Interrogating Labour’s pledge to build 1.5m new homes in 5 years

The new Labour government swept into power with a large majority in July 2024. With it, they’ve brought a pledge to build 1.5m new homes in their first term. They’re not the first to set housebuilding targets, and the previous Conservative administration aimed to build 300,000 new homes per year – something it failed to achieve. But what’s changed? Is this new mandatory target achievable or just another grand plan with little substance?

Make no mistake, the target is ambitious and if it’s achieved, will represent housebuilding levels not seen since the 1950s. However, they have already indicated that they will introduce a raft of planning reforms and free up space to achieve their goals. This post examines the scale of the challenge facing Labour, what they propose to do, and how likely they are to succeed.

1.5 Million New Homes by 2029

To achieve this target, 1150 new homes will need to be built every working day for the next five years, translating to roughly five new, large housing estates completed every week. David Rudlin, a new towns specialist working with the government estimates that an area of land twice the size of Milton Keynes will be required to achieve this, more if brownfield land is not utilised.

If Labour were to stay in power for two terms and maintain their targets, an area of land 1.5x the size of Birmingham would be used, even if 60% of construction took place on previously developed sites. Again, if brownfield sites are not used, this rises to 3.5x the area of Birmingham.

To achieve their initial target, Labour have already indicated they will create a new category of land called the ‘grey belt’ with reduced planning restrictions. In addition, they’ve also promised 300 extra planning officers to speed up the process. Taking previously developed and ‘ugly’ parts of the green belt should free up space for between 100,000 and 200,000 new homes. Similarly, it’s estimated that current brownfield sites in the UK could provide enough space for 1.2 million homes. Clearly, in terms of land available for development, this could be achievable.

The Guardian have also highlighted Four Ways Labour Could Deliver on Their Pledge. These include:

• New urban towns on previously developed land. These are high-density and well-planned towns within existing major cities. Greenwich Millenium Village, a 300-acre site built over 25 years on an old gas works that included the Millennium Dome, is an example of this in action.
• Milton Keynes 2.0. Famously one of the 20th century’s New Towns, Milton Keynes is now home to over 250,000 people. Although it’s a decades-long strategy, creating a new large settlement from nothing is still possible, albeit unlikely.
• Super Extensions. Building extensions or satellite towns to existing cities, separated by green space but with excellent transport links could significantly increase capacity but maintain the small town feel desired by residents.
• New Small Towns. Smaller than Milton Keynes 2.0 but larger than Super Extensions, new, walkable and ‘traditional’ small towns around the country could be the answer. Poundbury in Dorset is a prime example of this, as is an extension of Newquay in Cornwall and a proposed site in Faversham, Kent.

Realistically, a combination of the above will likely be the approach that the new government takes to achieve its targets. However, it’s not just the availability of land which will present a challenge.

Addressing the UK’s Skills Shortage

It’s still the case that there is a massive skills shortage in the UK, one that has been exacerbated by Brexit and the COVID-19 pandemic. With all the will in the world, if there simply aren’t enough people to build the homes, they are doomed not to reach their target. It’s not simply construction workers either, architects and designers, suppliers, local authorities and the rest of the public sector all report shortages.

What Labour plans to do is unclear, but in the short term, migrant labour will likely be required to fill the gap.

Lack of economic growth & crumbling infrastructure

The elephant in the room, inflation continues to hamper the UK’s economic growth. While ambitious targets and planning reform are certainly welcomed, it’s undeniable that the cost of property development in the UK has skyrocketed. Costs are rising at every stage of the process from planning and design to building and putting to market.

Without economic growth and the money to get these large-scale projects off the ground, the UK property industry will be stuck in a doom loop. How the government intends to tackle this, whether through incentives, subsidies or large-scale borrowing, remains to be seen.

What’s more, these 1.5m new homes, and the people that live in them will require power, water, internet connectivity and a whole host of other public services and utilities, all of which require investment. Labour has already removed the ban on onshore wind farms, but it is still unclear how they intend to solve the wider issues which will impact their ability to deliver on their targets.

So far, Labour’s approach to solving the problems within the property development sector has been encouraging. It’s very early days but planning reform has long been required. Whether it has the desired effect remains to be seen, but if you’re a property developer in the South East looking to kickstart your next project with development finance, don’t hesitate to contact us.

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