Nothing better typifies the challenges surrounding Housing policy in the UK than the remarkable churn in Housing Ministers. Since February 2022, six different Conservative MPs have held this position (Lee Rowley, the incumbent, has been in the role twice), leading to short-termism, stasis and, ironically enough, a lack of planning.
The results of this political inconsistency are widely discussed: a persistent shortage of affordable homes, particularly for first-time buyers, and limited new housing development, often due to planning restrictions and local opposition.
In the private rental sector, there are concerns about rising rents, housing quality, and tenant security. Furthermore, this government (any subsequent governments) will need to balance the demand for more housing with environmental concerns and local community interests, while also addressing issues of inequality and regional disparities in the housing market.
In recent years these challenges have been complicated by economic factors such as inflation and interest rates.
According to YouGov, housing ranks as the fourth most critical political issue in the UK, following the economy, health, and immigration. Major political parties have dedicated substantial attention to housing in their manifestos, offering a combination of concrete proposals and political promises. We take a look at the key pledges from the major parties:
Home Ownership
All major parties champion homeownership, but practical solutions are scarce.
The core challenge lies in reducing deposit requirements to increase accessibility without exposing lenders to undue risk or inflating house prices further. Without a step change in house building, it is a delicate balance.
Both Labour and Conservative manifestos propose extending mortgage guarantees to encourage higher loan-to-value lending. While this approach is low-risk, experience suggests it may not significantly impact the housing market.
The Conservatives propose reviving a modified Help to Buy scheme, likely to be welcomed by housebuilders who would partially fund it. This approach has proven popular with potential homeowners, though careful implementation is crucial to protect their interests. They also suggest offering landlords capital gains tax incentives for selling to current tenants, potentially appealing to those affected by rising mortgage rates or increased regulations. However, the two-year time limit may restrict its effectiveness, depending on tenants' financial situations.
Beyond these proposals, both parties offer limited new ideas for increasing homeownership; Labour's main commitment is to prioritise first-time buyers for new homes.
Private Renting
Most major parties, except Reform, agree on restructuring the private rented sector, particularly ending Assured Shorthold Tenancy agreements. Unfortunately, the dissolution of Parliament for the GE has all but killed the Renters Reform Bill. What happens next isn’t clear, but new legislation will be needed.
The parties differ on implementation speed and details, Labour proposes immediate action, while Conservatives promise to strengthen landlords' possession recovery processes.
While many investors anticipated the end of "no-fault evictions", rent control remains a more contentious issue. Notably, neither Conservatives nor Liberal Democrats mention it in their manifestos. Labour hints at a light-touch approach, suggesting only improved tenant empowerment to challenge unreasonable rent increases.
Housebuilding
Housebuilding commitments have become a manifesto arms race, with parties proposing ambitious targets: Labour at 300,000 homes annually, Conservatives at 320,000, and Liberal Democrats aiming for 380,000. The optimism behind these goals is significant given Savills' projection of 160,000 annual completions over the next three years without major policy intervention.
The Lib Dems propose 150,000 social homes yearly and 10 new garden cities, with councils buying land at existing use value. While radical, experience suggests limited feasibility.
Conservatives commit to protecting greenbelt land, focusing on brownfield development and urban densification. However, this approach doesn’t significantly differ from current policies, under which planning consents have declined.
Labour's plans include restoring mandatory housing targets, strengthening development presumptions, a brownfield-first approach with some 'grey belt' land release, new towns, urban extensions, and increased planning resources. They also propose changes to compulsory purchase compensation rules. The challenge lies in balancing these ambitious goals with the desire for more affordable and social housing, without promising increased grant funding. The effectiveness of these proposals, particularly Labour's, depends on maintaining sufficient incentives for landowner cooperation.
With the Labour Party comfortably ahead in the opinion polls, it would be wise for property investors to pay particular attention to their manifesto commitments. As reported by building.co.uk, Labour will make at least three major housing announcements within a fortnight of forming a government. Let’s hope whoever lands the Housing brief is given the time to have a meaningful impact.
