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Labour and the Conservatives both have gaping holes in their housing policy

(Alamy)

5 min read

Housing has consistently ranked among the top five issues facing the country over the last year. But the policy solutions of both major parties have failed to break through.

When polled on whether Labour or Conservatives would better help people get onto the housing ladder, the most selected category was “neither” with 36 per cent.

Voters are animated about housing, but many aren’t convinced by Labour or Tory policies. The Social Market Foundation published a series of reports on housing over the spring and based on what we learned, we’ve looked at the major parties’ commitments – and what they’re missing.

Labour

Labour has pledged to build 1.5m homes over five years, working out to 300,000 per year. That would be a steep increase from the current rate, which hovers around 210,000.

They promise to do so through planning reform –  designing new policies to circumvent blockages  from local committees, arduous regulations, and vociferous NIMBYs. The idea is that by swerving these, developers could build more homes at a faster pace to increase supply and, they hope, lower prices. The party would demand that brownfield land be fast-tracked for development, alongside portions of the greenbelt that they consider “poor-quality and ugly.” Some may be used to build new towns. Additionally, 50 per cent of new homes would be classed as “affordable” lowering to 40 per cent in new towns.

Other Labour policies include:

  • Additional rights for renters including ending no-fault evictions and more rights to alter the property.
  • A mortgage guarantee scheme with government insuring low-deposit mortgages, decreasing the savings eligible households require for deposits.
  • Insulation to renovate drafty homes making them warmer and cheaper to heat
  • Reforming leasehold contracts, though it remains unclear how far the party would go after they backtracked on introducing legislation in their first 100 days.
  • Additionally, Housing First policies to decrease homelessness based on pilot schemes in Manchester, Liverpool and Birmingham may be included in the manifesto, but these have yet to be confirmed

Conservative

The Tories have not released many housing plans for the next term but their existing record provides indicators. In their 2019 manifesto the Conservatives promised to build 300,000 per year, which Labour also signed onto. But last December Housing Secretary Michael Gove announced the targets would be eased due to interest rates.

The Tories have also considered some planning reform, but thus far their version has been more, well, conservative, than the opposition. This year, Gove announced a two-pronged housebuilding strategy to push councils in England’s largest towns and cities to build on brownfield land and allow more flat conversions. But the impact will likely be minimal due to many changes being optional and riddled with loopholes.

On homeownership, the Prime Minister has discussed reintroducing Help to Buy loans, a scheme introduced in 2013 that allowed first time buyers to borrow 20 per cent of their home’s purchase price interest free, offsetting the cost of deposits. Like Labour, the PM has also mulled mortgage guarantees. However, the future of both policies remains uncertain.

The private rented sector, like leasehold reform, remains a wedge issue for Tory campaigners. The Renters Reform Bill 2023 contained measures to abolish fixed term contracts and create a national landlord registry, but the planned abolition of section 21 ‘no-fault evictions’ was postponed. The bill was lauded by some elements of the party and derided by others, and remains in limbo after the election call.

What’s missing

Making planning reform affordable

Labour’s details remain scant. Planning reform is no easy task, and when we reviewed the many examples of planning reforms attempted across English-speaking countries, we found most failed to stimulate development or lower prices.

Affordability requirements on new buildings can help, for instance mandating a developer provide a certain amount of homes for affordable prices, but those represent another hurdle. The government defines “affordable” housing as homes provided at 80 per cent of the market rate. That’s still unaffordable in much of Britain, particularly in high-demand areas. Labour may be betting they can avoid controversy by building 50 per cent of their units under this definition while keeping home prices high. Instead, Labour should introduce true affordability requirements, which would allow someone making 60 per cent the local median wage to pay 30 per cent of their income on rents.

Building social housing

Britain’s social housing stock is dwindling, with more homes for social rent sold or demolished than built last year. Angela Rayner pledged the ‘biggest boost to affordable, social and council housing for a generation’ at party conference last year.

England has never built more than 300,000 homes a year without more than 100,000 of those being built by the state, back in the late 1960s. We have proposed using housing ‘fairness taxes’ – levies on non-residents, ‘house-flipping’ and vacant homes - to fund the tripling of homes built for social rent, up from 9,561 in 2022. Matching tax rates seen in other Western countries could raise up to £4bn a year for this purpose.

Cooperative housing

Co-operative housing allows people to ‘rent like they own’, bringing together their market power to secure better housing collaboratively. They benefit from security of tenure, a voice in how their building is run, and strength of community. It can make people healthier, and the connection to community can create less of a NIMBY backlash – 23 per cent of Swedes and 10 per cent of Germans live in some form of co-op. In Britain, just 0.2 per cent do.

Whilst co-operatives are likely to remain a small share of the UK housing mix, the sector should be supported to expand. A state-backed co-operative homes lender to ease their access to finance and the re-establishment of the Community Housing Fund would be a good place to start.

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