Can the Labour government really build 1.5 million houses?

The new Labour government has promised to build 1.5 million houses across the next parliament to address the housing shortage issue in the UK. That may sound like a bold new target, but really it is just the same 300,000 new homes a year target relabelled. Previous governments have failed to meet that target, so is it a realistic target for Labour to achieve?

Key Labour policies

Green belt review

Labour plans to ask councils to review green belt land. This includes identifying ‘grey belt’ areas, which are low-quality green belt lands, that could be used for potential development. The aim is to balance new housing needs with environmental concerns.

Comment

Some might agree it is a sensible policy to use currently unproductive land. According to BBC Verify’s podcast ‘Can building on ‘grey belt’ land fix the housing shortage?’, not much of the green belt needs to be built on to have a big impact. The Centre for Cities think tank estimates that developing just 2% of existing green belt land near railway stations servicing big cities would unlock enough land to build between 1.7 million and 2.1 million homes. However, can that 2% all come from grey belt areas? The simple answer is no. Knight Frank estimates that the amount of homes that could be built on grey belt land is only between 100,000 and 200,000. So, the grey belt does not look like a silver bullet. Moreover, grey belt isn’t an officially defined term yet, meaning what actually gets classified as grey belt, in due course, could be much smaller than hopes and expectations.

Increased planning capacity

To expedite the building process, Labour proposes hiring 300 new planning officers to streamline the approval process for new housing projects.

Comment

Some believe the key issue with the planning system is not the system itself but the low number of planning officers working in it. Whether 300 officers will be enough is uncertain, as is whether Labour can source and train those 300.

National planning policy framework

A draft framework will be published to reimpose housing targets, providing a clear and consistent approach to housing development across the country.

Comment

Housing targets have been used before. While they have increased house building in certain periods, they’ve fallen short of achieving the targets. Setting a target does encourage development but does nothing to alleviate the development challenges, like availability of viable sites, costs and market forces.

Local housing priorities

Local residents will be given ‘first dibs’ on new homes. This is to prevent overseas investors from snapping up properties and ensure the housing benefits local communities.

Comment

It will be interesting to see how this policy can be implemented and if it will face any opposition as being discriminatory. For housebuilders, the policy could potentially reduce the pool of would-be buyers. Additionally, given that pool has less money to spend than the wider market, will housebuilders want to build under these conditions?

Sustainable and affordable housing

Labour is committed to ensuring that new homes are not only affordable but also sustainable, contributing to the party’s broader environmental goals.

Comment

This is a welcome and necessary policy as part of tackling climate change. Such policies have often made it more challenging to build commercially viable homes. Thus, it is difficult to see how it will help labour achieve their target in building 1.5 million houses.

Conclusion

In summary, there are some positive steps forward in these policies. It’s good to see that the policies are focused on supply-side too. However, builders can only build if buyers can buy. Given the state of both the country’s and the public’s finances, how are the odds looking on the country having 1.5 million more homes by 2029?

Side note: Developers taking advantage of the new policy regime and seeking out opportunities on grey belt land, or indeed brownfield land, shouldn’t forget about land remediation relief. It is a valuable corporation tax incentive that can significantly reduce the financial risk of developing on challenging sites. If you would like to know more this or how Labour’s housing policies could effect you, get in touch with our real estate and tax experts.