What’s next for UK housing?

The documents are hot off the press, Capital Raising Associate Director Sam Woodward shares what the main parties’ manifestos tell us about what they really want to do about housing in the UK?
The UK has lived under the shadow of a perma-crisis in residential housing for decades now – a housing crisis which, as the 2021 Census revealed, is more acute in some areas than others. Supply is one issue. The UK has failed to meet any targets for years.
What do we need?
The Census showed that the rise of single-dwelling households in the UK has been prolific – in part a result of an ageing population. According to the data, the proportion of the population aged 65 years and over last March was 18.6 per cent, up from 16.4 per cent in 2011. Many older borrowers now live alone. One-person households (those living alone) are the second most common type of household, accounting for almost 1 in 3 (30%) of UK households in 2022, 8.3 million households. The majority (53%) of these households were women living alone. 70 per cent are women over 65.
This should exert a profound impact on housing policy thinking and may be why Labour’s manifesto only fleetingly mentions first-time buyers, preferring instead to focus on supply issues. One paragraph addresses the plight of current first-time borrowers by promising them the first chance to buy new homes and pledging to prevent entire developments from being sold off to international investors before houses are even built. It will also introduce a permanent, comprehensive mortgage guarantee scheme to support first-time buyers.
A new approach to planning
Labour has nimbyism and planning in its sight as blockers that need to be addressed. The party promises to restore mandatory housing targets (in response possibly to the Home Builders Federation’s report that stated 2472 sites were approved in the first quarter of this year – the lowest figure since 2006)3 and ensure that planning authorities have up-to-date Local Plans. It will fund additional planning officers, and, when necessary, make full use of intervention powers to override local community objections and build new stock.
Crucially, a new Labour administration promises to build a new generation of new towns that, alongside urban extensions and regeneration projects, will form part of a series of large-scale new communities across England.
Green and pleasant land
The much-touted Labour idea about releasing ‘grey belt’ land is explained, namely a focus on poorer quality green belt and brownfield sites. Labour will take a brownfield first approach by fast-tracking approval of urban brownfield sites. The release of lower quality ‘grey belt’ land will be prioritised and Labour promises ‘golden rules’ to ensure developments benefit communities and nature.
A plan for housing demand
The need for housing in England requires planning for growth on a larger than local scale so Labour will introduce effective new mechanisms for cross boundary strategic planning. Labour will require all Combined and Mayoral Authorities to strategically plan for housing growth in their areas and give the Combined Authorities new planning powers along with new freedoms and flexibilities to make better use of grant funding.
Labour will “further reform compulsory purchase compensation rules to improve land assembly, speed up site delivery, and deliver housing, infrastructure, amenity, and transport benefits in the public interest. Landowners will be awarded fair compensation rather than inflated prices based on the prospect of planning permission.”
Finally, Labour will deliver the biggest increase in social and affordable house building in a generation by strengthening planning obligations to ensure that new developments provide more affordable homes. Labour will prioritise the building of new social rented homes as well also looking to better protect existing stock by reviewing the increased right-to-buy discounts introduced in 2012 and increasing protections on newly-built social housing.
A step to the right
The Conservatives are equally keen to be seen to be addressing a shortage of stock but are going further with fiscal changes to support first-time buyers. The party will deliver 1.6 million (as opposed to Labour’s 1.5 million) homes in the ‘right places’ while protecting the countryside, permanently abolishing Stamp Duty for homes up to £425,000 for first-time buyers and introducing a new Help to Buy scheme, which is popular with lenders as it has form and requires no lengthy systems implementation.
Within these headlines are several notable points. They plan to abolish the legacy EU ‘nutrient neutrality’ rules to immediately unlock the building of 100,000 new homes with local consent. Developers will be legally required to pay a one-off mitigation fee so there is no net additional pollution. The Conservatives will also focus on brownfield land in urban areas by providing a fast-track route through the planning system for new homes on previously developed land in the 20 largest cities. They want to raise the density levels in inner London to those of European cities like Paris and Barcelona.
“Unlocking new urban regeneration schemes, by creating locally-led urban development corporations in partnership with the private sector and institutional investors. We will support the delivery of new quarters in Leeds, Liverpool and York alongside working with local leaders and the community to seize the opportunity of our ambitious Cambridge 2050 plan.“
Of note here is the declaration of support for local and smaller builders. The Conservatives will require councils to set land aside for them and lift Section 106 burdens on smaller sites while ruling out Labour’s proposed ‘community right to appeal’ which would, they believe, be problematic for the planning system.
The Conservatives’ promise to make local authorities use the new Infrastructure Levy to deliver the local infrastructure needed to support homes. The party will renew the Affordable Homes Programme which is intended to deliver homes of all tenures and will focus on regenerating and improving housing estates.
The Conservatives, in contrast to Labour, are pledging to retain the party’s commitment to protect the Green Belt from uncontrolled development, while ensuring more homes get built where it makes sense, like in inner cities. Their commitment to national planning protections would mean there would not be a top-down requirement on a council to remove Green Belt protection.
A casting vote?
The Liberal Democrats, who may hold some sway in a tight result, want to build ten new garden cities and allow councils to buy land for housing based on current use value rather than on a hope value basis by reforming the Land Compensation Act 1961.
They promise to properly fund local planning departments to improve planning outcomes and ensure housing is not built in areas of high flood risk without adequate mitigation, by allowing local authorities to set their own fees. They too will encourage the development of existing brownfield sites with financial incentives and by ensuring that affordable and social housing is included in these projects and introduce ‘use-it-or-lose-it’ planning permission for developers who refuse to build.
Where there is challenge, there is opportunity
There is evident overlap in the three main parties’ political manifestos. All focus on reform of planning as being key in facilitating change and building on brownfield as a priority.
The manifestos leave room for the market to spot potential opportunities n. No party has really provided detailed answers to the real issues of delivery. The supposition in all manifestos is that if we create the right environment for building then it will happen. However, the cost of materials and labour post-Brexit as well as the nature of an ageing workforce remain issues and there is not a great deal in these proposals for SME builders so some brownfield plots of ten units or less may remain unsupported. The scale may be missing and the devil will be in the detail but there may well be post-election opportunities for investors looking for returns.
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