster on July 4th has a massive challenge on their hands, both in terms of improving the volume of new housing being delivered, and in addressing the barriers to improving the existing housing stock in pursuit of a net zero Britain.

I for one am continuing to lobby my local MP candidates around the importance of housing as an election issue not to be overlooked, and am looking forwards to positive action to help the sector meet the challenges ahead.