Keir Starmer’s Labour housing policy has pledged that Labour will prioritize housebuilding from “day one” of coming into power. Labour has set the ambitious goal of constructing 1.5 million homes over the next five years.
This target requires building 300,000 homes annually, which is more than double the number completed in 2022-23. But is this a realistic pledge?
Given the challenges in the housing market, can Labour overcome the obstacles that have stymied housebuilding efforts in the past?
The Scale of Labour’s Housing Policy: Doubling Annual Housing Completions
Labour’s target of building 300,000 homes per year represents a significant increase from recent construction rates. In 2022-23, only around 140,000 homes were completed, meaning Labour’s goal would require more than doubling this figure.
To achieve this, Labour plans to tackle several key areas. Reducing planning application delays, helping first-time buyers, and building on what they describe as “unsightly” greenbelt land.
Reducing Planning Application Delays
One of Labour’s strategies to boost housebuilding is to streamline the planning application process. The current system is often criticized for being slow and cumbersome with lengthy delays.
This often discourage developers from initiating new projects. Labour aims to streamline approvals, speeding up home construction within a shorter timeframe.
Supporting First-Time Buyers
Another key element of Labour’s plan is to provide more support for first-time buyers. High prices and stringent mortgage requirements have made homeownership increasingly difficult for young people.
Labour plans to ease entry for first-time buyers, potentially boosting demand and encouraging more housebuilding.
Building on Greenbelt Land
Perhaps the most controversial aspect of Labour’s housing strategy is the proposal to build on “unsightly” greenbelt land. The greenbelt has long been protected from development to preserve natural landscapes and prevent urban sprawl.
However, Labour argues that some areas of the greenbelt are not particularly scenic and could be used to help meet the country’s housing needs.
This proposal is likely to face opposition from environmental groups and local communities, but Labour believes it is necessary to achieve their housing goals.
The Historical Context: Decline in Public Sector-Funded Housing
To understand the scale of the challenge facing Labour, it is important to consider the historical context. Since the 1980s, the number of homes built and paid for by the public sector has fallen dramatically.
In previous decades, local authorities played a significant role in housebuilding, particularly in the construction of social housing.
However, this role has diminished over time, with successive governments placing greater reliance on the private sector to meet housing needs.
Private Developers’ Reluctance to Flood the Market
While private developers have taken on a greater role in housebuilding, they are often cautious about building too many homes too quickly.
Flooding the market with new homes can drive down prices, which is not in the interests of developers looking to maximize their profits. As a result, the number of new homes constructed each year tends to fluctuate based on market demand.
In recent years, demand has been dampened by rising mortgage rates. According to HMRC figures, housing transactions fell by 19% in 2023, largely due to the increased cost of borrowing.
In response, developers have scaled back their plans, with the National House Building Council (NHBC) reporting a 44% drop in new home registrations in 2023.
Can Labour Realistically Deliver 1.5 Million Homes by 2029?
Given these challenges, can Labour realistically achieve their target of building 1.5 million homes by 2029?
Housing experts suggest it will be a difficult goal to meet.
One of the main obstacles is that most decisions on whether homes get built are in the hands of private sector housebuilders, not the government.
The Role of Private Sector Builders
The role of private builders is crucial. In 2023-24, only 143,000 homes were completed, far short of Labour housing policy target. To reach 1.5 million homes, builders would need to complete these homes within approximately 1,826 working days, accounting for holidays and other potential delays.
“Builders would need to finish a home every two and a half minutes over 1,826 working days to stay on track”
This calculation doesn’t even factor in issues like rainy days, which can significantly slow down construction. Even in ideal conditions, the scale of the task is daunting—builders would need to finish a home every two and a half minutes to stay on track.
Material Shortages and Delays
In addition to the sheer scale of construction, there are numerous practical challenges that could impede progress.
Material shortages have been a persistent issue in the construction industry, exacerbated by global supply chain disruptions.
Securing utilities like sewage, electricity, and water also involves lengthy waits, and building regulations approval and planning permission add further delays.
The Challenge of Land Acquisition
Land acquisition presents another significant hurdle. Commercial developers often prefer to build larger, more profitable homes, such as three or four-bedroom houses with two bathrooms.
They often prioritize these over the desperately needed but less lucrative social housing options.
This preference can slow the pace of construction, as developers are more interested in maximizing profits than meeting government targets.
The Funding Question: Who Will Pay for It?
Even if all the logistical challenges could be resolved, there remains the critical question of funding. Building 1.5 million homes would require a massive financial commitment, and it is unclear where the money would come from.
Labour would need to find ways to finance this ambitious project, whether through government borrowing, public-private partnerships, or other means.
Given the current state of public finances, this could prove to be one of the biggest obstacles to achieving their goal.
The Expert Perspective: A Lofty Ambition
Given the scale of the challenge, many experts are skeptical about Labour’s ability to meet their target. David Crosthwaite, chief economist at the Building Cost Information Service, describes Labour’s goal as “a lofty ambition and nothing else.”
He argues that flooding the market with new homes would not be in the best interests of developers, who are unlikely to cooperate with such a plan.
Peter Bill, a property author and commentator, echoes this sentiment, pointing out that politicians “hold no trowels.” In other words, the government has limited control over the construction process, which is largely driven by private developers.
For Labour’s housing policy to succeed, they would need to find ways to incentivise or compel developers to build at the required scale—a task that is easier said than done.
The Need for Direct Government Intervention
Some experts argue that the only way Labour could significantly influence housing supply would be for the government to build homes directly.
This approach was more common in the past when local authorities employed direct labor to construct social housing. However, given current public finance constraints, this option seems unlikely.
Labour’s Housing Policy Starting On The Back Foot
David Fell, lead analyst at Hamptons, believes that Labour’s progress will be slow, as they will be starting on the back foot.
He notes that higher interest rates will limit the number of homes that developers can build and sell. With sales numbers down by 25% to 35% on the long-term average, Labour will inherit a housebuilding deficit that could hinder their efforts from the outset.
Optimism Amidst the Challenges
Despite these challenges, there are some who are more optimistic about Labour’s housing policy prospects. Anthony Codling, head of European housing and building materials at RBC Capital Markets, sees Labour’s policies as the most promising among current political manifestos for boosting housing supply.
He believes that if Labour can effectively implement their plans, they could make significant progress towards their target.
Conclusion: Labour’s housing policy – a daunting task
Labour’s housing policy pledge to build 1.5 million homes in five years is undoubtedly ambitious. The scale of the challenge is enormous, with numerous obstacles ranging from market dynamics and developer interests to material shortages and funding constraints.
However, if Labour can find ways to overcome these challenges, there is potential for significant progress in addressing the UK’s housing crisis.
Whether they can deliver on this promise remains to be seen, but the stakes are high, and the need for more housing is undeniable.
