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Labour's Plan To Boost Homeownership May Not Solve "Root Cause" Of Housing Crisis

3 min read

The Labour Party has set out a mini-plan to increase homeownership among first-time buyers, but experts have warned its proposals are not radical enough.

In a series of Tweets, Labour promised to give “first dibs” to first-time buyers in their local area, reform planning laws and stop “entire developments” from being sold to foreign investors.

Lisa Nandy, Shadow Secretary of State for Levelling Up, Housing and Communities, promised in September to build more homes and ensure 70 per cent of Britons owned their own property.

Housing demand in Britain has outstripped supply for years, with data from Centre for Cities, a policy research unit, showing the country needs 654,000 homes per year over the next decade to solve England’s property shortage.

Under successive Conservative governments the average house price has soared from £195,000 in May 2010 to almost £300,000 in October 2022.

Meanwhile Rishi Sunak, the Prime Minister, dropped mandatory housing targets after replacing them with advisory ones last year.

However, Chief Executive of the Town and Country Planning Association Fiona Howie claimed Labour’s initial proposals might not be enough to overturn the backlog of new homes needed.

“We need to build more good quality, affordable homes for future generations. However, further reforms to the planning system will not be enough. We need a nationally funded and locally delivered social housing programme,” Howie told PoliticsHome.

“Large scale, high quality new communities connected by fast and reliable public transport are an essential part of this solution.”

Part of the blame for Britain’s housing crisis can be attributed to the end of “mass council building” after the introduction of Margaret Thatcher’s Right to Buy scheme.

The policy, first introduced in 1980, gave most council tenants the option to buy their own homes at a discount. However, the Centre for Cities put most of the blame for the housing crisis on the Town and Country Planning Act, brought in by Labour prime minister Clement Atlee.

It claimed the legislation led to private housebuilding plummeting by a third. The Adam Smith Institute, a free market think tank, has also called for this legislation to be reppealed to ensure "we have the homes that our families, neighbours, and children desperately need."

"These proposals are seemingly well-intentioned, but may not solve the root cause of the UK's housing calamity," Maxwell Marlow, the Adam Smith Institute Director of Research, told PoliticsHome. 

"Banning sales of homes to foreigners and allowing houses for local first time buyers does not solve the shortage of homes for people across the country. But it's right to call out our unsustainably sclerotic planning system."

Priced Out, an organisation which campaigns for affordable housing, said Keir Starmer, the Labour Party leader, has the "right idea" but also urged him to rethink proposals on restricting foreign ownership and giving "first-time buyers first dibs". 

“We welcome any party willing to get spades in the ground and deliver the homes Britain desperately needs - but the devil will be in the details," a spokesperson from Priced Out told PoliticsHome. 

“The root of this crisis is lack of supply - and the success of the next government’s housing policy will be determined by if it can deliver more homes where they are most needed.

“The recent report from the Fabian Society's Housing Committee shows there are some in Labour who understand how to solve the housing crisis. We strongly encourage Keir Starmer to read their latest report - Homes for Britain.”

The Labour party was contacted for comment.

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