All the major parties have pledged to build at least 300,000 new homes every year in a welcome attempt to solve Britain’s housing crisis, but the next government will need more than strong words to fix the problem.
In 2019, the Conservatives promised to ramp up construction of new homes to 300,000 per year by the middle of the 2020s, but the government has failed to make good on its promise.
The number of new houses peaked in 2019-2020, when just under 250,000 new homes were constructed.
The latest available figures show that only 234,000 new dwellings were completed in the 2023 financial year, which was little changed on 2022. Figures for the 2024 financial year will be released later this year.
Rishi Sunak had been trying to introduce binding targets on local councils back in 2022 in an attempt to reach the 300,000 target, but these plans were watered down under pressure from NIMBY MPs.
The result is that the rate of housebuilding continues to lag behind demand, making it increasingly difficult for young people to get on the housing ladder.
The Centre for Cities estimates that Britain has backlog of 4.3m ‘missing homes’ compared to the average European country.
This means in England and Wales, the average house is now worth over eight times the average annual salary, up from just over four times in 2000.
In London, the picture is even worse, having increased from 5.5 times the average annual salary in 2000 to 12 times in 2023.
Labour has promised to meet the government’s housebuilding target through large-scale reform of the planning regime.
The opposition has said it will make planning authorities update their Local Plans, increase the number of planning officers, and prioritise the fast-tracking of brownfield site development.
Andrew Wishart, senior UK economist at Capital Economics, also pointed to a crucial line in Labour’s manifesto which could unblock the houesbuilding pipeline by lowering costs for developers.
Labour’s manifesto said that landowners would be “awarded fair compensation rather than inflated prices based on the prospect of planning permission”.
Under current compulsory purchase rules, authorities have to compensate landowners for the so-called ‘hope value’ of the land, which includes if it were sold with planning permission, rather than the market value.
Development land with planning approval is worth around 80 times more than agricultural land, Wishart noted.
“The implied reform to compulsory purchase raises the prospect of acquiring land for less, which could enable Labour to raise housebuilding and boost the economy without falling foul of the fiscal rules,” Wishart said.
The Lib Dems have also pledged to reform these rules. The centrist party wants to construct 380,000 new homes per year including 150,000 social homes.