Property industry leaders have given a cautious welcome to the new UK chancellor Rachel Reeves’ plans to restore mandatory housebuilding targets, but said more radical and longer term measures were needed to address the country’s housing crisis.
In her first speech as chancellor on Monday, Reeves said she would bring back compulsory housebuilding targets as part of a wider plan to boost the UK economy.
‘The story of the last 14 years has been a refusal to confront the tough and the responsible decisions that are demanded. This government will be different and there is no time to waste,’ she said in her address to business leaders.
‘We’ve got to get Britain building, and we’ve got to ensure families can get on the housing ladder.
‘Homeownership is going backwards. It’s gone backwards in the past few years. Britain today has lower homeownership than it should, and the Labour party – this government – want to be the party of homeownership. But we also know that social housing is an important part of the mix, and will be included in the 1.5 million new homes [over the life of this Parliament].’
James Dunne, head of operational real estate at Abrdn, said the firm welcomed ‘any changes that help facilitate desperately needed further investment into the UK housing market’.
However, he warned: The government has ambitious targets to deliver 1.5 million homes over the life of this parliament. These numbers have never been reached in annual terms without significant direct development by government or local authorities.
‘In the expected continued absence of this, the government needs to go beyond the planning system and work in partnership and financially support the private sector to deliver significant volumes of housing across all tenures.’
Dunne said this meant looking ‘beyond the bulk housebuilders’ to finding ways of enabling viable delivery of affordable and social housing.
He noted: ‘It should also embrace the growth of the professional rental sector that makes up a significant proportion of housing delivery in Europe and the US and channels new money from pension funds, insurers and retail investors in the UK housing system.’
Daniel Austin, CEO and co-founder at boutique property lender ASK Partners, said a ‘radical yet credible long-term plan’ was needed to assuage market concerns.
‘Their [Labour’s] proposed target of 300,000 homes annually echoes longstanding government aspirations unmet since 2004,’ he said, elaborating: ‘Four primary factors underpin this crisis: over-reliance on major housebuilders, politicised planning discouraging development, net loss of social housing, and post-Brexit labour shortages.’
Addressing these roots was imperative to alleviate the affordability crisis, he said, listing a range of measures which could help. ‘Reinvigorating SME housebuilders is pivotal… Boosting skilled labour domestically and reforming the planning system are equally crucial… Prioritising social housing and incentivising brownfield developments are essential steps toward sustainable growth… Lenders must offer flexible financing to smaller developers.’
He concluded: ‘The unique challenges facing the UK demand decisive action. Embrace this opportunity to steer us toward a balanced and sustainable housing market, ensuring prosperity for generations to come.’
Nick Sanderson, CEO at senior living specialist Audley Group, said that while Reeves’ plans signalled change and were welcome, they shouldn’t stop there. ‘The new government must also acknowledge the role of specialist housing and expedite its delivery, including housing that is tailored to our growing older population. Only then will we see more homes come to the market as people choose to downsize, leaving family homes available for those further down the ladder.
The Royal Institution of Chartered Surveyors (RICS) issued a similarly mixed reaction: ‘It is clear the current planning system is not fit for purpose and we welcome reform to the National Planning Policy Framework to help meet our future housing and energy needs.
‘This includes 300 new planners, which is very welcomed but in reality, represents roughly one extra person per planning authority and it is essential we don’t just recruit, but retain these highly-skilled planners. But this must also be partnered with planning authorities to producing updated housing plans to reflect this new target and justify their housing development strategy.’
RICS further welcomed the new government’s ‘Grey Belt’ plan, under which councils will effectively be required to prioritise building on brownfield sites and poor-quality areas in the green belt.
‘However’, it noted, ‘a holistic, rather than piecemeal, approach for the Green Belt is required to provide access to green infrastructure, protect biodiversity, and recognize the economic need for urban growth. It must also reflect the constrained capacity of our energy infrastructure, which is increasingly blocking housing production, and RICS is calling for urgent investment in our electrical grid capacity to help support our future housing and infrastructure needs’.
The organisation concluded: ‘All of these elements will need to be tackled in a coordinated manner and this will be particularly pertinent in Labour’s quest to achieve economic growth. Many studies have agreed on the positive correlation between GDP growth and the availability of homes. If housing delivery is backloaded towards the end of parliament, then the electorate may not see benefits quickly enough.’
He added; ‘It takes bravery to move away from promises of simply building more and more and instead focus on what needs to be built to make the most difference. I’d like to hear more from the government on taking that leap.’
Mark Buddle, head of residential development at property consultancy Bidwells, said: ‘Restoring mandatory targets alone will not be enough to solve the housing crisis. While it is a positive step, it will only be effective if a wider policy environment is far more supportive of development than it has been in the past.
He added: ‘Labour is making the right noises around this, through whether they will be able to deliver on their 1.5 million target will depend on how forcefully they reform Britain's sclerotic, overly localised planning system.’
