Never one to mince her words, Kemi Badenoch thinks Labour’s plan to build 1.5 million new homes in England over the course of this parliament is “a promise that simply isn’t deliverable” – and she’s twisted the knife into Angela Rayner by saying “I can tell the Right Honourable Lady, that she has been stitched up.”
Whether there’s a stitch-up or not, Badenoch has got one thing right. This is a commitment the Government risks missing by a country mile.
Mind the gap.
Since 2017, the run-rate for ‘net additional dwellings per annum’ has been roughly 235,000. Last year saw a sharp drop, perhaps to as little as 160,000. The maths is straightforward: to get anywhere near its target, Labour needs to double the number of annual completions.
Pledges to create the first new towns in a generation make a nice soundbite, but they are not going to solve the short-term problem. The Taskforce is not due to recommend locations until July, and its report will only fire the starting gun on a wave of public consultations. Even if the will exists to push things through, the UK’s recent record on major infrastructure projects is dismal. There is simply no way any of the new towns will be populated before the next election.
You can’t build houses by force.
Councils certainly are not going to pick up the slack. Many are on their financial knees, but the Government clearly thinks local government is part of the issue, hence the reintroduction of mandatory targets for each local authority in England.
Some of this makes for odd reading. The London Borough of Kensington and Chelsea has been tasked with providing 5,107 new homes a year, which is 22 times more than it averaged over the last three years. Much the same applies to the New Forest with a target of 1,501 versus the recent average of 187; Or Sevenoaks 1,149 versus 214.
While this is mostly a diversionary smokescreen, it is also a classic case of treating the symptom rather than the disease. Kensington and Chelsea approved 91% of all housing applications in the year ending September 2024. New Forest District Council approved 76% and Sevenoaks approved 71%, which is in-line with the national average.
In other words: the real problem is not that there are too many blockers; it is that there are not enough builders.
Over to you, Matthew Pennycook.
The Minister of State for Housing and Planning is a politician on the rise. Not short of ambition, Matthew Pennycook is a man to keep an eye on. He desperately needs to crack the housing brief – and he will know by now his only hope lies with the private sector.
Something that will have caught Pennycook’s attention is the scale of the land banks held by the eleven largest housebuilders. The latest data shows they own or control the equivalent of 1.2m plots across England, Scotland, and Wales, nearly half of which already has some form of planning permission.
What can be done to get more of this land into development? As things stand, the odds are stacked against the Government. The housebuilders and their shareholders know they are sitting on an appreciating asset. Moreover, they have a fiduciary and commercial duty to only deploy land when they can secure the best returns. From their perspective, the economic imperatives are clear: avoid flooding the market and stay laser-focused on building higher priced, higher margin units. Especially at a time when labour is tight and material costs steep.
Breaking this log-jam would take a big legislative stick. Some think-tanks have suggested sites that aren’t in active development should be liable to a form of land tax. This might kick in five years after acquisition or two years after planning permission has been granted.
Nothing wrong with the idea, but this feels like a battle Labour simply cannot afford to have. Antagonising the housebuilders is the very last thing it needs. Instead, Pennycook & co. need some carrots to dangle, which is why, the reform of the National Planning Policy Framework is so significant.
A grey (belt) area.
The Government’s proposals carve out a wholly new designation: grey belt land. The definition is conveniently loose. As well as Previously Developed Land, it includes “any other areas of the Green Belt that make a limited contribution to the five Green Belt purposes”.
(a) to check the unrestricted sprawl of large built-up areas;
(b) to prevent neighbouring towns merging into one another;
(c) to assist in safeguarding the countryside from encroachment;
(d) to preserve the setting and special character of historic towns; and
(e) to assist in urban regeneration, by encouraging the recycling of derelict and other urban land.
This sort of language will be red meat to the big housebuilders. It opens the prospect of building exactly the sort of homes they want in exactly the ‘right’ areas: the outskirts of pretty villages in Oxfordshire or Cheshire, say. In return, they’ll be prepared to scratch the Government’s back by including some level of affordable housing (although ‘affordability’ usually seems to be in the eye of the beholder).
Labour needs to get some quick runs on the board, so expect this to start happening soon. The consequence is that our clients (buyers we advise) need to be on particularly high alert. It won’t be enough to understand what developments are already in the works. They need partners with the expertise to anticipate what could be coming down the track.
Small could be beautiful.
Kier Starmer has been brave in backing his Secretary of State for Housing saying that the public should judge them on delivering the 1.5m target. However, Badenoch will definitely be proved right if they only stick to large scale developments and will need to stimulate thousands of smaller opportunities.
Matthew Pennycook understands this is key and is moving fast on this front. ENABLE Build, a government guarantee scheme that helps developers borrow on more favourable terms, has just been doubled in size to £2 billion; and an extra £700m of loans is now available for small and medium-sized housebuilders via the Home Building Fund. And you can be sure more incentives will follow.
For landowners and private wealth, this could be the ideal moment to take another look at property development, and interested parties will find some relevant models to follow.
Drawing inspiration from the Duchy of Cornwall’s work at Poundbury, Newquay and Faversham, the Blenheim Estate is progressively developing the land around Woodstock. Both Park View and Hill Rise are mixed tenure projects; alongside plenty of multi-million-pound properties, there are shared ownership options plus rentals that undercut the area average by 40%.
A very different approach is being taken at Saxonvale, a 12-acre site in the centre of Frome that has lain derelict for decades. In January, Somerset Council agreed to sell the land into community ownership. With professional partners on board, the Mayday Saxonvale team has plans for 260 homes, flexible space for local businesses and a lido.
Does opportunity beckon for you?
When updating Local Plans, authorities will go through a process known as a ‘call for sites’ allowing anyone to submit a map of a piece of land which they consider merits development. These are then assessed against the objectives of the Local Plan resulting in some becoming designated sites.
With an increasingly benign planning regime, easier access to credit (including falling mortgage rates), and - perhaps most importantly of all - Labour's need to protect its political credibility, now could be a very good time to put forward part of a back garden, redundant outbuilding, or offlaying paddock, for consideration.
