Government to take 'interventionist approach' to housebuilding

The new Chancellor, Rachel Reeves has used her first major speech to announce the government's first steps to achieve 'sustained economic growth' and reform the planning system.

Related topics:  Planning,  Housing,  Government
Property | Reporter
8th July 2024
Rachel Reeves - 725
"It’s very positive to see the new Government hit the ground running on planning reform"
- Melanie Leech - British Property Federation

Referencing the UK's "antiquated" planning system, Ms Reeves confirmed that work to reform it is already underway, including a consultation on a new approach to planning before the end of the month and restoring mandatory housing targets.

Angela Rayner is set to contact planning authorities regarding green belt boundaries, prioritising brownfield and 'grey belt land' for housing where needed.

The government will also reform the planning system to deliver the infrastructure, and "set out new policy intentions for critical infrastructure in the coming months"

Asked by the BBC if she is relying too much on the private sector to deliver investment in housing, she said "Yes, I do support development, and I think as a constituency MP, I have done just that."

On the private sector, she added: "We need the private sector to build homes. We're not going to be in the business of building those homes directly - we need the construction sector, the housebuilding sector to build those homes."

The Chancellor said: "This Labour government has been elected on a mandate to get things done, to get Britain moving again. We will make those tough decisions to realise that mandate".

However, she added that it wasn't "a green light for any type of housing" and that the new government will "take an interventionist approach to make sure that we've got the housing mix that our country needs".

How the industry reacted

Paul Rickard, Managing Director Pocket Living, said: “Today’s speech by the new Chancellor is a welcome first step in ending the housing delivery crisis blighting the lives of millions of people and especially those looking to get onto the property ladder.

"The restoration of national housing targets will help focus the minds of local authority decision-making, and we are pleased that a more permissive planning regime for brownfield sites is being developed.

"However, whilst significant, planning reform alone is not enough to deliver the homes we need and we look forward to a comprehensive agenda coming forward around public-private delivery partnerships, support for SME developers to get building again, and a strong focus on boosting the capacity of the construction sector.”

Melanie Leech, Chief Executive, British Property Federation, said: “It’s very positive to see the new Government hit the ground running on planning reform.

“Housebuilding targets are a clear statement of intent and will help accelerate delivery. We need to build more homes of all tenures and types and so we urge the Government to also consider bold targets for Build-to-Rent and affordable housing specifically. Housebuilding targets need to be supported with extra capacity in the planning system, so it’s good to see Labour also restate their commitment to get more planners in.

“The Government must also make sure the system supports employment uses as well as homes so that we create sustainable communities. The move to streamline infrastructure delivery is welcome and should include the logistics facilities that are vital for the movement of goods and are chronically undersupplied in key parts of the country.

“The Government is right to look at all options to drive development for growth and the delivery of homes. Moves to fast-track brownfield development are critical to regeneration across the country and a review of the green belt will help to identify those sites which can be brought into use for homes whilst continuing to protect the green spaces which we all enjoy.”

Nathan Emerson, CEO of Propertymark, comments: “It is encouraging to see that the new UK Government is committed to reforming the planning system and delivering thousands of new affordable homes each year. Propertymark is keen to see a diverse mix of housing delivered that keeps pace with real-world demand.

“Fine details about reform to the National Policy Planning Framework must be mapped out and open to full stakeholder scrutiny. It’s crucial there is transparency on how they intend to meet their ambitious target of building 1.5 million new homes by the end of its term in government, which in reality would mean having a large housing estate built every day before the next general election.

"Whilst we support more homes being constructed, there needs to be careful consideration on background infrastructure to ensure we are making the best use of available land, ideally prioritising a brownfield-first approach.”

Daniel Austin, CEO and co-founder at ASK Partners, said: “Housing stands as a pivotal issue in the election fray, given its correlation with economic stability. Recent upticks in house prices and mortgage approvals hint at recovery, yet the persistent housing shortage threatens prolonged recession.

"The UK faces a crisis of affordability due to insufficient homes for rent and sale, negatively impacting GDP. Decades of social strain persist with little resolution in sight.

“We urge the implementation of a radical yet credible long-term plan to assuage market concerns. Their proposed target of 300,000 homes annually echoes longstanding government aspirations unmet since 2004.

"Four primary factors underpin this crisis: over-reliance on major housebuilders, politicised planning discouraging development, net loss of social housing, and post-Brexit labour shortages.

"Addressing these roots is imperative to alleviate the affordability crisis. Reinvigorating SME housebuilders is pivotal. Incentives should facilitate access to opportunities, including allocating small land plots for development and streamlining planning permissions for brownfield sites. Boosting skilled labour domestically and reforming the planning system are equally crucial.

"Independent decision-making and private sector assistance can expedite approvals and reduce costs. Prioritising social housing and incentivising brownfield developments are essential steps toward sustainable growth. Lenders must offer flexible financing to smaller developers. Despite potential temporary unpopularity, a steadfast commitment to a pro-growth agenda is necessary.

“The unique challenges facing the UK demand decisive action. Embrace this opportunity to steer us toward a balanced and sustainable housing market, ensuring prosperity for generations to come.”

Nick Sanderson, CEO at Audley Group comments: “Labour’s plans to bring back mandatory housebuilding targets and reform the planning system signals the start of change in the housing market. Change that focuses on housebuilding and planning, as Rachel Reeves outlined, but while welcome, it shouldn’t stop there.

"The new government must also acknowledge the role of specialist housing and expedite its delivery, including housing that is tailored to our growing older population. Only then will we see more homes come to the market as people choose to downsize, leaving family homes available for those further down the ladder.

"It takes bravery to move away from promises of simply building more and more and instead focus on what needs to be built to make the most difference. I’d like to hear more from the government on taking that leap."

Colin Brown, Head of Planning & Development, Carter Jonas said: “The change in tone and narrative from the new Labour Government is both welcome and refreshing.

"However, it is early days for the administration, and we will need to see a lot more detail on how they intend to implement these changes so that delivery is realised on the ground. The scale of the challenge is huge – to achieve 1.5m new homes in the new parliament will involve rates of housebuilding not seen for decades and one cannot simply “turn the tap on” and expect houses to magically appear.

"The Government will need to pull multiple levers and act decisively to secure real transformative change. Central to this will be to grapple with the thorny issue of development in Green Belt locations and to also address the undoubted skills and labour shortages which have the potential to derail their programme.”

Pete Mugleston, MD and mortgage expert at Online Mortgage Advisor, commented: “The recent announcement by Rachel Reeves Chancellor of the Exchequer, regarding the government's commitment to growing the economy and reforming national housing policies is a positive step forward. This is an opportunity to provide homeowners with more options and potentially lead to the Bank of England lowering interest rates in the near future, making homeownership more attainable and affordable for many.

“Her pledge to build 1.5 million homes and have mandatory housing targets over the next five years is particularly encouraging. Increasing the housing supply can help alleviate the intense competition that often drives up property prices.

"By expanding the availability of homes, the government aims to create a more balanced market where buyers have more choices, reducing the pressures homeowners often feel with aggressive bidding and overpaying.

"This increase in housing supply is also a strong indicator for the Bank of England to finally lower their interest rates from 5.25%. 'This should make mortgages more affordable and reduce homeowners' monthly payments easing the financial burden for many.'

“The government's plan to reform the national policy framework and get rid of the onshore wind ban is a welcomed welcome sign.  This will reduce the bureaucratic hurdles often faced when building new developments and will lead to quicker approvals for housing projects and, consequently, faster construction.

"This efficiency can help meet the ambitious target of 1.5 million homes and ensure that these new developments are integrated with necessary infrastructure, such as schools, healthcare facilities, and transport networks.

Nick Leeming, Chairman of Jackson-Stops, comments: “Labour is grasping the nettle of planning reform and signalling to the industry that they are serious about change. Our latest research revealed over a fifth (22%) of the nation believes building on brownfield land and low-quality grey belt land would improve the housing market.

"Interestingly, this trend was felt most strongly amongst older generations, with over a quarter of the over 55s agreeing that building on this land would improve the housing market. No doubt, this trend is being driven by those keen to see their children and grandchildren get onto the housing ladder.

“Buyers and sellers alike should take comfort in Labour’s focus on housing so early on; but in the short term, the market is likely to remain on the same trajectory as the first half of 2024 as we wait for changes to start to filter through into actions. The property market can take comfort in its resilience, having navigated changing Governments and policy changes time and time again, though this focus on housing building and planning reform is a marked change from recent years.”

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